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Real Property Law - PROCEEDINGS - Appeals and judicial review - Practice and procedure - Evidence

Thursday, January 19, 2017 @ 7:00 PM  

Appeal by the plaintiffs from a judgment valuing disputed development lands. In 2005, the parties acquired a tract of land pursuant to a joint venture agreement that contemplated subdivision and development. By 2011, disagreements between the parties led to one of the defendants withdrawing from the venture. In 2012, during appraisal of the lands to facilitate unwinding of the joint venture, a prospective buyer offered $40 million to purchase the lands. The plaintiffs did not disclose the offer and did not pursue the sale. Litigation ensued. In 2014, the plaintiffs were found to have breached their fiduciary duty to the defendant. The trial judge directed valuation of the lands as of 2012 and as of 2015, pursuant to a specific process. The parties were unable to agree on a valuation and returned to the trial judge with competing appraisal reports. The trial judge rejected one report as seriously flawed, save for its estimate that market value of comparable properties dropped by 15 per cent between 2012 and 2015. The judge identified issues with the other appraisal report, rejecting its 2015 valuation, and accepting its determination of the property’s minimum value in 2012 as $30 million. The trial judge found that the best evidence of the property’s 2012 value was the $40 million prospective purchase offer. The judge concluded that the property’s value was $36 million in 2012 and $31 million in 2015. The plaintiffs appealed.

HELD: Appeal dismissed. The trial judge did not err in according weight to the second appraisal report. The judge provided sufficient reasons for favouring the subdivision development methodology over the direct comparison method. Although the plaintiffs’ arguments in favour of the direct comparison method were cogent, the judge’s limited acceptance of the second appraisal did not give rise to an error of principle or a palpable and overriding error of law, as the prospective sale was the determinative factor in his valuation rather than the report. There was no error in reliance on the evidence of the prospective sale given the unsatisfactory expert reports.