IMA Insti-News | Spring 2021

INSTI-NEWS SPRING 2021

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IMA | INSTI-NEWS

IN THIS ISSUE PAGE

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STAY CONNECTED

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MEMBER ELEVATIONS

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WHAT DOES THE ROAD AHEAD LOOK LIKE FOR COMMERCIAL REAL ESTATE? Erika Siegert

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EXECUTIVE DIRECTOR’S UPDATE Tyler Callaghan, MBA

LIFE MEMEBERSHIP CEREMONY – David G. Powell, M.I.M.A. (Life)

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ABANDONED USE OF EASEMENT LEADS TO LOSS OF BACKYARD PARKING PAD James Cook

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LOBLAW CASE COMMENT Donald G. Mitchell

MANUFACTURING VS. PROCESSING – A DISTINCTION WITH A DIFFERENCE Donald G. Mitchell

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LEGAL NON-CONFORMING USE PREVENTS MUNICIPALITY FROM ENFORCING ZONING BY-LAW James Cook

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IMA ANNOUNCEMENTS

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IMA | INSTI-NEWS

SPRING 2021 ISSUE

Insti-News is published by the Institute of Municipal Assessors with assistance from the Communications Services Committee. chaired by: Gina Stone, A.I.M.A. Any opinions or recommendations expressed in this issue are those of the contributors and do not necessarily reflect the views of the IMA.

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Interested in submitting an article? Have a great idea for a hot topic? Make your submission to info@theima.ca. Be sure to put “Insti-News Submission” in the subject line or contact the IMA office by phone to discuss.

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CONTACT

Institute of Municipal Assessors 10720 Yonge Street, Suite 206 Richmond Hill, ON L4C 3C9 905-884-1959 1-877-8703 info@theima.ca

STAY CONNECTED https://theima.ca/

@the_ima1957

@theima.ca

Institute of Municipal Assessors

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EXECUTIVE DIRECTOR’S UPDATE I hope you and your families are enjoying the return of spring. For myself, it revived my appreciation and hope for 2021 with the new membership cycle well underway and the return to “normal” timeline now established.

As we formally turn the page on the 2020-21 membership year, it is remarkable to reflect on what we accomplished. Despite the obvious challenges, the IMA experienced year-over-year growth across most portfolios, including membership, course registrations, course completions, webinar attendance, and conference attendance. While we were asked to physically distance, in many ways we were more connected than ever as we found new opportunities to collaborate and pursue professional development.

Over the coming months, many companies will wrestle with what the “new normal” might look like for their operations. For the IMA, we will continue to execute our 2020-23 Strategic Plan with the launch of several new projects and programs aimed at increasing member value. In addition to these initiatives, we are in the process of finalizing key strategic partnerships to bring new opportunities to the Institute and our members. We look forward to sharing these updates over the coming months as we continue to evolve.

As reported earlier this year, the IMA made the difficult decision to move all offerings online for the remainder of 2021. That will include a virtual Annual General Meeting (June 14, 2021), virtual District meetings, and a 2021 Fall Virtual Symposium (November 1-2, 2021).

Building off the momentum from the 2020 Fall Virtual Symposium, we continue to work with the platform host to bring you a more engaging and interactive online experience in 2021. We are excited to unveil these new integrations and opportunities at the Symposium.

In closing, I would like to thank the IMA staff, Executive, Board of Directors, committee volunteers, and entire membership for your unwavering support and resiliency over the last year. Despite the challenges we all faced, they were met head-on, and I am so proud of what we have accomplished together. I look forward to the 2021-22 membership year and all it has to offer!

Stay safe and enjoy the spring weather!

Tyler Callaghan, MBA Executive Director

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LIFE MEMBERSHIP CEREMONY

On Thursday February 21, 2021, the IMA hosted its first ever virtual M.I.M.A. (Life) membership ceremony to welcome its newest member, David G. Powell. David recently retired after 62 years of practice in the field of property assessment and taxation. He joined the IMA in 1960 and earned his M.I.M.A. Accreditation soon-after in 1965.

Dave started his career in 1958 with the Town of Brampton as an apprenticing assessor. As an assessor in the County of Peel, he worked on all types of property including residential, commercial, industrial, farm and exempt. He attended appeal hearings to defend valuations for all types of property.

Between 1966 and 2008, he was employed by Imperial Oil Limited as their tax representative in the Province of Ontario. In time, his expertise was expanded to cover Imperial’s properties in the Provinces of Quebec, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland and Labrador.

In 1992, after an early retirement from Imperial Oil Limited, David started his own company. Municipal Tax Equity Consultants Inc. which today includes MTE Paralegal Professional Corporation division.

Dave was a long-time contributor and volunteer with the IMA, having lectured throughout Ontario at various IMA District events on matters pertaining to assessment and valuation. He attended District Meetings and Annual General Meetings/ Conferences over 62 years span and was always quick to support his staff in attending IMA events and professional development opportunities. He remains a positive ambassador for the IMA. David was nominated by former IMA President (1994-1995) and Executive Director (2004-2020) Mario Vittiglio, M.I.M.A. The nomination was unanimously approved by the Board of Directors in December 2020. Dave was recognized by the IMA in a virtual ceremony attended by his friends, family, and former colleagues on February 21, 2021.

Congratulations on a fantastic career David! It is an honour to welcome you to the M.I.M.A. (Life) category of membership.

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MEMBER ELEVATIONS AFFILIATE MEMBERS

NAME Micheal Alfieri Karen Ball Skylar Banville Kelly Blakely Steven Butts Carrie Carone Alison Clarke Byron Clarke Laura Crane Hailey Dewar Lisa Dionne Derek D’Souza Emma Franklin Melissa Gannon Leah George Jake Gofton Dana Griffen Juhee Han Athony Kee Youri Kim Lucia Kutchukian Joelle Lacroix Isabel Lee Audrey Litwiller Kellie Manuel Carolyn Mills Sarah Moll Divya Nageli Quinn Parr Sophia Peerzada Rebecca Quaife Vidura Rathnayake Louis Sabourin Phil Sanford Shannon Smale Michael Stajduhar Donalea Stewart Lydia Thomas Rizpah Tiwari Alexander Uhl Emily Wright Paige Zadow

COMPANY MPAC Hamilton MPAC Kitchener Independent MPAC Pickering Independent MPAC Pickering MPAC Hamilton Self Employed City of Barrie ReMax Hallmark Service New Brunswick Region of Peel MPAC Sarnia MPAC Ottawa MPAC Richmond Hill MPAC Kitchener ArGil Property Tax Services MPAC Toronto MPAC Barrie MPAC Toronto MPAC Ottawa MPAC Ottawa MPAC Toronto Choice Properties REIT City of Barrie MPAC Owen Sound MPAC Pickering State Street Corporation, India MPAC Sault Ste. Marie MPAC Pickering MPAC Toronto MPAC Brockville Independent McCarthy Tétrault LLP MPAC Toronto MPAC Mississauga MPAC Thunder Bay MPAC Kitchener City of Brampton St. Catharines MPAC London Independent

A.I.M.A. MEMBERS NAME Brooke Atkins Troy Bragg Curtis Chafer Mia Cyr Norman DeMerchant Ju Hee Han Rosalyn Hann Joe Harrington Scott Johnson Kelly McGhee Laura Muntz Jacquelyn Nemish Olivia Phillips Mohsen Rahmatian Vidura Rathnayake Barna Robinson Kendra Schell Amboka Wameyo Hao (Eric) Ye

COMPANY MPAC Muskoka & Parry Sound MAA, Gander MPAC Pembroke MPAC Timmins Service New Brunswick MPAC Toronto MAA, Corner Brook MPAC Trenton Altus Group Ottawa MPAC Richmond Hill MPAC Ottawa MPAC Pickering MPAC Richmond Hill MPAC Toronto MPAC Brockville Equitable Value Inc. MPAC Muskoka & Parry Sound City of Kitchener City of Edmonton

M.I.M.A. MEMBERS NAME Scott Powell

COMPANY Yeoman and Company, Calgary AB

THE IMA WOULD LIKE TO CONGRATULATE ITS RECENTLY ELEVATED AND NEWLY APPOINTED MEMBERS! 06

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ABANDONED USE OF EASEMENT LEADS TO LOSS OF BACKYARD PARKING PAD James Cook, Partner, Gardiner Roberts

In a densely populated city like Toronto, many older neighbourhoods contain tightly-packed homes separated by narrow easements which provide access to backyard parking areas. A recent decision of the Ontario Superior Court of Justice demonstrates that the prolonged failure to use such an easement may lead to its extinguishment as a legal right.

In January 2020, the Applicants in Kansun v. Diamantakos, 2020 ONSC 7193 (CanLII) bought a detached home in Toronto which contained two registered easements on the eastern and western sides of the property going from the front street between the houses to the backyard. The eastern easement was wide enough to accommodate a vehicle between the two houses, and it then traversed across the back yard to access the back yard of the home to the west, owned by the Respondents’ family since the mid-1960s. The western easement was only wide enough for pedestrian use.

For some time, the Respondents’ family used the eastern easement in order to access their back yard and park vehicles in their garage. However, by 1975 the garage was in disrepair and a fence had been erected between the two properties which blocked vehicular access to the Respondents’ backyard from the easement. The eastern easement had become unusable by vehicles due to overgrowth and other obstacles, and neither easement was used by the Respondents to access the rear of their property after 1975. In 1990, a legal parking pad had been built at the front of the Respondents’ property. The properties were converted into the Land Titles Act system in 2000.

Shortly before the Applicants purchased their property in 2020, the Respondents grew concerned over the potential loss of the registered easements. During the dead of night, the Respondents removed a portion of the fence; cut down trees at the boundary of the properties; removed garbage bins which were obstructing vehicular use of the easement; and parked a vehicle in their backyard (which could only be accessed through the eastern easement and across the Applicants’ backyard).

This attempt at a self-help resurrection of property rights proved to be unsuccessful.

After the Applicants completed their purchase of the property, they sought an Order discharging the easements pursuant to section 61(1) of the Conveyancing Law and Property Act, which provides as follows: Where there is annexed to land a condition or covenant that the land or a specified part of it is not to be built on or is to be or not to be used in a particular manner, or any other condition or covenant running with or capable of being legally annexed to land, any such condition or covenant may be modified or discharged by order of the Superior Court of Justice.

In addition, the Applicants sought damages of $500,000 for damages for trespass resulting from the Respondents’ surreptitious night-time removal of the fence and obstructions from the easement.

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At issue was whether the owners of the Respondents’ property had abandoned their rights to use the easements. An easement may be extinguished by: (a) operation of a statute; (b) operation of law; or (c) express or implied release: Pharand v. Jean-Louis, 1952 CanLII 114 (ON CA); Aragon (Wellesley) Development (Ontario) Corp. v. Piller Investments Ltd., 2018 ONSC 4607 (CanLII).

The easements at hand were not extinguished by operation of statute or release.

However, the Applicants argued that the easements were extinguished by operation of law on the basis that they had been abandoned by the owners of the Respondents’ property.

Easements may be extinguished by “operation of law” where: (a) the same person comes to own the two properties which the easement involves (known as “merger”); (b) the period for which the easement was created comes to an end; (c) the purpose for which the easement was created has come to an end; or (d) the right to the easement is abused: Remicorp Industries Inc. v. Metrolinx, 2017 ONCA 443 (CanLII). A registered easement (or right-of-way) is not lost by mere non-use. Rather the non-use of the rightof-way must be coupled with the intention to abandon the right-of-way, which taken together imply release by abandonment. “Abandonment” itself must be ascertained from all the circumstances of the particular case, and requires the Court to engage in what it called “findings of fact perhaps more readily made by a psychologist.”

The application judge, the Honourable Mr. Justice Perell, determined that after 1975, the Respondents’ family did not use either of the easements as a means to gain access to their back yard. Further, the Respondents exhibited an intention to abandon the easements. Justice Perell found as a fact that the Respondents’ family knew they had a right to use the easements by the time that they built the parking pad, but they affirmatively decided to abandon the use of the easements and not to replace the garage. The Respondents’ family decided instead to build and to utilize the parking pad at the front of their property. The intention to abandon was further demonstrated by assessing the physical circumstances surrounding the easement: Given the awkwardness and inconvenience of traversing the middle of the backyard of one’s neighbour along a driveway of approximately 100 feet in length, which circumstances likely would be worse during Canadian winters, to reach a dilapidated garage, it was logical and clever of the [Respondents] to build a parking pad and replace the garage with a shed and to complete the fence, which along with the trees, would provide privacy to their own backyard.

As a result, the Court found that the two easements had long been abandoned by the Respondents’ family and granted an order discharging them from title to the Applicants’ property pursuant to 61(1) of the Conveyancing Law and Property Act. The Applicants’ claim for trespass damages from the Respondents was dismissed since they did not own the property at the time of the night-time self-help incursion.

Further, the Court declined to order any costs of the proceeding. In Justice Perell’s view, the Respondents were entitled to defend their registered property interest (not to mention the claim for trespass damages): “Both sides should neither be encouraged or discouraged from putting their legal rights before the court for a decision.”

The case demonstrates that owners of an easement should take care to ensure that they do not lose the right to use it. This does not mean that an easement needs to be used on a daily basis or that temporary obstruction or interference with a rightof-way is proof of abandonment: e.g. Yekrangian v. Brogren, 2020 ONSC 2320 (CanLII); Ma v. Abdullah, 2019 ONSC 6781 (CanLII). However, while there is a high threshold to establish that a registered easement has been abandoned, the lack of use over a prolonged period, coupled by alternative ways to access a property which demonstrate an intention to abandon the former use of the easement, may lead to its extinguishment as a property right.

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MANUFACTURING VS. PROCESSING – A DISTINCTION WITH A DIFFERENCE Donald G. Mitchell Partner, Conway Davis Gryski

Machinery and equipment used for manufacturing purposes is exempt under paragraph 3(1)17 of the Assessment Act (Act).

Land used for manufacturing, producing or processing anything is classified in the industrial property class pursuant to section 6 of Ontario Regulation 282/98 (Regulation).

In Lagasco1, the applicant, an upstream producer of oil and natural gas, sought a declaration that machinery and equipment located in its processing plants and oil and gas wells, situated on multiple properties in southwestern Ontario, are exempt from taxation on the ground that they are used for manufacturing purposes.

MPAC argued that Lagasco’s machinery and equipment do not qualify for exemption because they are not used for manufacturing purposes. Rather, MPAC submitted that Lagasco is engaged in processing, which does not qualify the items in issue for exemption under the Act.

The word “manufacturing” is not defined in the Act. The following definition of manufacturing has been adopted and applied

by Ontario courts and tribunals in assessment matters: … to manufacture is to fabricate; it is the act or process of making articles for use; it is the operation of making goods or wares of any kind; it is the production of articles for use from raw or prepared material by giving these materials new forms, qualities and properties or combinations whether by hand or machinery.

The word “processing” does not appear in the Act and is not defined in the Regulation. Processing occurs when raw or natural materials are transformed into saleable items. The legal test adopted by the Assessment Review Board to determine whether land is used for “processing anything” is:

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(i)

whether the process changes the product in its form, appearance or other nature; and

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whether the process has made the product more marketable.

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The definitions of manufacturing (giving materials new forms, qualities and properties) and processing (changing the form, appearance or other nature of a product) overlap somewhat. The distinction between manufacturing and processing and whether the words may be used interchangeably, was the central issue decided by the Superior Court of Justice in Lagasco.

Lagasco extracts raw natural gas and crude oil from wells located in southwestern Ontario, transmits these products to processing plants where they are separated into component parts and treated to remove impurities before being sold to downstream oil refiners and gas utility companies.

Natural gas is a naturally occurring hydrocarbon consisting primarily of methane, natural gas liquids (NGLs), water, hydrogen sulfide and carbon dioxide. The gas is treated at processing plants to remove the NGLs and other impurities. These impurities must be removed from the raw gas before it can be transported and used by the ultimate distributor.

Crude oil is a naturally occurring unrefined petroleum product usually found together with natural gas and saline water (brine) in a substance called a crude oil brine emulsion. The extracted crude oil emulsion is sent to a separate processing plant where the crude oil is separated from the brine and any associated natural gas.

Lagasco submitted that it manufactured a new product by taking raw non-useable, sometimes dangerous and volatile products and converting them into useable products safe for distribution and ultimate use by consumers.

MPAC argued that the natural gas does not change during processing other than having NGLs and other impurities removed from it. Similarly, the crude oil demulsification process (essentially separating oil from water) is not manufacturing. In both cases, there is insufficient change from the raw material to the final product.

Lagasco argued that whether it was processing, or manufacturing is a distinction without a difference. The Court disagreed and confirmed that manufacturing and processing are distinct activities noting that the paragraph 3(1)17 provided for three distinct exemptions none of which was for machinery and equipment used for “processing”.

The Court accepted MPAC’s argument that manufacturing, as interpreted in the context of the Act, carries with it the concept of making something new. It found that Lagasco’s operations do come within the definitions of processing and do not constitute manufacturing. The Court concluded that, [t]here is a change in the characteristics of the oil and the gas during the applicant’s processes which render them marketable. However, a new product is not created; the oil remains oil and the gas remains gas. I find that the applicant’s processes of removing impurities from natural materials and separating them into component parts does not constitute manufacturing within the meaning of the Assessment Act. While the distinction between manufacturing and processing is not relevant for property tax classification it remains relevant for exemption purposes under the Act. 1

Lagasco v. MPAC, 2020 ONSC 7459 (CanLII)

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WHAT DOES THE ROAD AHEAD LOOK LIKE FOR COMMERCIAL REAL ESTATE?

Erika Siegert, Senior Analyst, National Research Insights, Altus Group As we approach the one-year mark since the onset of pandemic closures in Canada, continued change and the emergence of new trends in commercial real estate is expected moving forward. With some industries beginning to permanently adopt changes made throughout the last year, and others making temporary changes as they assess their progress, an evolution across sectors will be seen now more than ever.

Office: Focus on flexibility As companies review their work from home strategies against productivity and performance seen in 2020, potential downsizing or the reconfiguration of existing space is likely to occur over the next year, further contributing to uncertainties in the market. Although some companies will increase space for social distancing and growth, overall vacancies are expected to rise in most markets due to increasing sublet space and tenants downsizing or offloading space all together. In turn, there will be more landlord-tenant conversations around modifying lease terms and adjusting rental rates, with an overall focus on finding flexible solutions. As safety remains top of mind, remote work is here to stay, but there will still be a need for in-office interaction and collaboration moving forward. However, secondary and tertiary markets may continue reaping the benefits of work-from-home as many have demonstrated a growing interest in suburban areas. Markets with a relatively low cost of living, such as Kelowna, Calgary, Hamilton, Ottawa, Montreal and Halifax, may continue to benefit. Expect more demand for co-working space as an amenity in office buildings, or options to pay for space as you need. Look for companies using more hub and spoke models to provide employees with better flexibility, maintain connectivity, and reinforce company culture.

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Industrial: Further growth in e-commerce to prompt technology-driven developments The already thriving industrial sector is likely to experience continued demand with a growing need for industrial space in order to facilitate last-mile logistics and delivery across markets. Highquality industrial assets will remain in high demand, especially when it comes to cold storage capabilities supporting the ongoing spike in online grocery orders, and facilities that leverage technology to maximize fulfillment efficiencies to keep up with e-commerce activity. Assets with technology capabilities from racking and stacking to automated pickers will be of particular interest to tenants as tight availability rates persist. Secondary and tertiary industrial markets are also likely to see further developments to support distribution capabilities surrounding existing hubs in areas such as Toronto, Vancouver and Montreal. With that, investor interest in data centres is expected to rise especially in secondary markets with strong potential for growth. All eyes will be on the industrial market to see whether the 2020 winner can maintain momentum moving forward. Watch for more drone and driverless car pilot projects for parcel and food deliveries.

Retail: Personalization and adaptable offerings will enhance omni-channel experiences With the pandemic driving changes in consumer purchasing behavior, brick-and-mortar retailers have and will continue to strengthen their services in order to compete with booming e-commerce demand. From restructuring physical store layouts to leveraging new technologies, expect retailers to focus on offering personalized services for consumers, and enhancing inventory capabilities to provide curb-side pickup, delivery, contactless checkout, and other convenient options. New advancements could also see the rise of ghost-retailers, especially in the grocery sector. This includes transforming in-store areas to pick-up only, with existing locations acting as their own mini-fulfillment centre to efficiently distribute grocery products. While changing behaviours and pandemic-related limitations could last for the medium to long term, many consumers will be eager to shop in person where safe and convenient when restrictions lift. Despite dropping activity, investors will remain focused on prioritizing mixed-use assets with adaptable amenities and expansion potential. Overall, expect to see additional retailer failures as well as the redevelopment or intensification of select retail centres to add residential and office components.

Capital markets: Bid-ask gap between purchasers and vendors will persist Despite the abundance of available capital, the bid-ask gap between buyers and sellers is expected to continue. Still, investment activity could pick up, with many investors becoming more comfortable making decisions amid uncertainty. Cap rates will likely remain flat for core assets, with downward pressure on specific assets and an increase for non-core assets. Industrial and multi-family assets will still to be in demand, but investors will also look to alternatives such as data centres, self storage, and cold storage. As we all eagerly wait for vaccine advancement updates, any good news is likely to push economic and investment momentum forward.

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LOBLAW CASE COMMENT Donald G. Mitchell Partner, Conway Davis Gryski

In Loblaw Properties Limited v Municipal Property Assessment Corporation, Region 09, 2021 CanLII 10167 (ON ARB) the City of Toronto was substantially successful in its extensive motion for disclosure which asked for production of 1. Leases

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Sale Agreements

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Offers to Purchase

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REIT Transfer information and appraisal

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Other appraisals

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Building plans

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Construction Costs

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Renovation / Refurbishment Costs

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Planning opinions

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Toronto grocery store sales information

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Toronto vs. Ontario Annual Aggregate Grocery Growth

Information; and

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Ontario grocery store sales information.

The Board granted disclosure requests, 1, 2, 4, 6, 7, 8 and 10. It granted requests 11 and 12 on condition that the City provide a list of the specific Loblaw food retail stores for which it is seeking the information. The Board made no order with respect to requests 3, 5 and 9 as all parties accepted Loblaw’s submission that no such documents exist.

In granting the City’s motion, the Board reaffirmed that full disclosure of all relevant information is fundamental to ensuring both a fair hearing and the integrity of the Board’s appeal process.

The Board confirmed that the test to be applied is set out in Walmart1 which requires consideration of both the relevance of the information sought and the proportionality of the request relative to the importance and complexity of the issues. The Board’s ruling includes helpful commentary regarding the Disclosure Guideline and Schedule, relevance, proportionality, and confidentiality that will assist parties in understanding their disclosure rights and obligations.

Disclosure Guideline and Schedule The Board confirmed that the Disclosure Guideline and Schedule is a non-exhaustive list of the types of disclosure which should routinely be disclosed.

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Relevance The Board confirmed that the purpose of Rule 45 is to ensure that each party has access to all documents that are relevant to an issue in dispute, in order that each party may fully prepare its case for the hearing. The test for relevance is whether the production of documents requested relates to the issues in dispute. If so, they are relevant.

The Board noted that at this stage of the proceeding, relevance is determined by looking at the relationship between the information provided in a requested document and the issue in dispute, not whether the information in the document will ultimately be admitted into evidence, nor the weight to be given this evidence if it is admitted. It is not the function of the Board to determine the merits of the appeal on a motion for production.

The Board adopted a broad definition of relevance. For example, it ordered production of sale agreements and appraisals on the basis that they may contain information relevant to the issues even though the valuation experts may not rely on the sale transactions or appraisal opinions.

In addition, the Board confirmed that a party must disclose relevant information even if that party is not relying on it. The disclosing party cannot decide whether another party requires the requested document for preparation of its case. If the documents are relevant, they must be disclosed since other parties are entitled to receive all relevant documents for the purpose of determining whether they well rely on them.

Proportionality Even though Walmart states that the onus to establish that a document should be disclosed pursuant to Rule 45 rests with the party requesting disclosure, Loblaw suggests that the disclosing party is required to show that the request is disproportionate. In considering the proportionality of the requests, the Board held that there is nothing in the evidence to suggest that Loblaw would be required to expend significant time and resources to locate, copy and deliver the documents.

Where there was evidence that documents may not be readily available, the Board required Loblaw to “use its best efforts to locate” the documents.

Loblaw argued that the City’s requests 11 and 12 for grocery store growth and sales information were imprecise and involved hundreds of stores. The Board noted that it may not be proportionate to require disclosure of information for dissimilar properties but rather than denying the request, the Board ordered the City to provide a list of the specific food retail stores to which the requests apply.

Confidentiality Loblaw argued that some of the requested documents contain highly confidential, proprietary and commercially sensitive information and, as such, undertakings of non-disclosure would not be a sufficient protection against the enormous prejudice to Loblaw if such information were inadvertently disclosed to a third party.

The Board rejected Loblaw’s arguments noting that due to the importance of full disclosure, a disclosing party must clearly establish not only that prejudice may exist, but also that such prejudice is sufficiently significant to outweigh the importance of disclosing relevant documents. The Board noted that Loblaw did not provide any evidence or explanation why a non-disclosure undertaking would be insufficient to address the alleged prejudice and found that Loblaw failed to establish that the alleged prejudice outweighs the importance of disclosing relevant documents.

1 Walmart Canada Corporation and Target Canada Corporation v Municipal Property Assessment Corporation, Region 01, 2018 CanLII 67789 (ON ARB), <https://canlii.ca/t/ht4t1>

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LEGAL NON-CONFORMING USE PREVENTS MUNICIPALITY FROM ENFORCING ZONING BY-LAW James Cook, Partner, Gardiner Roberts

While some property owners may believe that they can do what they want with their own land, municipalities control development and the permitted use of properties through zoning and other by-laws. Some properties are restricted to residential use while others may be limited to particular types of commercial activities. Municipal zoning restrictions for properties may change over time due to population densification or other reasons. What was once a permitted use may become prohibited as local planning requirements change. A recent Ontario Superior Court of Justice decision demonstrates the conflicts that can arise between property owners and their municipality due to zoning changes: Forbes v. Caledon (Town of), 2021 ONSC 1442 (CanLII).

The property in question, in the Town of Caledon, Ontario, was purchased by the plaintiff’s parents in 1986, after they had rented the property since the early 1970s. They operated a construction, landscaping, and fencing business and used the property for the outside storage of machinery and equipment, including vehicles and heavy trucks.

In 1987, the Town enacted a land use by-law designating the property as being within an “agricultural zone.” In 2005, the Town charged the plaintiff’s parents with a by-law violation for wrongfully permitting the outdoor storage of vehicles, machinery, and equipment and allowing a business operation on the property. The Town subsequently withdrew the charges, and the family continued to use the property as they had in the past.

In 2006, the Town enacted a new zoning by-law which defined a “use” as “the purpose for which any portion of a lot, building or structure is designed, arranged, intended, occupied or maintained.” The definition did not include outdoor storage.

In 2007, the plaintiffs’ parents attempted to sell the property but the sale was lost when the Town refused to confirm that it consented to the continued use of the lands for outside storage of machinery and equipment and for commercial activities.

The parents then brought an application for a declaration as to the lawfulness of their continued use of the lands and to stop the Town from interfering with the use.

In a decision dated February 26, 2009, subsequently affirmed by the Court of Appeal, Justice Price ordered that the property could be used for the following purposes: (a) the outdoor storage of vehicles, machinery, and equipment; (b) business operation; (c) the storage of heavy trucks; and (d) such further and other uses as may be ancillary to such business use of the property.

The effect of Justice Price’s order was to recognize the “legal non-conforming uses” of the property in accordance with s. 34 (9) of the Planning Act, which provides for the continuation of uses that were lawfully established under a prior zoning by-law, provided that the uses are a continuation of lawful pre-existing uses. Specifically, section 34 (9) states: No by-law passed under this section applies … to prevent the use of any land, building, or structure for any purpose prohibited by the by-law, if such land, building or structure was lawfully used for such purpose on the day of passing of the by-law, so long as it continues to be used for that purpose.

The plaintiff inherited the property in 2017. Then, in what Justice Paul Perell called a “deju vu dispute,” the case returned to court in 2020, after the plaintiff had difficulties in selling the property. Essentially the plaintiff sought an updating of the order made by Justice Price in 2009. He argued that he was entitled to such an order because the status quo about the property’s uses had not changed since 2009, but the Town was, he alleged, once again interfering with efforts to market the property for sale. The plaintiff claimed that the Town was motivated to have the property comply with the current industrial zoning for its location and wanted to have the legal non-conforming uses discontinued.

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For its part, the Town largely conceded that the status quo for the property’s use had continued since 2009, but the Town took issue with one alleged use as a “Motor Vehicle Compound,” which was defined in a by-law passed in 2015 as premises “used for the temporary storage and impounding of motor vehicles taken from a collision scene or otherwise towed or conveyed and awaiting repair or demolition, retrieval or disposal.” The plaintiff and the Town disagreed whether a “Motor Vehicle Compound” was a continuation of the property’s legal non-conforming use or a new illegal non-conforming use.

Justice Perell outlined the legal requirements for a use to be a legal non-conforming use, mainly that (a) the property must have been in lawful use for a certain purpose at the date of the passing of the zoning; and, (b) the property must continue to be used for that purpose. There are a number of case-by-case requirements, including the status quo as of the date of the passing of the zoning bylaw, as the use of the lands at that time must be shown to be a continuation of prior lawful use. A legal non-conforming use runs with the land, meaning that successors in title can lawfully continue to use the property in accordance with the legal non-conforming use.

Perell J. noted that the case was peculiar because to a large extent it was driven by the “paranoic thinking” of both parties. The plaintiff believed that the Town was intentionally being obstructive because it wanted the uses being made of the property to conform with the current zoning, and it was anxious to have some of the uses recognized by Justice Price’s 2009 Order discontinued. For its part, the Town believed that the plaintiff’s aim was to have the Town permit an unlawful intensification of the property’s legal nonconforming uses.

In this regard, the dispute was primarily in the minds of distrustful litigants who did not listen or understand one another rather than in the “physical world.” As to the “physical world,” the evidence was that there was no change in the plaintiff’s uses being made of the property from 2009 to 2021, save perhaps for the “Motor Vehicle Compound.” The Town argued that such use aligned with parking and was not a use permitted on the property because a Motor Vehicle Compound was not in existence at the property at the time of the passing of the by-law. The plaintiff countered that the so-called “Motor Vehicle Compound” was just another type of outside storage of vehicles, which was a permitted legal non-conforming use declared to exist under the Court’s 2009 Order.

Perell J. agreed with the plaintiff. The evidence of what is occurring on the property, confirmed by aerial photographs, supported the plaintiff’s argument about the use.

As to the dispute in the “non-physical world’” concerning the parties’ respective understanding of the law of non-conforming uses, Perell J. stated that neither party was entitled to any orders regarding whatever they may believe their opponent was thinking about future legal non-conforming uses for the property.

In the result, the plaintiff was entitled to a declaration that the property could be used for the legal non-conforming uses that had continued since the last court order in 2009. However, the plaintiff was not entitled to any other mandatory orders requiring the Town to give assurances to prospective purchasers of the property about what uses they could make of the property in the future.

The case demonstrates the issues that may arise between a property owner and a municipality over use, and matters that be discovered when investigating the zoning compliance of a property, particularly for commercial uses. In cases similar to the matter at hand, a prospective purchaser of a property would need to carefully assess a property’s current zoning restrictions, and whether any intended future uses of the property would either comply with those restrictions or be a continuation of the property’s current legal non-conforming uses. Otherwise, future plans may run afoul of a municipality’s zoning restrictions and be subject to by-law enforcement. A PDF version is available to download here.

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IMA ANNOUNCEMENTS 2020-2021 Webinar Series Valuation of Shopping Centres Date: Tuesday April 27, 2021 Time: 11:30am - 1:00pm ET CPD Credits: 1.5 Learning Costs: $60 (Members)

$75+HST (Non-Members)

Workshop on Assessment Appeal Preparation: Module 1 Date: Tuesday May 25, 2021 Time: 10:30am - 12:00pm ET CPD Credits: 1.5 Learning Costs: $60 (Members)

$75+HST (Non-Members)

Workshop on Assessment Appeal Presentation: Module 2 Date: Tuesday May 25, 2021 Time: 10:30am - 12:00pm ET CPD Credits: 1.5 Learning Costs: $60 (Members)

$75+HST (Non-Members)

Save the Dates * Save the Date for the IMA Annual General Meeting: June 14, 2021 * Save the Date for the 2021 Fall Virtual Symposium: November 1 and 2, 2021 *

Future of IMA Membership Dues In order to maintain our current level of service, while simultaneously supporting new strategic goals and objectives (as outlined in the 2020-23 Strategic Plan), the Board of Directors has approved a dues increase in select categories.

The fee structure below will take effect for the 2022-23 renewal period.

Membership Category

2011- 2021 Fee

2022-23 Fee

Affiliate

$159.00

$174.00

A.I.M.A.

$264.00

$299.00

M.I.M.A.

$264.00

$324.00

Retired

$84.00

$84.00

Read the full notice here.

Print version: A detailed notice was sent to the membership electronically and by mail in March 2021.

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2020-21 IMA SPONSORS THANK YOU TO THE FOLLOWING SPONSORS, WHOSE GENEROUS DONATIONS SUPPORTED THE IMA SCHOLARSHIP FUND

DIAMOND

PLATINUM

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BRONZE PEGoulet, Property Tax Advisor SUPPORT THE NEXT GENERATION OF PROPERTY ASSESSMENT PROFESSIONALS WITH A TAX-DEDUCTIBLE DONATION TO THE IMA SCHOLARSHIP FUND. LEARN MORE ABOUT THE AWARDS AND VIEW PAST RECIPIENTS HERE 18

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INSTITUTE OF MUNICIPAL ASSESSORS | APRIL 2021