Ontario Land Tribunal
Tribunal ontarien de l’aménagement du territoire
ISSUE DATE: August 8, 2023
CASE NO(S).: OLT-21-001159
PROCEEDING COMMENCED UNDER subsection 26(1) of the Expropriations Act, R.S.O. 1990, c. E.26, as amended
Claimants: Edward and Dorothy Janisse
Respondent: Corporation of the City of Windsor
Subject: Land Compensation
Property Address/Description: Part of Lots 119 and 120, Concession 3
Municipality: City of Windsor
OLT Case No.: OLT-21-001159
OLT Lead Case No.: OLT-21-001159
OLT Case Name: Edward and Dorothy Janisse v. City of Windsor
Heard: February 22-24, 2023 (by video) and April 5, 2023 and July 10, 2023 (in writing)
APPEARANCES:
| Parties | Counsel |
|---|---|
| Edward and Dorothy Janisse (“Claimants”) | Dante D. Gatti |
| The Corporation of the City of Windsor (“City”) | Patrick Brode Wira H.D. Vendrasco |
DECISION DELIVERED BY ROBERT G. ACKERMAN AND ORDER OF THE TRIBUNAL
Link to Final Order
1On March 31, 2016, the Corporation of the City of Windsor (the “Respondent”) caused a Plan of Expropriation to be registered in the Land Registry Office for the Land Titles Division for Essex, at Windsor (No. 12) as Instrument No. CE706334, which had the effect of taking all of the fee simple interest in the property municipally known as 6424 County Road 42, Windsor (the “Subject Property”). The taking was required for the purpose of consolidation of the Subject Property into the Windsor Airport Lands as part of the Economic Revitalization provisions of the Community Improvement Plan of the Respondent.
2The Owners of the Subject Property were Edward Janisse and Dorothy Janisse (“the Claimants”). The Subject Property had an area of 3.04 acres and was improved with a one and one-half-storey residential building, constructed in 1942, having a ground floor area of 780 square feet (“ft2”) and a second-floor dormer with an area of approximately 468 ft2 for a total of 1,240 ft2 (115 square metres [“m2”]). The residential building had been tenanted but was vacant at the time of the taking. There was also a wooden shed or garage on the property which appeared dilapidated in photographs and to have reached the end of its economic life.
3The Parties attended before the Board of Negotiation on May 11, 2017, with no resolution being reached. The Respondent delivered a Notice of Arbitration on February 13, 2018. The Claimants did not respond to the Notice of Arbitration or to Tribunal’s requests for information. As a result of inaction on the part of the Claimants, the Tribunal ordered the Arbitration dismissed on June 3, 2020.
4Thereafter, the Claimants, through their counsel, caused a Notice of Arbitration and Statement of Claim, dated June 15, 2021, to be delivered, which the Tribunal accepted. The first Case Management Conference ("CMC”) was convened by the Tribunal on June 9, 2022. Although Notice had been properly served, counsel for the Claimants did not attend the CMC. The CMC proceeded without counsel for the Claimants. At this CMC, the Hearing of this Arbitration was scheduled for three days beginning on February 22, 2023, a Procedural Order (“PO”) was granted, and a Status Hearing was directed to be scheduled on December 9, 2022, by Telephone Conference Call (“TCC”). The purpose of the Status Hearing was to review and approve a Hearing Plan and to address any other outstanding matters relating to the Hearing.
5This Member conducted at the Status Hearing on December 9, 2022. Counsel for the Claimants and counsel for the Respondent attended. The draft Hearing Plan for the scheduled three-day Hearing had been submitted prior to the Status Hearing by counsel for the Respondent. The Tribunal reviewed the draft Hearing Plan and, when asked, both counsel for the Claimants and counsel for the Respondent advised the Tribunal that they were content with the draft Hearing Plan which was accordingly approved. The Tribunal ordered and directed that the Hearing proceed in accordance with the Hearing Plan, which was attached as Schedule “A” to the Tribunal’s Order issued on January 6, 2023. During the Status Hearing, in response to the Tribunal’s inquiry, both counsel advised the Tribunal that there were no other outstanding issues which they wished the Tribunal to address, and confirmed that the Parties would be ready to proceed with the three-day Hearing commencing on Wednesday, February 22, 2023.
MOTION REQUESTING ADJOURNMENT
6On February 21, 2023, the day before the scheduled commencement of this Hearing, Mr. Brode, counsel for the Respondent, sent the Tribunal’s Case Coordinator a string of emails between himself and Mr. Gatti, counsel for the Claimants, in which Mr. Gatti was seeking the consent of the Respondent to the adjournment of this Hearing. The emails indicated that Mr. Brode, on behalf of the Respondent, refused to consent to the adjournment. This Member reviewed the email correspondence and instructed the Case Coordinator to communicate to both counsel that the Tribunal required that they attend as scheduled for the Hearing, and that the Tribunal would be prepared to hear a Motion on short-notice for the adjournment of the Hearing. Both counsel were instructed to review and have regard for the provisions of Rule 17 of the Tribunal’s Rules of Practice and Procedure (“the Tribunal’s Rules”) and to paragraph 23 of the PO. Counsel were also instructed to have their witnesses in attendance and to be prepared to proceed with the Hearing as scheduled, and that counsel for the Respondent must ensure that a Court Reporter is in attendance.
7Late in the afternoon of February 21, the Tribunal received a letter by email from Mr. Gatti, which advised:
Within the last 7 days however, there has been an irreversible breakdown in the solicitor/client relationship between the Claimants and myself. Based upon the rules and ethics of the legal profession in Ontario, it is impossible for me to continue [to] act for the Claimants. The Claimants wish to obtain new counsel, and as a result, I will be advising the Tribunal member tomorrow that I cannot continue and that the Claimants are seeking an adjournment.
8The Tribunal did not receive a Motion Record nor a Notice of Motion seeking an adjournment from Mr. Gatti nor from anyone on behalf of the Claimants. The Tribunal did however, on February 21, 2023, receive a Motion Record from the Respondent opposing an adjournment. The Responding Record contained copies of emails between Mr. Brode and Mr. Gatti respecting the adjournment request and a copy of the letter from Mr. Gatti to the Tribunal dated February 21, 2023, referred to above.
9Counsel did attend before the Tribunal on February 22, 2023, and Mr. Gatti as a preliminary matter, requested that the Hearing be adjourned. No Motion materials had been filed, so the Tribunal treated the request as an oral Motion. The Claimants were not in attendance. Mr. Gatti advised the Tribunal that the sole ground for the adjournment was that there had been a breakdown in the solicitor-client relationship, of which he first became aware on Friday, February 17, 2023. Mr. Gatti advised the Tribunal that he believes that his clients wish to retain new counsel and that they do not wish him to continue to represent them. He advised the Tribunal that the Claimants were fully informed and aware of the provisions in the PO respecting adjournments and the fact that the Hearing was scheduled to commence this date, and that they nevertheless wished to retain new counsel.
10Mr. Brode stated the Respondent’s position that an adjournment should not be granted and that the Hearing should proceed as scheduled. He stated that he had spent considerable professional time preparing for the Hearing, had his expert witness in attendance, and that if the Hearing was adjourned, that the Respondent would be prejudiced both by the further delay of this long-running matter and by the expenditure of Hearing preparation costs throw away, which Mr. Brode stated would be in the range of $30,000. He referred to the protracted seven-year history of this matter which he attributed to various previous delays by the Claimants. Mr. Brode submitted that the granting of an adjournment, just prior to the commencement of the Hearing, would be contrary to principles of fairness, contrary to the Tribunal’s Rules, contrary to the specific provision regarding adjournments contained in the PO, and would cause severe prejudice and hardship to the Respondent, and would constitute an abuse of process.
Analysis Regarding Claimants’ Request for an Adjournment
11The Tribunal notes firstly that Mr. Gatti continues to represent the Claimants. Mr. Gatti has not brought a motion on notice seeking an adjournment as required by the Tribunal’s Rules. The Hearing date was set by the Procedural Order made by Vice-Chair Lanthier on June 9, 2022. Mr. Gatti confirmed the Hearing date at the CMC on December 9, 2022, and that he would be ready to proceed. Mr. Gatti advised the Tribunal that his clients are aware of both the PO and its terms, and that the Hearing is scheduled to commence this date. Nevertheless, they are not in attendance.
12Under Rule 17.1 of the Tribunal’s Rules, hearing events will take place on the date set unless the Tribunal agrees to an adjournment. Rule 17.2 makes provision for the situation where an adjournment is on consent of the Parties. Rule 17.3 deals with requests for an adjournment which are opposed and provides that the party requesting the adjournment must bring a motion on notice at least 15 days before the hearing event. If the reason prompting an adjournment request arises within 15 days of the Hearing, the party seeking the adjournment must give immediate notice to the Tribunal and the other parties and serve its Motion materials as soon as possible. Rule 17.4 makes limited provision for the granting of last minute adjournments and provides that such adjournments will only be granted in situations of unavoidable emergencies, such as illness.
13Paragraph 23 of the PO specifically provides that “no adjournments or delays will be granted before or during the Hearing except for serious hardship or illness”.
14In these circumstances the Tribunal finds that:
a. The Respondent does not consent to the adjournment request;
b. The required motion on notice requesting an adjournment has not been brought by the Claimants;
c. Mr. Gatti states that there has been a breakdown in the solicitor-client relationship but he continues to represent that Claimants as he is not seeking an Order that he be removed from the Record;
d. The Tribunal notes the history of this matter and finds that the conduct of the Claimants has caused previous delays in advancing this Arbitration and costs to be unnecessarily incurred by the Respondent:
Expropriation Plan CE706334 was registered on March 31, 2016;
the Parties met at the Board of Negotiation on May 11, 2017;
Thereafter, Claimants did not proceed with the Arbitration of their claim under the Expropriations Act (“the Act”).
The Respondent therefore was required to initiate Arbitration proceedings by delivery of a Notice of Arbitration dated February 13, 2018;
contrary to the provisions of the Act and the Tribunal’s Rules, the Claimants failed to file their Statement of Claim. As a result, on June 3, 2020, Vice-Chair Sills of the Tribunal administratively dismissed the Notice of Arbitration;
subsequently a Statement of Claim was delivered by Claimants’ counsel, Mr. Gatti, on June 15, 2021, which was more than five years after the Expropriation;
on June 9, 2022, the first CMC was conducted before Vice-Chair Lanthier to establish the terms of a PO and to set a Hearing date. Counsel for the Claimants did not attend. The CMC proceeded in his absence;
the PO proposed by the Respondent was ordered and a three-day Hearing on the Merits was scheduled to begin on February 22,2023, at 10:00 am;
the Claimants are fully aware of the Hearing date and the provisions of the PO;
the PO specifically provides in paragraph 23 that no adjournments will be granted before or during the Hearing except for serious hardship or illness;
pursuant to the PO, the Respondent delivered its Witness List on August 26, 2022;
the PO required the Parties to deliver a preliminary Hearing Plan by November 1, 2022;
The PO also ordered that the Parties attend a Final Status Hearing on December 9, 2022;
the Status Hearing came before this Member on December 9, 2022, and both Mr. Gatti and Mr. Brode attended. Both counsel advised the Tribunal that there are no further issues and that the Parties were content with the draft Hearing Plan, which was confirmed as was the commencement of the Hearing on February 22, 2023;
the Hearing Plan indicates that Mr. Gatti intends to call only one witness, who is a real estate appraiser;
when questioned by the Tribunal Mr. Gatti stated the sole issue to be determined in the Hearing is the Market Value of the Subject Property, and that he could proceed with the Hearing in the absence of his clients.
Ruling on Request for Adjournment
15This Adjournment request was brought by Claimants’ counsel at the eleventh hour, and the Tribunal finds that the Respondent would clearly suffer prejudice if the adjournment is granted. The Hearing date was fixed by the PO and counsel for the Parties had assured the Tribunal that they would be ready to proceed. The Respondent is in attendance with its expert witness, Mr. Bower, and is ready for the Hearing. Mr. Gatti is also present with Mr. Carter, the Claimants’ expert and sole witness. Having carefully considered all of the foregoing, the provisions of Rule 17, the provisions of the PO and the submissions of counsel, the Tribunal finds that the adjournment request does not qualify as an unavoidable emergency under either Rule 17.4 or under paragraph 23 of the PO. The adjournment request was therefore denied.
MID-HEARING MOTION BY COUNSEL TO BE REMOVED FROM THE RECORD
16The Hearing commenced late in the morning of February 22, 2023, with the evidence in chief of the Claimants’ appraiser. At 12:00 noon on February 23, 2023, which was the second day of this Hearing, counsel for the Claimants, Mr. Gatti, caused a Notice of Motion returnable that date to be filed with the Tribunal’s Case Coordinator. The Motion was for an Order that Mr. Gatti be permitted to remove himself as solicitor of record for the Claimants. The Notice of Motion was contained in a Motion Record which also contained an Affidavit sworn by Mr. Gatti.
17The Notice of Motion indicated, and Mr. Gatti confirmed, that it had been served only upon the Respondent. The Claimants had not been served and were not present. Mr. Gatti’s Affidavit alleged that on February 17, 18 and 21, 2023, he had communications with the Claimants “which amounted to a breakdown of the solicitor and client relationship”. He deposed that “I also made a recommendation to them [concerning a settlement] which they were considering”. Counsel for the Respondent, Mr. Brode, opposed the Motion on the grounds that if it was granted, then the Respondent would suffer prejudice as a result of the further delay of this long running matter in addition to costs throw away of approximately $30,000. Mr. Gatti produced no authorities in support of his Motion. The Tribunal stood down to consider and rule upon the Motion.
18In its Decision in Baradaran v. Alexanian, 2020 ONSC 4759, the Superior Court reviewed the case law, the Rules of Professional Conduct of the Law Society of Ontario (“LSO Rules”) and the principles to be considered on a motion by counsel of record to be removed from the record. A lawyer is required to have “good cause”, or “justifiable cause”, to withdraw from the representation of a party in the midst of litigation. Rule 3.7-1 of the LSO Rules provides:
Although the client has the right to terminate the lawyer-client relationship at will, the lawyer does not enjoy the same freedom of action. Having undertaken the representation of a client, the lawyer should complete the task as ably as possible unless there is justifiable cause for terminating the relationship.
In considering such a motion, the Court stated that it will consider whether it is feasible for the client to represent himself or herself, whether counsel gave a reasonable amount of notice to the client, the impact which the delay caused by the removal of counsel will have on the client and on the other parties to the proceeding. The Court emphasized that prejudice to the client will always be a significant factor in the consideration of such a Motion. In the event that counsel’s withdrawal will cause serious prejudice to be suffered by the client, the Motion should not be granted.
Ruling on Mr. Gatti’s Motion for an Order that he be Removed from the Record
19Mr. Gatti’s Motion was brought mid-way through his clients’ case during the Hearing on the Merits of this Arbitration. Whether it is feasible for the Claimants to assume representation of themselves is unknown as they were not served with the Motion and are not before the Tribunal. In the circumstances, the Tribunal can only conclude that permitting Mr. Gatti’s withdrawal will cause serious prejudice to the Claimants, and in addition would cause serious prejudice to the Respondent and harm to the administration of justice. The Motion was accordingly denied.
HEARING ON THE MERITS
THE EVIDENCE
20The Tribunal heard from two witnesses, both of whom are real estate appraisers. The witness called on behalf of the Claimants was John S. Carter, AACI. The witness called on behalf of the Respondent was Ray Bower, AACI.
21A total of seven Exhibits were produced and marked. Three of the Exhibits were produced by counsel for the Respondent, Mr. Brode, during his Cross-Examination of the Claimants’ Appraiser, Mr. Carter. These three documents were provisionally marked for identification purposes only as Exhibits A, B and C, and were subsequently marked as Exhibits 5, 6 and 7 when identified during the direct evidence of the Respondent’s Appraiser, Mr. Bower.
| EXHIBIT NO. | FILED BY (PARTY NAME) | NAME/DESCRIPTION OF EXHIBIT |
|---|---|---|
| 1 | Joint | Joint Document Book |
| 2 | Claimants | Acknowledgement of Expert’s Duty – John S. Carter dated Feb 16/23 |
| 3 | Respondent | Affidavit of Service of Additional Documents of Natalie Armaleo, sworn Feb 23/23 |
| A | Respondent | Extract from City of Windsor Sewer Atlas, Sheet R11, revised July 2011 |
| B | Respondent | Transfer between Michael O’Keefe Farms Inc and Windsor Regional Hospital registered on October 15, 202, as Instrument No. CE969081 |
| C | Respondent | Geowarehouse Report for 4365 County Road 42, Windsor |
| 4 | Respondent | Acknowledgement of Expert’s Duty of Ray Bower dated Feb 16/23 |
| 5 | Respondent | Extract from City of Windsor Sewer Atlas, Sheet R11, revised July 2011 |
| 6 | Respondent | Transfer between Michael O’Keefe Farms Inc and Windsor Regional Hospital registered on October 15, 202, as Instrument No. CE969081 |
| 7 | Respondent | Geowarehouse Report for 4365 County Road 42, Windsor |
22Written Submissions and Supplementary Written Submissions were requested by the Tribunal and filed by both counsel as follows:
Claimants’ Written Submissions – March 16, 2023;
Respondent’s Written Submissions – March 24, 2023;
Claimants’ Reply Submissions – April 3, 2023;
Claimants’ Supplementary Written Submissions – June 30, 2023;
Respondent’s Further Written Submissions – July 10, 2023.
23The Joint Document Book having been produced and marked as Exhibit 1, Mr. Brode attended to the filings required by Rule 26.24 of the Tribunal’s Rules. The Tribunal was referred to the Plan of Expropriation, registered on March 31, 2016, as Instrument No. CE706334, which was filed as Tab 1 to Exhibit 1. The Tribunal was also directed to the Certificate of Approval of the Council of the Corporation of the City of Windsor dated February 2016, filed as Tab 4 to Exhibit 1.
Evidence for the Claimants
24Mr. Carter was called on behalf of the Claimants and qualified by the Tribunal to give opinion evidence on matters concerning the appraisal of real estate generally, and on the valuation issues in this Proceeding in particular. Mr. Carter had produced an Appraisal Report which was filed as Tab 15 of Exhibit 1 (the “Carter Report”). The Carter Report is dated September 15, 2016, and has a stated effective date of April 11, 2016, and is therefore a Retrospective Appraisal Report. The Tribunal notes that the Carter Report contains ambiguities which were not raised by counsel for the Respondent. The letter of transmittal indicates that Mr. Carter had appraised the Subject Property for the purpose of estimating its “current market value” in accordance with Section 14 of the Act. This is a misstatement, as the date of the Carter Report is approximately five months subsequent to the stated effective date of April 11, 2016. The reference to Section 14 of the Act is also at variance with the statement in the Executive Summary that the function of the Appraisal is “to assist the client establish market value as of the date of the Expropriation under Section 25(2)” of the Act. This is clearly a misstatement, as Section 25(2) provides the requirement that Expropriating Authorities base Section 25 Offers of Compensation upon a report appraising the market value of lands taken and any damages for injurious affection.
25As no evidence was provided respecting the effective date for the determination of compensation, the Tribunal requested that both counsel address this issue by way of Supplementary Written Submissions. Counsel for the Claimants submitted that his clients’ Form 8 Notice of Election, elected to have compensation determined as at the date on which his clients were served with the Notice of Expropriation, which was April 8, 2016. Ms. Vendrasco, now Counsel for the Respondent, replied that the Notice of Expropriation was sent to the Claimants on April 8, 2016, but was deemed to be served two days later pursuant to Section 1(2)(a) of the Act. As this date fell on a non-juridical day, the valuation day was deemed to be the following day, being April 11, 2016. The Tribunal concurs and determines that pursuant to Section 10(2)(c) of the Act, the date at which compensation is to be assessed is April 11, 2016.
26In his evidence Mr. Carter related that the Claimants had purchased the Subject Property in 1972 as an investment and that it had been tenanted continuously until just prior to the Expropriation. He stated that the Subject Property had an overall site area of approximately 3.04 acres with 317.45 feet of frontage onto County Road 42, which is an arterial road. The Subject Property was rectangular in shape and level, with two accesses onto County Road 42. Improvements consisted of a one and one-half storey single-family residential dwelling built in 1942, having a gross building area of 1,240 ft2. Services at the Subject Property included municipal water, electrical supply and natural gas service. Although on a septic system, Mr. Carter stated that a sanitary sewer connection was available at the County Road 42 frontage.
27The Subject Property was within the block which includes the Windsor Airport and was directly across County Road 42 from the site announced as the location of the new “Windsor Mega-Hospital”. Mr. Carter described, and the Executive Summary in his Report states, that he considers the Subject Property to be “Redevelopment Land”.
28Land use controls included an Agricultural Zoning according to the City of Windsor Zoning By-Law and an Official Plan (“OP”) designation as Future Employment Area. Mr. Carter stated that the Future Employment Area designation is intended to accommodate future Industrial and Business Park designations. He stated that redesignation or development of Future Employment Areas will require the completion of Secondary Plans and other appropriate studies relating to municipal physical servicing, transportation, Class Environmental Assessment and others, as required by the OP.
29Mr. Carter stated that the entirety of the Subject Property lies within an area designated for regulation by the Essex County Conservation Authority (“ECCA”) as it is located in a flood prone area. He stated that the Claimants advised him that, although they were aware that the Subject Property was located in a flood prone area, as documented by the ECCA, they have never experienced a problem with flooding throughout the period of their ownership.
30Mr. Carter stated that his analysis of the Subject Property’s characteristics and improvements in the area indicate the Subject Property could adequately support municipal physical service development. The Property has good visibility and access. Based on his investigations with the Respondent’s Planning Department, Mr. Carter stated that the site size of 3.04 acres is sufficient to allow for redevelopment and that the Subject Property's physical aspects do not impose limitations on development for the legally permissible uses under the Business Park designation.
31Mr. Carter emphasized that on July 16, 2015, there had been a public announcement that the southeast corner of County Road 42 and Concession Road 9, which is directly opposite to the Subject Property, would be the future site of the “Windsor Mega Hospital”. He stated that the location of the Subject Property across County Road 42 from the Hospital site, it's access to services and its location on an arterial road, meant that the Subject Property had excellent redevelopment potential for a commercial use such as a convenience store, gas station, restaurant, financial institution or hotel, all of which are permitted uses under the Business Park designation.
32Mr. Carter determined the Highest and Best use of the Subject Property, as though vacant, to be its “interim agricultural use with its ultimate development with a commercial use when market forces dictate”. As improved, he determined the Highest and Best use of the Subject Property, to be continuation of the existing single-family use and ultimately redevelopment with a commercial use when market forces dictate.
33Mr. Carter employed the comparable sales method of valuation in his Report and he selected five comparable sales. All of Mr. Carter’s comparable sales were located within the County Road 42 corridor. The particulars of these were set out in a table on Page 44 of the Carter Report which is reproduced below:
34Comparable No. 1 was the sale of the future site of the Windsor Mega-Hospital on the corner of County Road 42 and Concession Road 9 having a municipal address of 4035 Concession Road 9, Windsor. It was a 60.42 acre parcel which was designated as Future Employment Area in the OP and zoned Agricultural (the same as the Subject Property) and was unimproved. The sale price provided for a unit price of $100,960 per acre with a “sale date” (closing date) of July 1, 2017.
35Comparable No. 2 was the sale of a 5.04 acre property which was located on the opposite side of County Road 42 west of the Subject Property. It was designated as Future Employment Area in the OP and zoned Agricultural (the same as the Subject Property) and was improved with a single family residence and barn. The sale price provided for a unit value of $115,079 per acre, with a sale date of October 23, 2015. In describing Comparable 2, Mr. Carter referred to the fact that the purchaser had been a well-known real estate investor in the Windsor area, who purchased the property shortly after the Windsor Hospital announcement.
36Comparable No. 3 was the sale of a 3.10 acre parcel having an OP designation of Business Park which was zoned Hamlet Commercial. The sale price provided for a unit price of $116,129 per acre, with a sale date of December 22, 2015. The property was on rural services.
37Comparable No. 4 was the sale of a 16.20 acre parcel having a split OP designation of Commercial Corridor and Industrial, which was zoned Manufacturing District MD1.2 Zone. The sale price provided for a unit price of $169,753 per acre, with a sale date of January 19, 2016. The property had access to full services.
38Comparable No. 5 was the sale of a 1.40 acre parcel having an OP designation of C3 Commercial which was zoned Neighbourhood Commercial. The sale price provided for a unit price of $278,571 per acre, with a sale date of July 30, 2015. The property had access to full services.
39Mr. Carter’s Comparable Sales provided for a range in unit values per acre from $100,960 to $278,571 with an average of $156,098 per acre. After adjustments, he determined the range to be $140,000 to $160,000 per acre, and Mr. Carter concluded with an adjusted unit value of $150,000 per acre for the Subject Property.
40On this basis Mr. Carter estimated the Market Value of the 3.04 acre Subject Property to be $456,000 as at April 11, 2016.
41In Cross-Examination, counsel for the Respondent challenged Mr. Carter’s assertion that a sanitary sewer connection was available at the Subject Property. Mr. Brode produced an extract identified as Sheet 11 from the Sewer Atlas for the City of Windsor, revised July 2011, which was provisionally marked as Exhibit A for identification purposes, and subsequently marked as Exhibit 5 when identified by the Respondent’s witness, Mr. Bower. The extract from the Sewer Atlas showed the Subject Property and surrounding area. It indicated the presence of only a Trunk Sanitary Sewer running beside the Subject Property’s County Road 42 frontage. There was a notation on either side of the Subject Property which reads “No New Connection to Trunk Sanitary Sewer.
42Also in Cross-Examination, Mr. Brode produced to Mr. Carter a Report from GeoWarehouse respecting the property municipally known as 4365 County Road 42. This document was provisionally marked as Exhibit C for identification purposes, and subsequently marked as Exhibit 7 once it was identified by Mr. Bower. Mr. Carter acknowledged that the Report shows that the property which is the subject of the GeoWarehouse Report abuts his Comparable No. 2, and that it was purchased by the same Buyer as Comparable No. 2 from the same Vendor with the same closing date. The Report showed that the property was an unimproved 13.17 acre parcel which sold for the sum of $570,000. Mr. Brode suggested to Mr. Carter that if Comparable No. 2 and 4365 County Road 42 are considered as a single transaction, the resulting unit price for Comparable No. 2 is $43,280 per acre, and not $115,079 per acre as opined by Mr. Carter.
Evidence for the Respondent
43Mr. Bower was called on behalf of the Respondent and qualified by the Tribunal to give opinion evidence on matters concerning the appraisal of real estate generally, and on the valuation issues in this Proceeding in particular. Mr. Bower had produced a Retrospective Appraisal Report which was filed as Tab 14 of Exhibit 1 (the “Bower Report”). The Bower Report is dated July 16, 2016, with an effective date of April 11, 2016. The stated purpose of the Bower Report is to provide an estimate of Market Value to assist in the determination of the amount of “fair compensation” payable to the Claimants. Mr. Bower concurred with Mr. Carter regarding the OP designation of the Subject Property as Future Employment Lands and the Zoning as Agricultural. It was Mr. Bower’s opinion that the Highest and Best use of the Subject Property as at the effective date was for the continuation of the existing use as a single-family residence until such time as it is both physically possible and economically feasible to re-develop the site in accordance with legally permitted uses and as market demand would dictate.
44However Mr. Bower expressed a very different view from that of Mr. Carter respecting the timing of the redevelopment prospects for the Subject Property, stating that while redevelopment was possible, as indicated by the Future Employment Lands designation, as at the valuation date it would not have been seen as probable within the foreseeable future, and that accordingly the Future Employment Lands designation had no impact on the Market Value of the Subject Property as at the Valuation Date. Mr. Bower attributed this to:
the announcement of the new hospital location had not generated market demand for properties in its vicinity, with the exception of the sale listed by Mr. Carter as Comparable No. 2. At the Valuation Date the transaction for the purchase of the Hospital lands (Mr. Carter’s Comparable No. 1) had not closed, and did not close until more than one year after the effective date of April 11, 2016. Mr. Bower stated his opinion that this was due to the market uncertainty created by well-publicized public objections to the proposed hospital location and litigation which had been commenced to overturn the decision. In addition, as at the date of this Hearing, construction of the hospital had not begun, seven years after the announcement.
Mr. Bower stated that the area designated “Future Employment Area” by the Windsor Airport is large, being about 600 acres and, as no secondary plans or redevelopment proposals have been initiated since 2016 for any of the 600 acres comprising the Future Employment Area lands, there is no demonstrated demand for expansion.
given the 3.04 acre size of the Subject Property, any future development would likely occur only in conjunction with the simultaneous development of surrounding properties.
45It was therefore Mr. Bower’s opinion that, as the timing for any redevelopment of the Subject Property as at the Valuation Date was shrouded in uncertainty, the fact that it carried the designation as Future Employment Lands would have had no effect on its Market Value. He concluded that comparable properties for valuation purposes are residential and that comparable sales are therefore residential sales. Mr. Bower conducted an analysis of vacant residential land sales to establish an unimproved value for the Subject Property, followed by an analysis of improved residential sales, from which he extracted a residual house value on a per square foot basis, which he employed to estimate the value of the improvements on the Subject Property.
46Mr. Bower’s vacant residential land sales analysis used eight sales with dates ranging from September 2012 to February 2016. As a result, six of the sales carried a time adjustment of 20% or more, one had an adjustment of 13% and the most recent had an adjustment of 4%. The average price per acre extracted from these sales was $108,259. Mr. Bower’s time-adjusted comparable sales chart is at page 43 of his Report and is reproduced below:
| Location | Sale Price | Date | Time Adjustment | Time Adjusted Price | Size (Acres) | Price Per Acre | |
|---|---|---|---|---|---|---|---|
| A | 86 County Rd 42 | $125,000 | Sep-12 | 27% | $158,823 | 0.91 | $174,531 |
| B | 1152 Belle River Rd | $120,000 | Jan-14 | 21% | $144,878 | 1.99 | $72,803 |
| C | 925 County Rd 27 | $85,000 | Feb-14 | 21% | $102,491 | 1.22 | $84,009 |
| D | 484 Elmstead | $110,500 | Apr-14 | 20% | $132,794 | 1.19 | $111,591 |
| E | 7375 Broderick | $190,000 | Apr-14 | 20% | $228,333 | 2.33 | $97,997 |
| F | County Rd 27 | $90,000 | Jun-14 | 20% | $107,796 | 1.01 | $106,728 |
| G | 8025 Matchette | $210,000 | Aug-15 | 13% | $236,575 | 1.34 | $176,549 |
| H | 148 North Talbot | $141,000 | Feb-16 | 4% | $146,527 | 3.50 | $41,865 |
| Average | $157,277 | 1.7 | $108,259 | ||||
| Median | $145,703 | 1.3 | $102,363 |
47Mr. Bower stated that Comparable Sale A, best represents the Subject Property in terms of location on County Road 42, as it is located between the Subject Property and Manning Road, and is 2 km east of the Subject Property. However, it is the oldest sale, dating from September 2012, and therefore required an upward time adjustment of 27%. The site is the smallest of the comparable sales examined at 0.91 acre. Sale A has a time adjusted price of $158,823, which equates to $174,531 per acre.
48Mr. Bower selected Comparable Sale B (Belle River Rd. - 1.99 acres), Comparable Sale E (Broderick Rd. - 2.33 acres) and Comparable Sale H (North Talbot Rd. - 3.5 acres) being the three largest sites, for his estimation of the Market Value of the Subject Property on a per acre basis. Mr. Bower time adjusted the sale prices to $144,878, $228,333 and $146,527 respectively. He stated that these three properties have an adjusted average unit sale price of $70,888 per acre. Mr. Bower stated that applying this average to the Subject Property’s site area of 3.04 acres results in an indicated site value ‘as though vacant’ of (3.04 x $70,888) $215,499, which he rounded to $215,500.
49Mr. Bower’s next step in his approach to valuation was an analysis of improved residential sales, from which he extracted a residual house price on a per square foot basis to estimate the value of the residential building on the Subject Property. In his comparable sales analysis Mr. Bower employed the direct comparison approach to valuation and referred to six improved residential sales. These sales are summarized on the chart below, taken from page 58 of the Bower Report:
| Subject | #1 | #2 | #3 | |
|---|---|---|---|---|
| 6424 County Rd. 42 | 6655 Malden Rd. | 6038 Malden Rd. | 6611 Manning Rd. | |
| Distance to City Centre | 10 km | 11 km | 17 km | 19 km |
| Sale Price | $175,000 | $158,000 | $155,000 | |
| Sale Date | Sep-13 | Sep-13 | Nov-13 | |
| Time Adjusted price | 22% $213,816 |
22% $193,045 |
21% $187,883 |
|
| Site Size | 1.71 acres | 1.0 acre | 1.26 acres | |
| Estimated Site Value | $150,000 | $125,000 | $135,000 | |
| Residual Bldg. Value | $63,816 | $68,045 | $52,883 | |
| House Size (sq.ft.) | 1240 | 1130 | 941 | 1765 |
| Residual House Price/sf | $56.47 | $72.31 | $29.96 | |
| House Age | 74 years | 51 years | 91 years | 116 years |
| Basement | Full Unfinished | Full Unfinished | Full Unfinished | Part Unfinished |
| Heat | GFA | GFA | GFA | GFA |
| Cooling | Central AC | Central AC | Central AC | None |
| Condition | Average | Average | Good | Good |
| Garage/Shed | No Value | 2 Car | 2 Car with Loft | 2 Car |
| Subject | #4 | #5 | #6 | |
|---|---|---|---|---|
| 6424 County Rd. 42 | 3675 Howard Ave. | 2324 Lesperance Rd. | 3630 Howard Ave. | |
| Distance to City Centre | 10 km | 7 km | 13 km | 7 km |
| Sale Price | $185,000 | $136,900 | $170,000 | |
| Sale Date | May-14 | Nov-14 | Sep-15 | |
| Time Adjusted price | 20% $221,580 |
19% $162,316 |
12% $192,986 |
|
| Site Size | 1.17 acres | 1.04 acres | 1.66 acres | |
| Estimated Site Value | $135,000 | $125,000 | $150,000 | |
| Residual Bldg. Value | $86,580 | $37,316 | $42,986 | |
| House Size (sq.ft.) | 1240 | 1661 | 1132 | 896 |
| Residual House Price/sf | $52.13 | $32.96 | $47.98 | |
| House Age | 74 years | 63 years | 68 years | 61 years |
| Basement | Full Unfinished | Part Unfinished | Crawl Space | Crawl Space |
| Heat | GFA | GFA | GFA | GFA |
| Cooling | Central AC | Central AC | Central AC | Central AC |
| Condition | Average | Good | Good | Average |
| Garage/Shed | No Value | None | Garage | Garage |
| Other | Fireplace | Fireplace |
50Based upon his analysis, Mr. Bower calculated that the residual building value for the residential improvement to the Subject Property was between $62,000 and $68,200 as at the effective date (1,240 ft2 at $50.00 to $55.00). He settled upon the mid-point of $65,110 as his opinion of the value of the residence.
51It is therefore Mr. Bower’s opinion, as stated in the Bower Report and in his evidence, that the Market Value of the Subject Property as at the effective date was $280,600, being comprised of $215,500 in land value and $65,100 for the value of the residential building.
ANALYSIS
Highest and Best Use
52The determination of the Market Value of the Subject Property as at the valuation date of April 11, 2016, first requires the determination of its Highest and Best Use (“HBU”) as at that date. In its Decision in Farlinger Developments Ltd. v. East York [1973], 5 L.C.R. 95 at p.127, the Ontario Land Compensation Board, as it then was, observed that the determination of an expropriated property’s HBU is a condition precedent to the determination of its market value as at the effective date for compensation purposes.
53The 2016 version of the Canadian Uniform Standards of Professional Appraisal Practice (“CUSPAP”) sets out the following definition of HBU in Article 2.33: “The reasonably probable use of Real Property, that is physically possible, legally permissible, financially feasible and maximally productive that results in the highest value.”
54What the Tribunal will consider as “reasonably probable” for purposes of the CUSPAP definition is “something higher that a 50% possibility”. Clarke v. Nepean (City) [2001], 73 L.C.R. 256 (O.M.B.D.) at 277, and Farlinger Developments Ltd. v. East York (1975) 1975 CanLII 587 (ON CA), 8 L.C.R. 112 (O.C.A.) at 123-124.
55Mr. Carter concluded that the HBU for the Subject Property as vacant as at the effective date, was its “interim agricultural use with its ultimate development with a commercial use when market forces dictate”. It was apparent from Mr. Carter’s evidence and his selection of Comparable Sales, that he based his conclusion primarily upon the OP designation of the Subject Property as Future Employment Lands, which he considered to mean a Business Park designation.
56Mr. Bower concurred with Mr. Carter to the extent that the OP designates land use for the immediate area as Future Employment Area and that this suggests either Business Park or Industrial Park development. However, it was Mr. Bower’s opinion that Mr. Carter’s analysis only partially addressed the legally permissible requirement, which is also but one leg of the four-legged stool upon which HBU must be established. Mr. Bower stated that Mr. Carter did not appear to have thoroughly considered the other three legs of the stool; namely, that the use must also be shown, on a balance of probabilities, to be physically possible, financially feasible and maximally productive. It was Mr. Bower’s opinion that these criteria were not adequately addressed by Mr. Carter and that, as a result, his conclusion with respect to the HBU of the Subject Property was fatally flawed. The Tribunal agrees.
57While the OP designation for the Subject Property is Future Employment Area, Business Park is a separate and discrete OP designation as provided under Section 6.4.4 of the Windsor OP. Business Park was not the OP designation for the Subject Property as at the Valuation Date and an Official Plan Amendment (“OPA”) would be required to designate the Subject Property as Business Park. Mr. Carter did not investigate the availability of such an OPA.
58The Future Employment Land designation is provided in Section 6.13 of the OP which is entitled Future Growth Areas. The provisions of Section 6.4.4, in addition to describing the permitted uses and ancillary uses in a Business Park, which were referred to by Mr. Carter as uses available to the Subject Property, provides for extensive Locational and Evaluation Criteria which must be satisfied on an Application to re-designate Future Employment Lands as Business Park. Mr. Bower pointed out in his evidence that the stipulation in Section 6.4.4.3 (c) is of particular importance, as it directs that Business Park development shall only be located where full municipal physical services can be provided. Mr. Bower referred to Exhibit 5, the extract from the Sewer Atlas, stating that full services were not available at the Subject Property due to the “unavailability of a sanitary sewer connection”. The Tribunal agrees and finds that there was no existing sanitary sewer connection available to the Subject property as at the effective date, and that no sanitary sewer connection would be available to the Subject Property for the foreseeable future.
59Section 6.13 of the OP is titled “Future Growth Areas” and creates two designations: Future Urban Area and Future Employment Area. The preamble of Section 6.13 provides:
These designations have been established based on a comprehensive review of future population, household and employment projections and are intended to identify the general locations and area requirements set aside to accommodate growth over the twenty year planning horizon.
Future Urban Area and Future Employment Area designations primarily apply to large, generally undeveloped and unserviced areas that are expected to be developed within twenty years. Although it is recognized that these areas are intended for development, it is important that more detailed planning relating to the specific configuration and location of various land uses, road systems and servicing infrastructure be undertaken prior to proceeding with development.
(Emphasis added)
60The only uses permitted on lands under the “Future Employment” designation are ‘existing uses’, until such time that the lands are redesignated by way of an OPA. In the case of the Subject Property the existing use is the residential use. It is also clear from the Preamble of Section 6.13 that the OP would not permit development of the Subject Property in isolation from its neighbouring properties.
61In the Court of Appeal Decision in Re Farlinger Developments v East York, cited above, the Court ruled as follows respecting the evidentiary threshold to be met in order to establish the HBU of a property in a case where a change in zoning would be required:
it would seem to be established that the highest and best use must be based on something more than a possibility of rezoning. There must be a probability or a reasonable expectation that such rezoning will take place. It is not enough that the lands have the capability of rezoning. In my opinion probability connotes something higher than a 50% possibility.
62The Tribunal therefore finds that, as at the effective date, the prospect of any redevelopment of the Subject Property would have been on the twenty-year planning horizon, or beyond, and would require as a prerequisite that detailed planning studies regarding permitted land uses, road systems and servicing infrastructure be completed, and that a sanitary sewer connection be available. The evidence was that no such studies, plans, applications or proposals had been undertaken. In these circumstances the Tribunal prefers the opinion of Mr. Bower and finds that the HBU of the Subject Property as at the Valuation Date was long-term holding for future redevelopment with continuation of the existing residential use, until OP redesignation is possible and market conditions make it financially feasible to redevelop the Subject Property.
Is a sale to an Expropriating Authority a valid comparable sale?
63Mr. Carter, the Claimants’ appraiser, and their counsel in his written submissions, relied heavily upon Mr. Carter’s Comparable No. 1, which was the sale of the 60 acre site to Windsor Regional Hospital. The Respondent has argued that Comparable No. 1 is not a valid comparable sale because the purchaser is an Expropriating Authority, pursuant to Section 11 of the Public Hospitals Act, RSO 1990, c. P.40.
64The definition of Market Value for land expropriated is stated in Section 14(1) of the Act as “the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer.” It is argued that there are a number of reasons why a sale to an Expropriating Authority should not be considered to be a transaction in the open market between a willing buyer and seller. Section 30 of the Act provides for a process whereby an owner, on a without prejudice basis, can consent to an acquisition by an Expropriating Authority. Such a transaction proceeds as, and is recorded as a sale. The amount of the consideration for such a “sale” will be determined by the Expropriating Authority, and will be payable on closing, and will be treated as a payment under Section 25 of the Act, and will be without prejudice to the property owner’s right to make application to this Tribunal claiming that the amount of the compensation paid on closing should be increased. Section 30 provides that such a sale transaction will be treated as though it were an Expropriation for compensation purposes. In other situations, recognizing the inevitability of a requirement by an Expropriating Authority and of a pending expropriation, an owner may be prompted to negotiate a sale to the Expropriating Authority, thereby avoiding formal expropriation proceedings and subsequent litigation altogether. For reasons such as these, a sale to an Expropriating Authority is presumed to not be free and voluntary, because the owner in such a situation cannot satisfy the Section 14(1) requirement of a willing seller acting in an open market. There is accordingly a presumption in the caselaw that such a sale is not free and voluntary and cannot be considered as a valid comparable sale. However, the presumption is rebuttable through the production of evidence concerning the surrounding circumstances of the sale and that the sale was in fact free and voluntary.
65In its Decision in Nowell v. Ontario (Minister of Environment) [1984], 30 L.C.R. 255 (O.M.B.), the Ontario Municipal Board, as it then was, stated at p.259 that a pre-expropriation sale to an Expropriating Authority is admissible as a comparable sale, but that such a sale is presumed to have not been free and voluntary. The party seeking to rely upon the impugned sale bears the onus of rebutting that presumption through evidence of the circumstances surrounding the transaction.
66In its Decision in Windsor (City) v. 789881 Ontario Inc. (2002), 79 L.C.R. 30, the Ontario Municipal Board found that a pre-expropriation sale of a property to the City, which it required for intersection improvements, and upon which the Claimant’s appraiser placed heavy emphasis, would be accorded no weight, as the Claimants had not produced any evidence that the sale was voluntary. In fact, at p.50 of the Decision, the Board found that the lack of any evidence concerning the surrounding circumstances of the sale, fully distinguished the sale from the subject property in that case.
67The Claimants did not tender any evidence concerning the surrounding circumstances of the sale referred to as Comparable No. 1 to the Windsor Regional Hospital to establish that the sale was in fact free and voluntary. Therefore, the Tribunal will accord it no weight.
Market Value
68Mr. Carter’s Comparable Sales Nos. 3, 4 and 5 were properties with different OP designations than the Subject Property, being Business Park, Commercial Corridor/Neighbourhood Commercial, and different zoning designations: Hamlet Commercial, Manufacturing District and Commercial, and are therefore fully distinguishable from the Subject Property.
69Mr. Carter’s Comparable No. 3 had full municipal services available, was already zoned commercial and designated Business Park under the OP.
70Mr. Carter’s Comparable No. 4 was a 16 acre site with full services and was zoned manufacturing in an area designated under the OP as Commercial Corridor.
71Mr. Carter’s Comparable No. 5 had full municipal services available immediately and was zoned commercial with an OP designation of Commercial.
72Mr. Carter’s Comparable No. 2, at 5855 County Road 42, was a 5.04 acre property which was located very near to the Subject Property, having the same OP designation and zoning, and many other characteristics similar to the Subject Property. This sale yielded a unit sale price of $115,079 per acre. Counsel for the Respondent argues that the Tribunal should not accord any weight to Comparable 2 as the sale was not a transaction on the open market. Rather than being offered for sale on the open market, it would appear to have been a case of one speculator approaching the owner. Mr. Bower stated that he could not find an MLS listing for this property. Other than the fact that Mr. Carter did not provide an MLS listing, no evidence was presented regarding the surrounding circumstances of the transaction.
73Mr. Bower also opined, and counsel for the Respondent has argued, that another difficulty with Comparable No. 2 is that the Carter Report may not have included the entirety of the transaction. Mr. Bower referred to the document marked as Exhibit C for identification purposes during the Cross-Examination of Mr. Carter, subsequently marked as Exhibit 7, which is the GeoWarehouse Report concerning the 13.16 acre property adjacent to Comparable No. 2, municipally known as 4365 County Road 42. Exhibit 7 shows that this property was purchased by the Buyer of the Comparable No. 2 property, from the same Vendor, and that the sale closed on the same date. Mr. Carter had testified in Cross-Examination that the Buyer had advised him that he had wished to “make an allocation” when purchasing the two properties and that for this reason he did not include this sale in his comparable sales. Counsel for the Respondent argues that if the two transactions are treated as a single sale, the unit price per acre is $63,152, as compared to $115,079 per acre if the sale of Comparable No. 2 is considered alone. However, no further evidence was presented regarding the surrounding circumstances of the two transactions, or of the allocation, in support of either the price paid on the sale of Comparable No. 2, or to support the position that the two sales were actually a single transaction.
Can a property Sold Under Power of Sale be a Valid Comparable Sale?
74As stated above, it is Mr. Bower’s opinion that the HBU for the Subject Property as at the effective date was the continuation of its existing residential use. Accordingly, all of Mr. Bower’s comparable sales were residential sales. Mr. Bower stated that he relied upon his Comparable B, E and H to arrive at his unit price per acre of $70,888 and unimproved Market Value opinion of $215,500.
75Comparable H sold for a unit price of $41,865 per acre, which stands out among Mr. Bower’s Comparable Sales as it is markedly lower than the unit price paid for any of the other seven Comparable Sales. On a review of the unit prices shown on Mr. Bower’s Comparable Sales Chart reproduced at paragraph 46 above, Comparable H immediately appears to be an outlier. As noted by Mr. Bower on page 41 of his Report, Comparable H was a sale by a Mortgagee under its Power of Sale. Counsel for the Claimants did not direct the Tribunal’s attention to this in either his Cross-Examination of Mr. Bower or in his Written Submissions.
76The Tribunal therefore stated the following issues to both counsel and directed that they file Supplementary Written Submissions addressing the following issues:
Mr. Bower used his Comparable Sales B, E and H to conclude a unit value of $70,888 per acre for the Subject Property. The evidence was that Comparable H had been on the market for about 2 years and was sold by the Mortgagee under its Power of Sale. The unit price per acre for Comparable H shown in Mr. Bower’s Comparable Sales Chart is significantly lower than any of Mr. Bower’s other Comparable Sales. Please address the following:
a) Whether the sale required an adjustment in addition to the 4% time adjustment to reflect that fact that the sale was made under Power of Sale?
b) Whether CUSPAP (2016-2022 versions) requires Comparable H to be considered as a forced sale of a distressed property?
c) Whether the Comparable H sale price satisfies the CUSPAP definition of Market Value?
d) Whether Comparable H can satisfy the requirement in Section 14(1) of the Expropriations Act of a willing seller acting in an open market?
Whether the Sale required an adjustment in addition to the 4% time adjustment to reflect that fact that the sale was made under Power of Sale?
77In the Respondent’s Supplementary Written Submissions, Ms. Vendrasco submits that it is the 2016 version of the CUSPAP Rules which are applicable. The Tribunal agrees. The Tribunal observes that Article 2.31 provides that the terms “power of sale”, “distress sale” and “liquidation value” are synonymous with the terms “forced sale”, stated in the following terms:
FORCED SALE VALUE: A term synonymous with “liquidation value”, “distress sale” or “power of sale” implying a reduced selling period and compulsion to sell. Forced sale value is not a concept separate from market value but is a form of marketing conditions less favourable to the seller than those set out in the definition of market value. [see 16.14] Note: Some valuation standards do not allow the use of the term “Forced Sale Value” or similar; in these instances, the higher minimum Standard prevails.
78Ms. Vendrasco submits that a Forced Sale Value occurs in a situation where: the seller is under compulsion to sell, and may therefore be an unwilling seller; there is consummation of the sale within a short period of time; and normal Marketing Time is not possible due to a brief Exposure Time. She acknowledges that the term “forced sale” describes the situation in which a sale takes place resulting in a value that does not fully meet the definition of Market Value.
79Ms. Vendrasco also acknowledges in her Submissions that properties that sell under Power of Sale may sell for a price less than Market Value. Reasons for this can include that a mortgagee in possession of a property generally has little use for the property itself, and being faced with additional carrying costs such as taxes, insurance, interest, may opt for a quick sale. In this case however, she argues that Comparable Sale H was exposed to the market for more than a reasonable length of time, being 15 months. Ms. Vendrasco submits that Comparable H is therefore a valid comparable sale and did not require any further adjustment in addition to the 4% adjustment for time.
80Ms. Vendrasco also submits that the CUSPAP Forced Sale Value definition “generally applies” to the appraising of property to be sold under Power of Sale and not when such a sale is used as a Comparable Sale, and that CUSPAP does not require quantitative adjustments for such a Comparable Sale. However, as noted above, Ms. Vendrasco concedes that a forced sale results in a value that does not meet the definition of Market Value and that a sale under power of sale may result in a selling price which is below Market Value.
81Mr. Gatti submits that the definition of Forced Sale Value states that a power of sale results in less favourable marketing conditions to the Seller and that Comparable Sale H therefore required an adjustment to account for the fact that it was a sale under power of sale.
82The Tribunal has carefully considered the Supplementary Written Submissions filed by both counsel and the arguments presented therein. The Tribunal has carefully the circumstances the Comparable H sale and the fact that it was a sale under power of sale, at a unit price markedly lower than any of Mr. Bower’s other Comparable Sales. The Tribunal finds that inclusion of Comparable H in Mr. Bower’s analysis required either evidence of the circumstances surrounding the sale which demonstrate that the sale price represents Market Value, or an upward adjustment to reflect the fact that, it was a sale under power of sale, at a unit price which was markedly less than any of Mr. Bower’s other Comparable Sales. Absent such evidence and/or adjustment it is reasonable for the Tribunal to conclude that the property sold for a price that was below Market Value.
Whether CUSPAP (2016-2022 versions) requires Comparable H to be considered as a forced sale of a distressed property?
83Mr. Gati submits that CUSPAP considers a “power of sale” to be synonymous with a “Distress sale” and that the sale is therefore the forced sale of a distressed property. Ms. Vendrasco submits that the elements of the CUSPAP Forced Sale Value definitions are i) a “reduced selling period”, ii) “consummation of the sale is within a short period of time” and iii) “normal marketing time is not possible due to a brief exposure time”. None of these elements applied to Comparable Sale H. Since Comparable Sale H does not fall within the definition of Forced Sale Value it cannot be considered to be a forced sale of a distressed property.
84The Tribunal does not agree with Ms. Vendrasco’s submission. The Tribunal observes that in the Appraisal Institute of Canada (“AIC”) publication, Canadian Property Valuation Magazine, David Babineau of the AIC wrote in an article titled “The Valuation of Distressed Properties”, that a definition of a “distressed property”, is a “property that is under a foreclosure order or is advertised for sale by its mortgagee. Distressed property usually fetches a price that is much below its market value.” (Babineau, D., “The Valuation of Distressed Properties”, Canadian Property Valuation magazine, 2015-Volume 59-Book 2).
85The Tribunal also observes that Iain Hyslop of the AIC, wrote in an article titled “Forced Sale Valuation”, which was also published in Canadian Property Valuation Magazine, that:
The term ‘forced sale value’ is not a concept separate from market value, but it simply implies a form of marketing conditions that are less favourable to the seller than those set out in the definition of market value and usually requiring hypothetical conditions and extraordinary assumptions. Further to this premise, in circumstances involving financial distress, the party being forced to sell may be an unwilling seller, hence creating circumstances where the seller is in a disadvantaged bargaining position contrary to the willing buyer/willing seller concept.
86The Tribunal has carefully considered the Supplementary Written Submissions filed by both counsel and the arguments presented therein and finds that, in all the circumstances, Comparable H must be considered as a Forced Sale of a Distressed Property.
Whether the Comparable H sale price satisfies the CUSPAP definition of Market Value?
87Both counsel referred to the CUSPAP definition of Forced Sale Value, referred to above, which provides in part that Forced Sale Value is not a concept separate from Market Value but is a form of marketing conditions less favourable to the seller than those set out in the definition of Market Value.
88Mr. Gatti referred to CUSPAP Article 2.69 which defines Value as:
The monetary relationship between properties and those who buy, sell or use those properties. [see 5.13.1.iii, 6.1.1, 6.2.3, 6.2.5, 6.2.14, 6.2.16, 6.2.17, 6.2.19, 6.2.20, 6.2.22, 6.2.23, 6.2.24, 7.4.2, 7.15.8.iii, 7.17, 7.18.1, 7.19.2, 7.22, 16.14]. The Member must provide the basis for the value, that being a statement of the fundamental measurement assumptions of a valuation1 as well as the timeframe of the value opinion. [see 7.6].
89Neither counsel referred to the note to Article 2.69, which the Tribunal considers to be of particular importance in the consideration of Comparable H as it provides direction respecting the meaning of “Value”, and distinguishes, inter alia, between Market Value and Liquidation Value:
Note: Value expresses an economic concept. As such, it is never a fact, but always an opinion of the worth of a property at a given time in accordance with a specific definition of value. In appraisal practice, value must always be qualified, e.g., market value [see 16.15], liquidation value, investment value, rental value, or other. (emphasis added)
90The note to Article 2.69 directs that the appraiser’s opinion of value of a property must be in accordance with “a specific definition of value”. In these proceedings that specific definition of value is that OF Market Value as found in Section 14(1) of the Act, and Article 2.69 directs that the opinion of value be in accordance with that definition.
Whether Comparable H can satisfy the requirement in [Section 14(1)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e26/latest/rso-1990-c-e26.html#sec14subsec1_smooth) of the [Expropriations Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e26/latest/rso-1990-c-e26.html) of a willing seller acting in an open market?
91The Expropriations Act is a remedial statute enacted for the specific purpose of adequately compensating those whose lands are taken to serve the public interest. As a remedial statute, the Expropriations Act must be given a broad and liberal interpretation that is consistent with its purpose, which is to provide adequate compensation to those whose land has been expropriated. The application of these principles has resulted in the presumption that whenever land is expropriated, compensation will be paid.
92The Act provides a complete code for the determination of compensation. Section 13 sets out, in broad strokes, the categories of compensation assessable under the Act:
13 (1) Where land is expropriated, the expropriating authority shall pay the owner such compensation as is determined in accordance with this Act. R.S.O. 1990, c. E.26, s. 13 (1).
Idem
(2) Where the land of an owner is expropriated, the compensation payable to the owner shall be based upon,
(a) the market value of the land;
(b) the damages attributable to disturbance;
(c) damages for injurious affection; and
(d) any special difficulties in relocation,
but, where the market value is based upon a use of the land other than the existing use, no compensation shall be paid under clause (b) for damages attributable to disturbance that would have been incurred by the owner in using the land for such other use. R.S.O. 1990, c. E.26, s. 13 (2).
93This claim engages only Section 13(2)(a), being the determination of the amount of the compensation payable to the Claimants for the Market Value of the land taken.
94Section 14 of the Act prescribes the criteria and rules to be followed when determining Market Value under the Act. Subsection 14(1) provides the cardinal principle, that “the market value of land expropriated is the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer.”
95In defence of Mr. Bower’s reliance on Comparable H, Ms. Vendrasco submits that the CUSPAP Forced Sale Value definition “generally applies” to the appraising of property to be sold under Power of Sale and not when such a sale is being relied on as a Comparable Sale. The Tribunal disagrees. In these proceedings the specific definition of value is that found in Section 14(1) of the Act and Article 2.69 of CUSPAP directs that the opinion of value be in accordance with that definition. In its recent Decision in 1353837 Ontario Incorporated v Stratford (City) (2021), 19 L.C.R. (2d) 1 at 27-28 (OLT), the Tribunal provided direction to appraisers relying upon the Direct Comparison Approach to valuation when providing a Market Value opinion under Section 14(1):
Appraisers rely on definitions of market value that elaborate on s. 14 of the Act, including from the Canadian Uniform Standards of Professional Appraisal Practice (“CUSPAP”) and International Valuation Standards. CUSPAP refers to a prudent and knowledgeable buyer and seller:
The most probable price which a property should bring in a competitive and open market as of the specified date under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.
The International Valuation Standards’ definition is similar and refers to an arms-length transaction:
Market value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.
In other words, in land compensation proceedings under the Act, the Section 14(1) definition of Market Value is paramount, and the definitions in CUSPAP are intended to elaborate upon that statutory definition. It necessarily follows that, under the Direct Comparison Approach to valuation, each comparable sale must satisfy the Section 14(1) definition of Market Value.
96As noted above, the Tribunal observes that, in the case of Comparable Sale H, the resulting unit price per acre of $41,865 is so markedly lower than the unit price per acre resulting from any of Mr. Bower’s seven other Comparable Sales. As shown on Mr. Bower’s Comparable Sales chart, the unit values per acre resulting from the adjusted sale prices for the seven other comparable sales range from a low of $72,803 to a high of $176,549. The average unit value per acre of the other seven comparable sales is $117,744. As Comparable H was a sale was made under power of sale, at a far lower price per acre than any of the other Comparable Sales and at a unit value which is slightly more than one-third of the average of those sales, the Tribunal determines that further evidence regarding the surrounding circumstances of the Comparable H sale is required in order to establish that it satisfies the Market Value criteria in Section 14(1). It was open for the Respondent to produce such evidence that the sale price represents Market Value within the meaning of Section 14(1), but no such evidence was presented. In the absence of such evidence, the Tribunal determines that Comparable Sale H does not satisfy the requirements of Section 14(1). As in the case of Mr. Carter’s Comparable Sale No. 1, which was a sale to an Expropriating Authority, Mr. Bower’s Comparable H, being a sale under power of sale at a unit price markedly below that of all other comparable sales, and for the further reasons set out above, cannot be accepted as a valid comparable sale without evidence of the surrounding circumstances of the transaction. There was no attempt by Mr. Bower to adjust the sale price to reflect the fact that the sale was under power of sale and no attempt by the Respondent to produce evidence of the surrounding circumstances of the sale to establish that it satisfies the Section 14(1) requirements.
97The Tribunal therefore finds that the transaction represented by Comparable Sale H cannot satisfy the Market Value definition in Section 14(1) of the Act, that the sale be a transaction in the open market between a willing seller and a willing buyer, and that Mr. Bower’s Comparable H is therefore not a valid comparable sale, and the Tribunal will accord it no weight.
Conclusion
98Having carefully considered the evidence of Mr. Carter and Mr. Bower, and their respective Appraisal Reports, the Tribunal prefers the HBU analysis and conclusion of Mr. Bower. As a result, the Tribunal also prefers Mr. Bower’s residential comparable sales analysis. However, the Tribunal does not agree with Mr. Bower’s conclusion regarding the Market Value of the Subject Property as unimproved, since his opinion regarding the unimproved Market Value of the Subject Property was based in part on the inclusion of Comparable H in his analysis, without any evidence of the circumstances surrounding the sale to establish that it was a sale at Market Value within the meaning of Section 14(1) of the Act.
99The Tribunal finds that Mr. Bower’s Comparable A, being a sale dated September 2012, and therefore requiring a substantial upwards adjustment for time in the order of 27%, should also be excluded from consideration. The Tribunal prefers the average of the adjusted unit price per acre of Mr. Bower’s remaining six Comparable Sales, being Sales B, C, D, E, F and G. Averaged, these six Comparable Sales yield an adjusted unit value of $108,280 per acre (rounded), and the Tribunal so finds this amount to be the per acre unit value of the Subject Property as unimproved as at the Valuation Date. The Tribunal therefore finds that the 3.04 acre Subject Property had a Market Value, as if vacant, of $329,172 (rounded) as at the effective date of April 11, 2016.
100The Claimants presented no evidence respecting the estimated value of the residential component of the Subject Property and the Tribunal therefore accepts the evidence and opinion of Mr. Bower that the Market Value of the residential building on the Subject Property was $65,100 as at the effective date, and so finds.
ORDER
101The Tribunal therefore Orders that the Respondent, the Corporation of the City of Windsor, pay to the Claimants, Edward Janisse and Dorothy Janisse, the sum of $394,272 as the total compensation for their expropriated interests in the Subject Property, inclusive the amount of the Section 25 payment, and exclusive of statutory interest and costs.
INTEREST AND COSTS
102The Tribunal orders that counsel for the Parties are to deliver Written Submissions respecting Section 33 statutory interest and Section 32 costs on the following timetable:
i. Claimants’ Submissions within 30 days;
ii. Respondent’s Submissions within a further 15 days;
iii. Claimant’s Reply Submissions within a further 7 days.
103This Member shall remain seized and, following receipt of the Written Submissions referred to above, may rule upon the issues of interest and costs, or may determine that further submissions are required or that a further hearing event is required to determine interest and costs.
“Robert G. Ackerman”
ROBERT G. ACKERMAN
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.