COURT FILE NOS.: CV-20-644834 & CV-20-643847
DATE: 2021 12 07
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: METROLINX, Applicant
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1450638 ONTARIO INC., 1714820 ONTARIO INC. and KING CITY AUTO SALES & SERVICE, Respondents
AND RE: 1450638 ONTARIO INC., Applicant
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METROLINX, Respondent
BEFORE: Associate Justice Todd Robinson
COUNSEL: C. Harris, counsel for 1450638 Ontario Inc. (moving party)
C. Higgs and J. Karban, counsel for Metrolinx (responding party)
HEARD: August 5, 2021 (by videoconference)
REASONS FOR DECISION
[1] In March 2019, Metrolinx expropriated a property in King City owned by 1450638 Ontario Inc. (“145 Ont”). 145 Ont has owned the property since 2001, which it has leased for use as an automotive repair shop since 2006. The property is adjacent to a rail line. Metrolinx expropriated the land as part of Metrolinx’s GO Transit Expansion Program.
[2] Nearly a year after notice of expropriation was served on 145 Ont, Metrolinx served an offer of compensation for either payment of $49,698.81 directly to the Corporation of the Township of King for outstanding realty taxes and other charges or $1.00 as the market value of the property, without prejudice to rights conferred by the Expropriations Act, RSO 1990, c E.26. The offer of compensation was accompanied by an appraisal report valuing the property at $2.1 million.
[3] At the time, no explanation was provided for the discrepancy between the appraised value and Metrolinx’s offer of compensation. In this litigation, Metrolinx alleges that it became aware of environmental contamination to the property after receiving the appraisal, so made a reduced offer of compensation to account for environmental remediation and clean up costs.
[4] Each of 145 Ont and Metrolinx have commenced applications arising from the expropriation. 145 Ont seeks to delay possession of the property until Metrolinx complies with its obligations for an offer of compensation as provided in s. 25 the Expropriations Act. Metrolinx’s counter-application seeks a warrant under s. 40 of the Expropriations Act directing the Sheriff to put down resistance to Metrolinx’s possession of the property.
[5] Several months after the applications were commenced, Metrolinx’s appraiser prepared a supplementary memorandum in which he gave an opinion that suspected environmental contamination may impact the marketability of the property. Metrolinx thereafter served a revised offer of compensation with two options of $1.00, together with the initial appraisal and the supplementary memorandum.
[6] Metrolinx’s evidence in both applications and in response to this motion is from Brian Matthews, Metrolinx’s Manager, Acquisitions Pre-Construction Services, Capital Projects Group. 145 Ont cross-examined Mr. Matthews, and further examined the appraiser, Gus Dal Colle, under Rule 39.03 of the Rules of Civil Procedure, RRO 1990, Reg 194. After an opposed adjournment request, the applications were adjourned by Pollack J. so that this refusals motion could be brought and decided.
[7] On this motion, the parties’ most contentious dispute is whether litigation privilege protects Metrolinx’s communications with Gus Dal Colle and his draft reports. Detailed written and oral submissions were made on that issue. There is also a dispute about the relevance and proportionality of requests for information on prior expropriations by Metrolinx of lands used for automotive purposes and contaminated lands, as well as Metrolinx’s expropriation policies.
[8] I am ordering answers to many of the refused questions. I find that the dominant purpose of the appraiser’s retainer and work was not in contemplation of litigation, but rather was to provide Metrolinx with the appraisal necessary to satisfy its statutory obligations under the Expropriations Act. Litigation privilege protects neither communications with the appraiser nor the draft appraisal reports that were prepared. Most of the refused questions about the appraisals are relevant to disputed issues. Also, while I agree with Metrolinx that relevance of other expropriations has not been demonstrated, questions about Metrolinx’s expropriation policies are relevant and should also be answered.
Analysis
[9] Several refusals were not pursued by 145 Ont at the motion hearing. The remaining refusals fall into one of three categories: questions about the appraisal and the supplementary memorandum, questions about other similar expropriations, and questions about expropriation policies.
Questions about the appraisal and supplementary memorandum
[10] In both the cross-examination of Brian Matthews and the examination of Gus Dal Colle, Metrolinx refused various questions about its communications with Mr. Dal Colle, preparation of the appraisals, and timing and production of draft reports. The refused questions deal with the following:
(a) preparation and delivery of the initial appraisal report, namely:
(i) the “promised” date for completion of Mr. Dal Colle’s appraisal report;
(ii) when the first draft of the appraisal report was completed;
(iii) when Mr. Dal Colle provided Metrolinx with a draft of his appraisal report;
(iv) how many draft appraisal reports Mr. Dal Colle prepared;
(v) production of communications as to when the appraisal report was acquired by Metrolinx; and
(vi) whether a draft of the supplementary memorandum was prepared for Metrolinx’s review;
(b) production of draft reports, namely:
(i) any draft appraisal reports given to Metrolinx; and
(ii) any drafts of the supplementary memorandum that were given to Metrolinx for review;
(c) the terms of Gus Dal Colle’s retainer, namely:
(i) production of the letter of engagement from Metrolinx; and
(ii) production of the letter of instruction from Metrolinx regarding preparation of the supplementary memorandum;
(iii) production of any instructions or communications with the appraiser;
(iv) production of any notes of the instructions from Metrolinx regarding the supplementary memorandum; and
(d) communications between Metrolinx and Gus Dal Colle, namely:
(i) whether Metrolinx asked Mr. Dal Colle to communicate with 145 Ont through its legal counsel;
(ii) whether Metrolinx responded to Mr. Dal Colle about inquiries made by 145 Ont’s lawyers relating to inspection;
(iii) production of communications between Mr. Dal Colle and Metrolinx relating to inspection of the property;
(iv) production of any communications between Metrolinx and Mr. Dal Colle on why his appraisal report was delayed and the timing of the report; and
(v) what other information was given to Mr. Dal Colle by Metrolinx, other than what is expressly in the supplementary memorandum.
[11] Metrolinx argues that its communications with Mr. Dal Colle and the draft appraisals are irrelevant and, in any event, litigation privileged. I address those positions in reverse order.
(a) Does litigation privilege protect communications with the appraiser and his draft reports?
[12] Litigation privilege protects communications made or documents created for the dominant purpose of actual or contemplated litigation: Blank v. Canada (Minister of Justice), 2006 SCC 39 at paras 59-60. Third party communications, such as communications with experts, are only protected by litigation privilege where the dominant purpose of the communication is to prepare for litigation: Moore v. Getahun, 2015 ONCA 55 at para 68.
[13] Metrolinx has the onus of demonstrating that litigation privilege applies to its communications with the appraiser and the draft appraisal reports. Metrolinx must demonstrate both that litigation was contemplated when the communication occurred or document was created and that the communication or document was for the dominant purpose of litigation. Meeting that onus requires evidence of the dominant purpose behind the communication or document that Metrolinx seeks to protect: Whitell v. Whitell, 2020 ONSC 2310 (Master) at paras. 29 and 33.
[14] Subsection 25(1) of the Expropriations Act provides that, within three months after an expropriation and before taking possession of the property, the expropriating authority must serve an offer to pay an amount in full compensation of the registered owner’s interest and, further, an offer to pay the market value as estimated by the expropriating authority, without prejudice to any rights conferred under the Expropriations Act. Subsection 25(2) requires that Metrolinx’s offer of compensation be based on a report appraising the market value of the lands and damages for injurious affection. Subsections 25(3) and (4) set out that the expropriating authority may apply to a judge for an extension of the three month period and that late service of an offer does not invalidate the expropriation, but rather triggers interest on the compensation payable to the registered owner.
[15] It is undisputed that obtaining Gus Dal Colle’s appraisal was required for Metrolinx to satisfy its statutory obligations under s. 25. As noted, Mr. Dal Colle prepared two reports: an appraisal dated December 20, 2019, and a supplementary memorandum dated September 15, 2020.
[16] The first appraisal was issued prior to litigation. It appraises the value of the property at $2.1 million. The appraisal includes express limitation language about environmental conditions, stating that the appraiser has assumed the property “to be free and clear of pollutants and contaminants”, “in compliance with all regulatory environmental requirements”, and “free of any environmental condition, past, present or future, that might affect the market value of the property appraised.” It further denies any liability relating to the effect of environmental issues on market value of the property.
[17] The supplementary memorandum qualifies the initial appraisal. In that memorandum, Mr. Dal Colle sets out that he was asked to review “new material evidence” (including soil condition/contamination reports), assess its potential impact on value and marketability of the property, and submit an updated opinion and recommendation. After discussing the various reports and documents he has reviewed, Mr. Dal Colle concludes as follows:
Based on this new material evidence, it is our opinion, that the Section 25 estimate of market value of $2,100,000, made under the assumption the site is free and clear of contamination is no longer valid, and in our opinion appropriate deduction(s) for remediation and or including the possibility of off-site migration should be considered. Moreover, without such environmental due diligence, it is fair and reasonable to say that the Subject was not marketable as at the Effective Date.
[18] The supplementary memorandum was provided to 145 Ont by Metrolinx with its revised offer of compensation on September 21, 2020. That offer sets out that Metrolinx has received information about the environmental condition of the property and that its (revised) offer of compensation is based on Mr. Dal Colle’s initial appraisal report and the supplementary memorandum.
[19] Metrolinx argues that the communications and documents around preparation of the appraisal and supplementary memorandum are irrelevant, but that questions about the supplementary memorandum were also properly refused as litigation privileged. In the refusals chart, though, Metrolinx’s position is that all communications and documents about the appraisal process, including both the initial appraisal and supplementary memorandum, are litigation privileged.
[20] Although I understand Metrolinx to have conceded that litigation privilege does not protect anything to do with the initial appraisal report, to the extent I am wrong in that understanding, I have considered whether litigation privilege applies to the initial appraisal process. I have also considered the claim of litigation privilege over preparation of the supplementary memorandum.
[21] Metrolinx has not met its onus of establishing that litigation privilege applies. I find that the dominant purpose of preparing both the appraisal and supplementary memorandum was satisfying Metrolinx’s statutory obligation under s. 25 of the Expropriations Act, not litigation.
i. Are communications and documents surrounding the initial appraisal litigation privileged?
[22] 145 Ont relies on the decision in Oulahen v Toronto (City), 2017 39845 (ON LPAT) for the proposition that a s. 25 appraisal report is not privileged and must be produced, regardless of whether or not the expropriating authority intends to rely on it. Specifically, the Local Planning Appeal Tribunal stated, at para. 44, “The courts have held that an appraisal report commissioned by an expropriating authority for a s. 25 offer is not a privileged document and must be produced even if the expropriating authority chooses to not rely on the report.”
[23] Metrolinx does not dispute that it was required to produce Mr. Dal Colle’s first appraisal report, but argues that the appraisal process is analogous to an insurer’s investigation of an insurance claim. In that context, Metrolinx relies on Romaniuk v. Prudential Insurance Co. of America, 2000 50982 (ON SC), [2000] OJ No 1527 (SC) at para. 20, where the court held that issuing a denial of coverage shifted the dominant purpose from investigating the possibility of an obligation to indemnify to preparing for litigation. Metrolinx argues that its $1.00 offer is equivalent to an insurance claim denial and, accordingly, any documents created after the date of that offer, including the supplementary memorandum, were created for the dominant purpose of litigation.
[24] Romaniuk does not assist Metrolinx. It was an appeal from a master’s decision concerning the date on which litigation privilege attached to an insurer’s files. In upholding Master Linton’s decision, Epstein J. did hold that the dominant purpose of an insurance investigation can shift upon denial of coverage. However, Epstein J. did not determine that every document created after the date of the coverage denial was litigation privileged. Rather, Epstein J. held that, “only documents and material from [the coverage denial] date can fall within those subject to a claim for litigation privilege”: Romaniuk, supra at para. 20. Put another way, claims of litigation privilege could only properly be asserted over documents created after the date of coverage denial. The case does not hold that all such documents created after that date are litigation privileged.
[25] In any event, I question whether an insurance claim investigation is properly analogous to an expropriation appraisal assessment. The processes and mechanics of expropriations and insurance claims are very different. In an expropriation, s. 25 of the Expropriations Act requires not only that a third party appraisal be obtained, but also mandates that the appraisal be disclosed. While insurance investigations are commonly performed to inform a determination on whether to grant or deny coverage, I was pointed to no equivalent mandatory disclosure obligation for any document forming part of a decision on coverage.
[26] In my view, a denial of coverage following investigation does not have the same character as a s. 25 offer of compensation made following an independent, third party appraisal. The “reality of litigation” may arise upon an insurer denying coverage, but I do not accept that litigation is reasonably contemplated in every expropriation where the expropriating authority makes a low offer of compensation in comparison to the appraised property value.
[27] General legal propositions provide guidance to parties and the court, but must always be applied to facts of a particular case. Metrolinx has the onus of demonstrating litigation privilege. It has an evidentiary burden to lead evidence on the dominant purpose of the communications and documents over which it asserts privilege. The record before me does not support that Metrolinx reasonably contemplated litigation with 145 Ont when it commissioned the appraisal, nor at any point prior to serving its first offer of compensation and the appraisal report. The initial appraisal was not created in contemplation of any litigation, so neither communications with the appraiser nor draft appraisal reports prepared prior to the offer of compensation are privileged.
ii. Are communications and documents surrounding the supplementary memorandum litigation privileged?
[28] Metrolinx correctly points out that it requested Gus Dal Colle’s supplementary opinion after commencement of litigation. During Mr. Dal Colle’s examination, he stated his view that the supplementary memorandum was for the purpose of this litigation. Both are factors to be considered, but neither is determinative of the dominant purpose. I must consider the reasons for which the supplementary memorandum was created to determine its dominant purpose.
[29] The supplementary memorandum specifically notes that it should be “read in conjunction” with the appraisal. It makes no reference to the litigation. Operatively, the memorandum clarifies the impact of environmental contamination not previously considered on Mr. Dal Colle’s appraised value of the property. Put simply, the appraisal and the supplementary memorandum together form Mr. Dal Colle’s opinion on market value of the property.
[30] Metrolinx points to the Court of Appeal’s decision in Shergar Development Inc. v. Windsor (City), 2020 ONCA 490 as supporting that an offer of settlement can serve two purposes: a valid offer under s. 25 of the Expropriations Act and an offer to settle for litigation purposes. Metrolinx argues that, by extension, the supplementary memorandum can also serve two purposes: an appraisal under s. 25(2) of the Expropriations Act and a litigation expert opinion that is protected by litigation privilege.
[31] Shergar does not deal with litigation privilege. It was an appeal from a decision of the Divisional Court confirming a decision by the Ontario Municipal Board (the “OMB”) dealing with costs awards under s. 32 of the Expropriations Act. The OMB determined that the language of “the amount offered” in s. 32 was not limited to considering the offer made under s. 25 of the Expropriations Act. Rather, subsequent offers could be considered, including those meeting the criteria of a Rule 49 offer under the Rules of Civil Procedure. Both the Divisional Court and the Court of Appeal agreed with the OMB’s determination. The Supreme Court of Canada refused leave to appeal.
[32] I accept that Mr. Dal Colle’s supplementary memorandum may be capable of serving both a statutory and a litigation purpose, but documents that are not prepared for litigation (whether prepared prior to or during that litigation) regularly serve a litigation purpose. Not all such documents are litigation privileged. Only those created for the dominant purpose of litigation are protected.
[33] Moreover, nothing in Shergar nor any of the cases cited by Metrolinx support that a document may be created for multiple dominant purposes. In my view, such a holding would be inconsistent with the ordinary, grammatical meaning of “dominant”.
[34] Although Metrolinx argues that the supplementary memorandum would not have been prepared if litigation had not been commenced, Metrolinx has tendered no evidence supporting that assertion. Mr. Matthew’s supplementary affidavit in the underlying application puts the supplementary memorandum into evidence. It states only that a supplementary joint offer was made pursuant to s. 25 of the Expropriations Act, which was served with both the appraisal report and supplementary memorandum. Mr. Matthews’ responding affidavit on this motion does not address the supplementary memorandum at all, let alone the circumstances of its creation.
[35] During cross-examination, Mr. Matthews was specifically asked why Metrolinx requested the supplementary memorandum. Litigation was not mentioned in his response. Instead, he stated it was because “issues had come to light with respect to contamination and/or migration, and those issues, we were concerned that this may have an impact on value and/or the offer we could serve.” He later stated that the memorandum was not intended to reappraise the property. Mr. Matthews was re-examined at the conclusion of his cross-examination, but was not asked any clarification question on the purpose of the memorandum.
[36] Metrolinx has elected to tender no specific evidence on the purpose behind the supplementary report. The evidence in the record before me does not support a finding that the supplementary memorandum was created dominantly for a litigation purpose. An inference from the timing if its creation is, in my view, insufficient. Without more, the supplementary memorandum being obtained and served after commencement of litigation is a matter of timing, not purpose.
[37] Taking into account Mr. Matthew’s cross-examination evidence, I find that the dominant purpose behind Metrolinx obtaining the supplementary memorandum was the same as obtaining the appraisal: satisfying Metrolinx’s statutory obligation in s. 25(2) of the Expropriations Act.
[38] Since I have found that litigation was not the dominant purpose of either the initial appraisal or the supplementary memorandum, litigation privilege does not apply to any communications with Mr. Dal Colle or any drafts of his two reports. I thereby need not address the parties’ arguments regarding the scope of litigation privilege and waiver.
(b) Are communications with the appraiser and his draft reports relevant?
[39] Metrolinx also argues, in any event, that the refused questions are not relevant, characterizing them as an impermissible “fishing expedition”. Questions that are overbroad or speculative, which courts colloquially call a “fishing expedition”, are not proper: Price v. H. Lundbeck A/S, 2018 ONSC 2483 at para 27.
[40] There is no dispute over the scope of proper cross-examination on an application, which is set out in the oft-cited decision of Ontario v. Rothmans Inc., 2011 ONSC 2504 at para. 143. The following points have particular significance on this motion:
(a) proper scope of cross-examination depends on the nature of the application;
(b) questions asked must be a fair question, and must further be relevant to the issues on the application, the matters raised in the affidavit by the deponent (even if those issues are irrelevant to the application), or the credibility and reliability of the deponent’s evidence;
(c) the scope of cross-examination on credibility does not extend to impeaching the character of the deponent; and
(d) undertakings to obtain information may be sought, and the court will compel an answer provided the information is readily available or is not unduly onerous to obtain.
[41] In assessing relevance, a key factor I must consider is whether an answer to the question asked could be relied on by the application judge to determine an issue on the application: Sanctuary v. Toronto (City), 2020 ONSC 4708 at para. 19.
[42] In my view, the reasonableness and good faith of Metrolinx’s offer of compensation are squarely at issue in these applications. Gus Dal Colle appraised the property at $2.1 million. Metrolinx offered $1.00. Metrolinx’s offer of compensation letter expressly states that the offer is based on the appraisal, making no reference to any other documents or information relied upon. No pre-litigation explanation was provided for the discrepancy between the appraised value and the offer made.
[43] 145 Ont’s position in its notice of application and in this litigation is that Metrolinx ignored the appraisal report and failed to comply with its statutory obligations under the Expropriations Act, reducing its offer of compensation arbitrarily and without foundation. In Metrolinx’s own notice of application, at para. 28 of the grounds, Metrolinx asserts that “a registered owner should not be entitled to an offer of compensation higher than the statutory authority’s good faith estimate of the value of the expropriated lands.”
[44] Both parties rely on the decision in Toronto (City) v. Bernardo, 2004 5760 (ON SC), which involved a circumstance where the City of Toronto expropriated lands appraised at a value of $242,500, but for which the City ultimately served only a $1.00 offer of compensation. The reduced offer accounted for environmental contamination and clean up costs. The court held, at paras. 50-51, that the City had satisfied the requirements of s. 25 of the Expropriations Act, since it had acted in good faith and with a reasonable basis for its position in making the offer.
[45] Metrolinx argues that, similar to Toronto (City) v. Bernardo, the genuine dispute is not about reliance on the appraisal, but rather is about whether Metrolinx’s information on environmental contamination supports a finding that the $1.00 offer of compensation was made in good faith and on a reasonable basis. Metrolinx submits that there is no evidence on this motion disputing that Metrolinx’s first notice of property contamination was after receiving it has already received Mr. Dal Colle’s appraisal.
[46] Metrolinx seems to be overstating Brian Matthew’s evidence. Mr. Matthew’s cross-examination evidence does seem to support that he personally is unaware of Metrolinx having any communications or dealings with the Ministry of the Environment, Conservation and Parks or any other regulatory body about environmental fitness of the property before January 22, 2020. However, the extracts to which I have been directed all refer to Metrolinx’s communications with the Ministry. I accept that Metrolinx may not have had communications with the Ministry about environmental contamination before January 2020, but I was directed to nothing supporting that Mr. Matthews has given unequivocal evidence, in either his affidavits in the underlying application or during cross-examination, that Metrolinx was entirely unaware of potential or actual environmental contamination prior to January 2020.
[47] Gus Dal Colle’s evidence is that he was unaware of potential contamination and that his appraisal did not consider it. Because of his stated assumption in the appraisal that the property was free and clear of environmental issues, Metrolinx argues that prior drafts of the appraisal will be of no assistance to the court in assessing the reasonableness of the offer of compensation. Metrolinx further argues that the questions are really an impermissible attack on credibility of both Mr. Dal Colle and Mr. Matthews for the sole purposes of impeaching their character.
[48] I am not convinced. Metrolinx’s communications with Mr. Dal Colle and the prior draft appraisals may have relevance beyond the dispute over Metrolinx’s knowledge and reliance on the environmental condition of the property. It is not appropriate for me to constrain the application judge by effectively making a pre-determination that that environmental contamination is the only basis upon which to assess whether or not Metrolinx acted reasonably and in good faith.
[49] I accept 145 Ont’s argument that, in determining whether Metrolinx did or did not act in good faith, the application judge will likely be required to perform a similar assessment to that outlined in wpd Sumac Ridge Wind Incorporated v. Kawartha Lakes (City), 2015 ONSC 4164 at paras 55-57, aff’d 2016 ONCA 496 at para. 86. Although that case dealt with allegations of bad faith on the part of a municipality, the same principles are likely material to the application judge’s assessment, namely (i) whether Metrolinx acted unreasonably and arbitrarily and without the degree of fairness, openness, and impartiality required of an expropriating authority, and (ii) whether Metrolinx acted without a rational appreciation of the intent and purpose the Expropriations Act or for an improper purpose.
[50] Assessing the reasonableness and good faith of Metrolinx’s offers of compensation and, accordingly, whether it has properly discharged its obligations under s. 25 of the Expropriations Act will likely involve considering Metrolinx’s conduct from the time of expropriation through to at least when it made its first offer of compensation. Its communications with Mr. Dal Colle would seem probative to its conduct during that period.
[51] Metrolinx argues that, given the volume of properties expropriated by Metrolinx, it would be unfair and unduly onerous to require Metrolinx to give access to the files of its appraisers in every expropriation. These kind of “slippery slope” arguments are common in litigation and, in my view, unhelpful.
[52] Relevance is a case-specific determination. Communications with an appraiser and draft appraisal reports may be relevant in some expropriation cases, but not others. In this case, I am not making a blanket finding that Metrolinx’s communications with appraisers and their draft appraisal reports will be relevant and producible in all cases for all expropriations. I am assessing relevance of the specific questions asked in the particular circumstances of the facts and issues in dispute in this case.
[53] In my view, whether relating to knowledge of environmental contamination or understanding the parameters of the appraisal requested from Mr. Dal Colle, answers to many of the refused questions could well be relied on by the application judge in assessing the reasonableness of Metrolinx’s offer of compensation. 145 Ont is entitled to test Metrolinx’s evidence by inquiring about matters such as:
(a) what Mr. Dal Colle knew (and did not know) when completing first appraisal;
(b) when Mr. Dal Colle became aware of environmental contamination;
(c) if any information was provided to Mr. Dal Colle that is not outlined in his reports;
(d) reasons for the delay in completing the appraisal;
(e) whether the content of Mr. Dal Colle’s appraisal changed between issuance of the draft appraisal (confirmed to have been provided to Metrolinx by Mr. Dal Colle during his examination) and the final appraisal;
(f) what directions or instructions Metrolinx gave to Mr. Dal Colle (if any) after receiving draft appraisal reports; and
(g) instructions given to Mr. Dal Colle about the supplementary memorandum (if any).
[54] These matters are the subject of refused questions. Based on the allegations and disputed issues in these applications, all of them may be probative to disputed issues and may assist the application judge in assessing Metrolinx’s good faith and the reasonableness of both its offer of compensation and conduct. The information is relevant. Since it is not protected by litigation privilege, questions must be answered.
[55] Nevertheless, I agree with Metrolinx that several of the questions asked were properly refused. The following addresses my reasons for upholding those refusals.
[56] Gus Dal Colle was asked to confirm when a draft of his appraisal report was provided to Metrolinx, how many draft appraisal reports he prepared, and to produce any draft reports given to Metrolinx (refusal nos. 1-3). I am not satisfied that there is any relevance to the total number of drafts prepared, but agree with 145 Ont that answers to the questions about when Metrolinx was first provided a draft of the report and production of the drafts that were provided to Metrolinx are relevant. The circumstances of delay in Metrolinx serving the first s. 25 offer is a disputed issue in these applications, to which those answers may be probative.
[57] Mr. Dal Colle was asked what instructions he was given by Metrolinx about communicating directly with 145 Ont (refusal no. 5). Brian Matthews was asked a similar question about whether Metrolinx asked Mr. Dal Colle to communicate with 145 Ont through its legal counsel (refusal no. 1). 145 Ont has not satisfied me that whether or not Mr. Dal Colle was directed to communicate through counsel is relevant to disposition of any issue in these applications.
[58] Mr. Dal Colle was asked to confirm the “promised” date for the completed appraisal (refusal no. 6). I see no relevance of when the appraisal was promised. Mr. Dal Colle gave evidence on when he provided it and I am ordering production of communications with Metrolinx.
[59] A further refusal during Mr. Dal Colle’s examination relates to an email written to him by 145 Ont’s counsel in late April 2019. That email was written in response to a request by Mr. Dal Colle to inspect the premises, and asked (i) the purpose of the site inspection, (ii) if Metrolinx would share the appraisal reports and any other analysis arising from the inspection within 30 days, (iii) when the inspection was proposed and its anticipated duration, and (iv) whether Mr. Dal Colle would be asking other questions or seeking other information from 145 Ont. Mr. Dal Colle gave evidence that he contacted Metrolinx’s counsel after receiving the email. He was asked to confirm that Metrolinx’s counsel did not provide a response (refusal no.7). I am not satisfied that whether Metrolinx responded to Mr. Dal Colle has any material bearing on issues in dispute.
[60] Gus Dal Colle was further asked to provide any communications as to when the appraisal report was acquired by Metrolinx (refusal no. 8). Mr. Dal Colle separately confirmed during examination that his appraisal report was provided to Metrolinx on or about its date, namely December 20, 2019. I see no relevance or need for documentary confirmation of a more precise date.
[61] Metrolinx argues that a further question posed to Brian Matthews is of the same character as the above, namely 145 Ont’s request for Metrolinx to review its file and produce any communications about the reasons for Mr. Dal Colle’s report being delayed and the timing of the report (refusal no. 2). I disagree. The property appraisal was not completed until nearly 9 months after the expropriation, despite the statutory requirement that an offer of compensation be served within 3 months based on an appraisal. No application for an extension of time was sought or obtained by Metrolinx under s. 21(3) of the Expropriations Act. As already noted, circumstances of that delay are, in my view, relevant to the application judge’s assessment of Metrolinx’s compliance with its obligations under s. 25. 145 Ont is entitled to test Metrolinx’s evidence and position on the reasons for delay.
[62] Brian Matthews was asked to confirm why Gus Dal Colle did not deal with environmental issues (refusal no. 4). I agree with Metrolinx that the question as asked was properly put to Mr. Dal Colle, not Mr. Matthews. The subsequent related question asked by 145 Ont’s counsel, to which there was no objection, was proper. Mr. Matthews answered it.
[63] With respect to a question about communications between Metrolinx and Mr. Dal Colle relating to his inspection of the property (refusal no. 9), I agree with 145 Ont that it is relevant. I do not agree with Metrolinx that the question has been answered by Mr. Dal Colle producing his inspection notes by undertaking. The refused question deals specifically with the extent of communications between Metrolinx and Mr. Dal Colle about the inspection, not Mr. Dal Colle’s inspection notes. If Mr. Dal Colle’s inspection notes have already been provided, it is unclear why Metrolinx is maintaining its refusal over its own communications with Metrolinx about that inspection.
Questions about prior automotive expropriations
[64] 145 Ont argues that questions about Metrolinx’s expropriations of automotive-use properties and other contaminated properties are relevant to assessing the good faith of Metrolinx’s offer. The disputed questions deal generally with the following:
(a) Metrolinx’s expropriation of other lands with automotive uses;
(b) Metrolinx’s consistency in dealing with similar automotive land expropriations;
(c) Metrolinx’s expropriation of other lands abutting rail corridors and whether environmental deductions were made; and
(d) Metrolinx’s practices for serving or withholding s. 25 offers for properties where there is environmental contamination.
[65] Metrolinx argues that these questions are a “fishing expedition”. 145 Ont is alleged to be casting a wide net in its cross-examination in the hopes of catching something arguably untoward in Metrolinx’s conduct toward 145 Ont when compared to prior, unrelated expropriations.
[66] No case law has been provided in which a court has ordered production of similar fact evidence on the basis of a good faith argument. 145 Ont directed me to the decision in Oulahen v Toronto (City) as supporting production of documents for similar projects. However, the Local Planning Appeal Tribunal’s decision on that point was limited to addressing production of confidential attachments to staff reports already in the possession of the claimants. Relevance was also not disputed by the City. Production was opposed solely on the basis that the documents contained privileged information: Oulahen, supra at para. 28.
[67] 145 Ont has not met its onus of establishing relevance of other expropriations. During his cross-examination, Brian Matthews confirmed that that Metrolinx strives to deal with property owners in a consistent manner and further stated that Metrolinx’s operating practice is to treat all owners fairly and consistently. Mr. Matthews further gave evidence on a Metrolinx policy requiring that a Phase 1 environmental assessment be performed for all acquired properties, stating that it can lead to further necessary due diligence. The suggestion was that it may impact the timing of a s. 25 offer of compensation. This evidence is not enough to open the door to prior expropriations of unrelated and only potentially similar properties.
[68] In my view, the refused questions are also overbroad. As stated by Mr. Matthews during his cross-examination, “no two situations are necessarily exactly the same.” I see little probative value to other offers made by Metrolinx in other expropriations unless the factual circumstances of those expropriations are also examined, such as the appraised value of the lands, nature and value of the automotive businesses being operated on them, the extent and nature of any contamination, and estimated contamination remediation costs. Nothing before me supports that such similar fact evidence is necessary or genuinely probative to the application judge’s fair and just assessment of whether Metrolinx’s basis for offering $1.00 to 145 Ont was reasonable or was made in good faith.
[69] Given my determination, I need not address the arguments on proportionality of the requested information. However, if I am wrong, I would have accepted Metrolinx’s submissions on Mr. Matthew’s affidavit evidence that the work involved to answer these questions is unduly onerous and disproportionate in comparison to the limited probative value that the answers may have in these applications.
Questions about expropriation policies
[70] Metrolinx advances the same “fishing expedition” argument about 145 Ont’s questions on Metrolinx’s expropriation policies, namely the following:
(a) to produce a copy of Metrolinx’s corporate real estate policy with respect to land acquisitions and treatment of property owners (refusal no. 9); and
(b) to produce a copy of Metrolinx’s policy on acquiring lands at market value and carrying out due diligence (refusal no. 14).
[71] With respect to refusal no. 9, during cross-examination, Brian Matthews confirmed the existence of a policy on land acquisitions and treatment of property owners, but was unable to advise if it recommends fair and consistent treatment of owners (although did confirm that was Metrolinx’s operating practice). It is not clear from the transcript if the policy is in writing.
[72] With respect to refusal no. 14, I agree with Metrolinx that the question is incorrectly framed in the refusals chart. A prior question was asked about policies on how Metrolinx deals with compensation for contaminated properties. In response, Mr. Matthews stated, “I don't recall a policy [that] identifies a specific procedure relative to environmental contamination, but [Metrolinx] has [an] over-arching policy to acquire at market value, and it has an over-arching policy to do due diligence. It always has.” When asked if there was anything in writing to that effect, Mr. Matthews stated, “Well, the policy.” Examining counsel then asked for production of “that policy”. I am satisfied that the production request, as asked, was for the policy mentioned by Mr. Matthews on acquiring properties at market value and due diligence. The request did not include another policy on compensation for contaminated properties.
[73] Metrolinx argues that whether or not it has any internal policies is irrelevant, since the Expropriations Act mandates the requirements for how market value is determined. Metrolinx submits that, accordingly, the reasonableness of its offer of compensation will be measured against the statutory requirements rather than any internal policy, if there is one.
[74] I will not be hearing the application, so I cannot say whether the application judge will measure reasonableness solely against the requirements of the Expropriations Act or if the existence and content of written internal policies may also bear on an ultimate determination. In my view, the existence of these two policies and their content is relevant. 145 Ont is entitled to see these policies, if in writing (which appears to be the case for at least refusal no. 14). These questions must be answered.
Disposition
[75] I accordingly order as follows:
(a) The following refused questions shall be answered by Brian Matthews and Gus Dal Colle:
(i) Refusal nos. 2, 3, and 9 in the refusals chart from the cross-examination of Brian Matthews at Tab 2 of 145 Ont’s motion record;
(ii) Refusal no. 14 in the revised refusals chart from the cross-examination of Brian Matthews at Tab 1A of Metrolinx’s responding motion record (Exhibit “A” to Mr. Matthews’ supplementary affidavit); and
(iii) Refusal nos. 1, 3-4, and 9-15 in the refusals chart from the examination of Gus Dal Colle at Tab 3 of 145 Ont’s motion record.
(b) Unless the parties agree that answers be given in writing, Metrolinx shall produce Brian Matthews and Gus Dal Colle for further examination on the questions ordered to be answered in para. (a) above by a date to be agreed by the parties or, if they cannot agree, by no later than January 14, 2022.
(c) The balance of 145 Ont’s motion is dismissed.
(d) This order is effective without further formality.
Costs
[76] Costs outlines have been exchanged and filed. The parties are encouraged to settle costs. If they cannot, then they may book a thirty (30) minute case teleconference with me to make oral submissions as to costs, to be arranged through my Assistant Trial Coordinator, Christine Meditskos. Unless I otherwise direct, moving and responding submissions will be ten (10) minutes each, with five (5) minutes of reply. Any case law relied upon shall be exchanged and filed directly with my Assistant Trial Coordinator at least five (5) days prior to the case teleconference.
[77] Unless a case teleconference has been booked (but not necessarily heard) within thirty (30) days of the date of these reasons for decision, the parties shall be deemed to have agreed on costs.
ASSOCIATE JUSTICE TODD ROBINSON
DATE: December 7, 2021