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REVIEW OF LEGAL PRINCIPLES AND BASIC QUESTIONS AND ANSWERS Osgoode – IPTI Certificate in Expert Evidence in Valuation Disputes Jack Walker, Q.C. and Ken West, LL.M. October 31, 2011 Osgoode P.D., Toronto, ON


Goals for Days 3 and 4 -

Examine statutory framework for valuation hearings and the context for expert valuation reports

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Understand the roles and responsibilities of an expert valuation before a valuation tribunal

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Review the USPAP/CUSPAP rules

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Address the appraisal concepts applicable to an appraisal critique on review

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Learn about preparing valuation opinion and drafting an expert report from a valuator’s perspective

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Familiarize with real property law concepts

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Review current jurisprudence on key issues


Day 3 9:00

(Module 2, Part I) Review of Essential Legal Principles Underlying Valuation Disputes and Basic Questions and Answers Ken West Jack A. Walker, Q.C.

10:45

Refreshment Break

11:00

Procedures and Practices in a Valuation Proceeding Robert Butterworth, Vice-Chair, Assessment Review Board [invited]

11:30

Role, Responsibilities and Obligations of the Expert Valuator Jack A. Walker, Q.C.

 12:30

Lunch

1:30

Expert Qualification for Valuation Experts Panel: Ken West Chris Schulze, Q.C. [invited] Jack A. Walker, Q.C.

2:15

Break 

2:30

Developing the Valuation Opinion Paul Sanderson

3:30

Realities of Expert Witnessing – Panel: Moderator Paul Sanderson, Robert Butterworth, Chris Schulze

 4:30

Day 3 concludes


Day Four – Module 2, Part II 9:00 Writing a Statutory Valuation Expert Report Jack A. Walker, Q.C. Paul Sanderson, J.P  10:30 Break 10:45  12:15 1:15  1:45  3:15

Testifying as an Expert Valuator: Credibility of the Expert Paul Sanderson, J.P. Luncheon Post-Hearing Issues and Evaluating Performance D.S. Colbourne, Former Chair O.M.B. and ARB [invited] Drafting a Report (practicum) Faculty en Banc Break

3:30

Examination- Knowledge Testing Multiple Choice Examination

4:30

Course Concludes


Awareness of the guiding statutory framework


Why do I require working knowledge of the relevant statutes? •

What are they?  Adjudicative Tribunals Accountability Governance and Appointments Act, 2009 (OAL 239)  Assessment Act (OAL 1)  Assessment Review Board Act and Rules (OAL 193)  Rules of Civil Procedure (OAL 733)  Statutory Powers Procedure Act (OAL 749)


What Acts are in play? Assessment Act, R.S.O. 1990, c.A. 31 Municipal Act, 2001, S.O. 2001, c.25 City of Toronto Act, 2006, S.O., 2006 c.11 Expropriations Act, R.S.O., 1990, c.E.26 Land Transfer Tax Act, R.S.O., 1990, c.L.6 Arbitration Act, 1991, S.O. 1991, c.17


• What supporting statutes are relevant?  Legislation Act, 2006 (OAL 447)  City of Toronto Act, 2006 (OAL 247)  Municipal Act, 2001 (OAL 475)  Municipal Freedom of Information and Protection of Privacy Act (OAL 627)


Key sections of the Assessment Act: sections 3, 19, 40, and others. Section 3 is the taxing provision in the Act. Section 19 is the valuation provision in the Act. Section 40 is the appeal provision in the Act.


Section 3: All real property in Ontario is liable to assessment and taxation, subject to the following exemptions from taxation. The exemptions include: Crown lands

Public educational institutions

Philanthropic organizations, etc.

Public hospitals, care homes, and children's treatment centres

Highways, etc.

Municipal property

Charitable institutions

Battle sites

Machinery

Machinery for energy conservation

Amusement rides

Airports

Conservation land

Small theatres

Large non-profit theatres


Section 19: (1) the assessment of land shall be based on its current value. Section 19.2 Valuation days Subject to subsection (5), the day as of which land is valued for a taxation year is determined as follows: 1. For the 2006, 2007 and 2008 taxation years, land is valued as of January 1, 2005. 2. For the period consisting of the four taxation years from 2009 to 2012, land is valued as of January 1, 2008. 3. For each subsequent period consisting of four consecutive taxation years, land is valued as of January 1 of the year preceding the first of those four taxation years. 2007, c. 7, Sched. 1, s. 5. (2)-(4) Repealed: 2007, c. 7, Sched. 1, s. 5. Exception (5) Subsection (1) does not apply in respect of the valuation of land for a taxation year after 2004 if the Minister prescribes a different day as of which land is valued for that year. 2004, c. 7, s. 3 (2).


Section 40. (1) Any person, including a municipality, a school board or, in the case of land in non-municipal territory, the Minister, may appeal in writing to the Assessment Review Board, (a) on the basis that, (i) the current value of the person’s land or another person’s land is incorrect, (ii) the person or another person was wrongly placed on or omitted from the assessment roll, (iii) the person or another person was wrongly placed on or omitted from the roll in respect of school support, (iv) the classification of the person’s land or another person’s land is incorrect, or (v) for land, portions of which are in different classes of real property, the determination of the share of the value of the land that is attributable to each class is incorrect, or (b) on such other basis as the Minister may prescribe. 2008, c. 7, Sched. A, s. 11. Appeal requirements, fee (2) A notice of appeal shall be delivered or mailed to the Assessment Review Board on or before the last day for appealing under subsection (5), (6), (7) or (8), as the case may be, shall state a name and address where notices can be given to the appellant and shall be accompanied by any fee required by the Board. 2008, c. 7, Sched. A, s. 11.


“Current Value” means, in relation to land, the amount of money the fee simple, if unencumbered, would realize if sold at arm’s length by a willing seller to a willing buyer.


Other Key Sections Section 17: Land is assessed against the owner Section 19.1(3): Phase in Section 39.1: RFR Section 46: Judicial applications


Key legal principles applicable to valuation • What is “land”? Differing definitions • Difference between Assessment and Taxation • Dichotomy between the Municipal Act, 2001 and the Assessment Act • Value in exchange vs. value in use


What is “Land”? Differing definitions Assessment Act: “Land”, “real property” and “real estate” include, (a) Land covered with water, (b) All trees and underwood growing upon land, (c) All mines, minerals, gas, oil, salt quarries and fossils in and under land, (d) All buildings, or any part of any building, and all structures, machinery and fixtures erected or placed upon, in, over, under or affixed to land, (e) All structures and fixtures erected or placed upon, in, over, under or affixed to a highway, lane or other public communication or water, but not the rolling stock of a transportation system Expropriation Act: “Land” includes buildings, structures and other things in the nature of fixtures and mines and minerals whether precious or base, on, above or below the surface.


Real Property Law Ken West, LL.M., Course Director Osgoode-IPTI Expert Evidence Certificate Osgoode Hall P.D., Toronto October 31, 2011


The Nature of Property Bundle of Rights Two main distinctions: • Real Property  Land • Personal Property (Chattels)  Things other than land


Historical Notes • Civil procedure in the middle ages  Real Actions › Land or the res  Actions for damages › Unimportance of chattels in medieval mindset › No return of property only damages • Realty vs. Personalty  Permanence of land/fixed and finite commodity • In rem vs. In personam  In rem, is a right against the world at large  In personam is a right against an individual


Real Property •

Corporeal Hereditaments 

Interests being capable of being held in possession ›

•

Essentially freehold status

Incorporeal Hereditaments 

Non-possessory in nature ›

Easements

›

Profits a prendre

›

Restrictive covenants


    

 





 

 

   

   

 


The Function of Modern Property Law • Determination of which items, tangible or otherwise, should be protected as property


The Institution in Context •

Estates and Tenure  English feudal ancestry

The things that lawyers know about are property and land. But why the leaves are on the trees, and why the waves disturb the seas, why honey is the food of bees, why horses have tender knees, why winters come when the river freeze, why faith is more than what one sees, and hope survives the worst disease, and charity is more than these, they do not understand. H.D.C. Pepler, The Devil’s Dream


Estates • Fee Simple • Encumbrances • Leases (Landlord and Tenant) • Licenses • Aboriginal title


Physical Dimensions of  Ownership • Cujus est Solum ejus est usque ad coelum et ad infernos


Air Rights  Bay-Adelaide Decision  • Are air rights land? • Is there a distinction between air rights and development rights?                         


Subsurface Rights • Edwards v. Sims, 24 S.W. 2d 619 (Kentucky C.A., 1929 • The Onyx Cave case


Riparian Rights • Ownership of lands abutting water • Right of access to water • Right to take energy flood prevention measures • May appropriate water for own ordinary use • Cannot diminish the quality or quantity of the natural flow


Servitudes

•

Easements  Incorporeal hereditament  A property interest that allows an individual to use a portion of another’s land  Recorded on title  Four elements are necessary to create a valid easement 1) There must be a dominant tenement and a servient tenement 2) The easement must accommodate the dominant land 3) The dominant and servient tenements must be held by the same person 4) The easement must be capable of being the subject matter of a grant

•

Covenants

•

Rights of Way


Fixtures • Northern telecom • So firmly affixed thereto as to be considered part thereof? • A matter of degree


Evidence Law


WHAT IS EVIDENCE?

Evidence Review

• The rules of evidence control the presentation of facts before the court. Their purpose is to facilitate the introduction of all logically relevant facts “without sacrificing any fundamental policy of the law which may be of more importance than the ascertainment of truth”. • What are the logically relevant facts in any particular case by the substantive law governing the cause of action set out in the pleadings. • Evidentiary principles, on the other hand, regulate (1) what matters are or are not admissible before the court, and (2) the method by which admissible facts are placed before it.  • The rules of evidence are made up of common law principles, statutory provisions and Constitutional principles. • The essential purpose and feature of the trial system in our society is the search for truth. • In an adversarial system, where fact presentation is controlled by the litigants and their counsel, the search for truth can be elusive in many cases. Apart from this deficiency in the framework in which the evidence is presented, the evidence itself may be inherently weak due, for example, to the imperfect recollection or perception of witnesses. 


WHAT IS EVIDENCE? Continued • In an attempt to limit the systemic frailties of the legal system, many of the rules of evidence are concerned with ensuring the reliability or accuracy of the evidence that is received. For example, the hearsay rule, which seeks to exclude evidence of the out-of-court statements of a person who is not a witness where offered to prove the truth of the contents of the statements, is based in part on a fear of fabrication and on a reluctance to receive evidence where the perception of the actual witness of the events cannot be tested in cross-examination. Many of the early exceptions to the hearsay rule were developed in areas where these concerns were not paramount.  • The Supreme Court of Canada has created a general sweeping exception to permit any hearsay which is considered by the trial judge to be both necessary and reliable. When out-of-court statements, however, continue to bear the risk of fabrication, such as in the case of self-serving, prior consistent statements, they are excluded.  • There is also concern about the reliability of other types of evidence. Because of the influential nature of expert testimony, a threshold of sufficient reliability must be met before such evidence may be put before a jury, particularly when a novel scientific technique or theory is being advanced.   Mohan test


GOALS OF EVIDENCE • A piece of evidence must satisfy a number of requirements before it can be considered by the trier of fact in the ultimate deliberation on the facts in issue. Once it meets these requirements, the evidence can be received by the court. • To be received, evidence must meet two basic requirements: 1) it must be admissible. 2) the trier of law must not have exercised his or her discretion to exclude the evidence. • Additionally, evidence is not admissible unless it is: (1) relevant; and (2) not subject to exclusion under any other clear rule of law or policy. The trier of law, in determining whether a particular piece of evidence should be considered, will first consider whether it is relevant. If it is not, it will be rejected. If it is relevant, the trier of law will consider whether it is subject to any exclusionary rule of the law of evidence. If it is not, the trier of law will go on to consider whether he or she has a judicial discretion to reject the evidence and whether that discretion should be exercised in the circumstances. If the evidence is subject to an exclusionary rule or is irrelevant, there is no generally recognized judicial discretion to nevertheless receive the evidence.   The exclusionary rules which make up the second branch of the admissibility test constitute a large part of the law of evidence.


RELEVANCE A traditionally accepted definition of relevance is that in Sir J.F. Stephen’s A Digest of the Law of Evidence, where it is defined to mean:  ‌any two facts to which it is applied are so related to each other that according to the common course of events one either taken by itself or in connection with other facts proves or renders probable the past, present, or future existence or non-existence of the other.  Pratte J. in R. v. Cloutier accepted a definition from an early edition of Cross on Evidence  For one fact to be relevant to another, there must be a connection or nexus between the two which makes it possible to infer the existence of one from the existence of the other. One fact is not relevant to another if it does not have real probative value with respect to the latter.


BURDEN OF PROOF • The term “burden of proof” is occasionally used to describe two distinct concepts relating to the obligation of a party to a proceeding in connection with the proof of a case. • In its first sense, the term refers to the obligation imposed on a party to prove or disprove a fact or issue. • In the second sense, it refers to a party’s obligation to adduce or point to evidence already on the record to raise an issue to the satisfaction of the trial judge. EVIDENTIAL BURDEN • The incidence of an evidential burden means that a party has the obligation to adduce evidence or to point to evidence on the record to raise an issue. Like the legal burden of proof, an evidential burden relates to a particular fact or issue, and where multiple facts or issues may be distributed between the parties. • The incidence of the evidential burden, the sufficiency of the evidence required to satisfy it, and the evidentiary effect of its discharge are all questions of law. • It is critical that all elements of a case are proved by adducing evidence and meeting the burdens.


HEARSAY The rule can be stated as follows:  Written or oral statements, or communicative conduct made by persons otherwise than in testimony at the proceeding in which it is offered, are inadmissible, if such statements or conduct are tendered either as proof of their truth or as proof of assertions implicit therein. • There are many exceptions to the hearsay rule. • Sweeping exception is that a statement that would otherwise be hearsay is admissible if it is considered by the judge/member to be both necessary and reliable. • The leading case on the hearsay rule is R. v. Starr (2000) 2 S.C.R. 144. • The US Federal Rules of Evidence (Article 8) is instructive on the subject of hearsay and its exceptions and exemptions.


JUDICIAL NOTICE • Judicial notice is the acceptance by a court or judicial tribunal, without the requirement of proof, of the truth of a particular fact or state of affairs. • Facts which are (a) so notorious as not to be the subject of dispute among reasonable persons, or (b) capable of immediate and accurate demonstration by resorting to readily accessible sources of indisputable accuracy, may be noticed by the court without proof of them by any party. • The practice of taking judicial notice of facts is justified. It expedites the process of the courts, creates uniformity in decision-making and keeps the courts receptive to societal change. • Judicial notice in every hearing is indispensable to the normal reasoning process.


Statutory Interpretation


Statutory Interpretation •

Principles  Historically, taxation statutes and exemption provisions were interpreted textually or using a “strict interpretation”  Today, the Modern Rule governs modified by a textual, contextual and purposive analysis.  The Modern Rule: The words of an act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act. The object of the Act, and the intention of parliament.  Adopted by the Supreme Court of Canada in Notre Dame  In Placer Dome the Court held that the Modern Rule as stated in Notre Dame should be modified and applied based on a textual, contextual and purposive approach  Paragraph 23 of Placer Dome Decision: The interpretive approach is thus informed by the level of precision and clarity with which a taxing provision is drafted. Where such a provision admits of no ambiguity in its meaning or in its application to the facts, it must simply be applied. Reference to the purpose of the provision “cannot be used to create an unexpressed exception to clear language”. Where, as in this case, the provision admits of more than one reasonable interpretation, greater emphasis must be placed on the context, scheme and purpose of the Act. Thus, legislative purpose may not be used to supplant clear statutory language, but to arrive at the most plausible interpretation of an ambiguous statutory provision.


Statutory Interpretation •

Leading Cases  Notre-Dame de Bon-Secours  Placer Dome  Canada Trustco A tax statute with precise and unequivocal words, the words will play a dominant role in the interpretive process. Where the words give rise to more than one reasonable interpretation, the ordinary meaning of the words will play a lesser role, and greater recourse to context and purpose of the Act may be necessary.  Golden – represents the death of strict construction  Johns-Manville – presumptions are not a reliable way to interpret legislation


Statutory Interpretation •

Statutory Provisions  Section 64 Legislation Act 64.(1)An Act shall be interpreted as being remedial and shall be given such fair, large and liberal interpretation as best ensures the attainment of its objects. Same(2)Subsection (1) also applies to a regulation, in the context of the Act under which it is made and to the extent that the regulation is consistent with that Act.


Expert Witness Concepts Review


Questions that should be asked by the Expert Witness: 1.

When do I get to the court room? •

2.

Where is the courtroom – (Assessment Review Board Act s.12 (OAL p.191))

Where do I sit? •

Why?

SPPA s.25.0.1 (OAL p.767)

 Historical background  Practical aspects 3.

Do I sit or stand when giving evidence?


ADJUDICATOR

WITNESS

COURT REPORTER COUNSEL

COUNSEL

AUDIENCE


4. Who do I look at when answering? 5. What about my report? • Do I take my report with me to the witness box? 6. What about my back up material?


7.

How does the hearing proceed a) What is meant by “onus” b) Civil vs. Criminal c)

Who goes first •

Prior to 2009

•

Post 2009  40 (17) Burden of Proof in Assessment hearings  40 (18) Shift in burden of proof if fail to allow inspection or provide information  40 (15) Closing statement


The Hearing Process – Explaining the Components MODERN

TRADITIONAL 1.

Opening statement by Appellant

2.

Evidence-in-chief by Appellant 

Factual evidence



Opinion evidence



Cross-examination

3.

Opening statement by Respondents

4.

Evidence-in-chief by Respondents

5.



Factual evidence



Opinion evidence



Cross-examination

Closing statements

Dealing with scarce resources and a cumbersome caseload the future may see significant changes to the traditional hearing process.

Hope-tubbing is one possible alternative procedure that we may see more of in the future to deal with the exigencies of modern tribunal practices.


• What about the Rules of Practice of the Tribunal? 

Assessment Review Board (OAL 193)



Review of significant rule affecting expert witnesses 

Rule 13 – Witness/advocate



Rule 48 – Disclosure



Rule 49 – Expert reports



Rule 50 – Reply reports



Rule 51 – Supplemental reports



Rule 54 – confidential documents 



How to deal with confidential information/data in an expert report

Rule 69 - Summons


• What about case law?  Can only lawyers interpret cases?  Why is it necessary to interpret case law to write an expert’s opinion?


Review of Legal Principles and Basic Q&A