COURT FILE NO.: 598/04

DATE: 20060424

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CHAPNIK, EPSTEIN and SWINTON JJ.

in the matter of section 31 of the expropriations act,

r.s.o. 1990, c. E.26, AS AMENDED

B E T W E E N:

TORONTO AND REGION CONSERVATION AUTHORITY (formerly The Metropolitan Toronto and Region Conservation Authority)

Respondent (Appellant)

• and -

A. EDWARD GADZALA, V & E GADZALA HOLDINGS LIMITED and 412264 ONTARIO LIMITED

Claimants (Respondents on Appeal)

Paul R. Henry and Robert B. Lawson, for the Respondent/Appellant, Toronto and Region Conservation Authority

Stephen Waqué and Sean L. Gosnell, for the Claimants (Respondents on Appeal)

COURT FILE NO.: 599/04

AND B E T W E E N:

CITY OF TORONTO (formerly City of Etobicoke)

Respondent (Appellant)

• and -

John S. Doherty and Mark Wiffen, for the Respondent/Appellant, City of Toronto

A. EDWARD GADZALA, V & E GADZALA HOLDINGS LIMITED and 412264 ONTARIO LIMITED

Claimants (Respondents on Appeal)

Stephen Waqué and Sean L. Gosnell, for the Claimants (Respondents on Appeal)

HEARD at Toronto: December 12, 13, 14, and 15, 2005

BY THE COURT:

1This is an appeal by the City of Toronto (the “City”) and the Toronto and Region Conservation Authority (the “TRCA”) from an order of the Ontario Municipal Board dated October 4, 2004 dealing with compensation for the expropriation of properties in the Motel Strip located on the shore of Lake Ontario in the former City of Etobicoke. This order was made in connection with two proceedings (heard together) in which the Claimants (Respondents on Appeal), Edward Gadzala, V & E Gadzala Holdings Limited and 412264 Ontario Limited (“the Claimants”), were awarded compensation arising out of:

(a) the TRCA’s expropriation on February 28, 1996 of one metre strips from the southerly boundary of 2109 and 2113 Lakeshore Blvd. W. (“the House Properties”) and 1.432 acres from 2143 Lakeshore Blvd. W. and 1.379 acres from 2147 Lakeshore Blvd. W. (“the Motel Properties”) to extinguish riparian rights and permit development of a public amenity area (including a waterfront drive) along the Lake Ontario shoreline (“the Linear Park”); and

(b) the City’s expropriation on December 23, 1997 of the balance of the House Properties for a Local Park.

2At issue in these appeals are the market value of the Motel Properties and the House Properties, the compensation for loss of riparian rights, damages for injurious affection, the disturbance damages for delay, and the disturbance damages for the loss of a parkland credit.

BACKGROUND

The Motel Strip and the Claimants’ Properties

3Prior to the expropriations, the Claimants were the owners of four properties in the Motel Strip in the former City of Etobicoke (which amalgamated with the new City of Toronto as of January 1, 1998, and which will also be referred to as the “City”). The Motel Strip is an area of approximately 50 acres (20 hectares) consisting of 33 long, narrow lots (some including water lots) fronting on Lakeshore Boulevard West, south of the Gardiner Expressway on the shores of Lake Ontario.

4At the outset, the allure of the Motel Strip, from the perspective of owners, the development industry, and public planning officials, must be emphasized. The Board noted in its decision that for decades, the Motel Strip has been widely recognized as having “remarkable development potential”, given its “direct waterfront access, proximity and accessibility to the central business district of the City of Toronto, and the outstanding views across the lake to the downtown skyline”(Reasons, p. 7).

5The Claimants’ properties were as follows:

1. The “House Properties”, which were previously improved with residential dwellings and consist of dry land only:

(a) 2109 Lakeshore Blvd. W. (also known as “Lot 20”);

(b) 2113 Lakeshore Blvd. W. (also known as “Lot 18”);

2. The “Motel Properties”, which are each improved with motels operated by the Claimants, and consist of both dry land areas and water lots:

(a) 2143 Lakeshore Blvd. W. (also known as “Lot 12”);

(b) 2147 Lakeshore Blvd. W. (also known as “Lot 11”).

The History of the Motel Strip

6The Board expressed the view that a review of the planning history of the Motel Strip lands was crucial to an understanding of the expropriations in issue. In its words, “there must be a thorough understanding of the planning of the motel strip lands going back to at least the early nineteen sixties” (Reasons, p. 7). The Board provided a detailed Chronology of Events, commencing in 1948. We do not intend to review in detail the extensive planning history and process spread over about 40 years preceding the takings, but highlight salient aspects only.

7In 1949, the Board approved zoning of these lands as Fourth Density Residential and also permitted private hotels in the area. In 1967, the City approved By-law No. 133 (temporary), which placed limits on residential development, permitted motels, and introduced the Waterfront Zone.

8Most significantly in 1967, the Waterfront Plan of the Metropolitan Toronto Planning Board introduced the concept of a continuous public waterfront including a waterfront drive on land created by filling provincially-owned lake bottom and private water lots. High-density residential uses were proposed north of the waterfront road.

9At page 20 of its decision, the Board stressed the importance of the 1967 Waterfront Plan:

In reviewing all of the 1967 Waterfront Plan, the Board finds that it was the clear intention of the public authorities to initiate a significant Scheme for the Motel Strip that included massive filling along the shores of the Lake, the capture of privately held lands, the creation of a public recreation area and the creation of a scenic drive. Further, that this public ambition would have impacts on private ownership regarding the loss of riparian rights and land [sic].

10The process of amending the Official Plan and the zoning of the Motel Strip over the next few years was, in the Board’s words, “tortuous” (Reasons, p. 21). In 1972, a District 7 plan re-designated the Motel Strip for High Density use. There were several subsequent changes to this plan. By 1977, the District 7 plan required a comprehensive assembly of the Motel Strip lands for development.

11The Motel Strip contained a number of motels and was for many years an area in decline. The municipal authorities and the Province made attempts at revitalization in the mid-1970’s, all of which fell apart and eventually ended in 1984. These attempts were in concert with a single developer, S.B. McLaughlin.

12The McLaughlin proposal was based on the concept of comprehensive land assembly of 40 acres of the Motel Strip. Under the proposal, the central 10 acres would be dedicated for school and municipal park purposes, and McLaughlin would construct a linear park along the southerly limit of the Motel Strip. In 1981, Etobicoke Council conditionally approved the McLaughlin proposal, the first condition being the “achieving of absolute control or ownership” of all properties by McLaughlin. In 1982, the conditional approval was extended for two years. In April 1984, Council refused to grant McLaughlin a further extension and instructed its Planning Department to prepare a new study of the Motel Strip. At page 23 of its decision, the Board stated:

It is clear to the Board that the Province’s vision for a linear park and scenic road, given a clear intent in the 1967 Waterfront Plan, led to the requirement for a comprehensive assembly of the motel strip lands as a prerequisite to development of the motel strip lands. The burden of these planning initiatives fell on the McLaughlin application and led to its failure. It became clear to the City of Etobicoke in 1984 that the land use planning burden, principally the comprehensive assembly of all the motel strip lands could not be achieved.

13From the early 1970’s until the collapse of the McLaughlin proposal, the Claimants were bound by option agreements to sell their land to McLaughlin for $2,700,000.

The Motel Strip Study

14Attempts from 1984 onward to establish a new planning regime for the Motel Strip were the subject of appeals to the Board by property owners, including the Claimants. In January 1986, the Planning Department completed the Motel Strip Study, which made various recommendations. It recognized that “[t]he comprehensive assembly requirement of the Official Plan represents a major impediment to desirable redevelopment projects using consolidated sites comprised of a number of individual properties” (Reasons, p. 26). The Study’s recommendations included the following:

(a) rescinding the comprehensive assembly requirement;

(b) re-designating the Motel Strip area for mixed uses;

(c) directly acquiring property for use as a park;

(d) implementing the park dedication ratio of 1 hectare for each 300 dwelling units; and

(e) creating a density transfer mechanism as a development incentive.

The Motel Strip Secondary Plan (“MSSP”) and the Board Decision of 1992

15In February 1988, the Etobicoke Council approved Official Plan Amendment C-65-86, commonly known as the Motel Strip Secondary Plan (the “MSSP”). The MSSP was intended to set in place the necessary land use policies and capital funding framework for the new servicing infrastructure and parks. The MSSP was referred to the Board, and the Board approved it, subject to a series of modifications, in April 1992.

16To promote redevelopment, including the provision for the Local Park within the Motel Strip, the MSSP policies designated the Claimants’ House Properties as “Public Open Space”.

17The Motel Properties were given a dual designation under the MSSP. The southerly shore and submerged portions, proposed to be acquired by the TRCA for the Linear Park, were designated “Waterfront Public Amenity Area”, and the remaining upland portions were designated “Mixed Use” and “Commercial”.

18Despite these designations, the MSSP provided for a “density transfer.” It attributed residential density to the lands to be acquired by the City and the TRCA, and allowed that density to be transferred to other development sites in certain circumstances. Two types of density transfer were authorized:

(a) a general density transfer from lands dedicated and acquired for the Linear Park and other public purposes; and

(b) a specific density transfer from submerged water lots (on certain conditions), applicable not only to the areas proposed to be incorporated into the Linear Park, but also to areas further south that were intended to remain under water.

19Furthermore, the MSSP gave Council discretion to require dedication of parkland (or cash-in-lieu thereof) as a condition of approval for residential development or development, at a minimum rate of 0.5 hectares to a maximum rate of 1.0 hectares for each 300 units proposed. It also gave Council discretion to consider a reduced rate where the development provided a needed public facility or contributed to the Linear Park.

20The Board conducted a hearing on the MSSP and considered land uses, built form, the road pattern, parks, density transfer and funding. The Board stated (at p. 31 of its April 8, 1992 Reasons):

The acquisition and development of the Public Amenity Area and Waterfront Drive have become fundamental to the realization of the environmental and redevelopment objectives of the modified Motel Strip Secondary Plan. If it fails, the Plan fails.

21Some of the key provisions of the MSSP as approved include the following:

(a) establishment as an objective that all lands required for the Public Amenity Area including Waterfront Drive would be acquired within 18 months of the Plan coming into effect;

(b) provision of a mechanism for density transfers where lands are dedicated for the Public Amenity Area including Waterfront Drive, as well as certain other public purposes;

(c) provision of a specific mechanism for density transfer from certain lands described as submerged water lots “to facilitate realization of that objective” (acquisition within 18 months); and

(d) requirement that acquisition of the Public Amenity Area including Waterfront Drive be completed prior to any rezoning to lift the holding provision.

Zoning By-law No. 1994-197 and the 1996 Board Decision

22In 1994, the City enacted By-law No. 1994-197. The Board approved it on appeal in February 1996. The By-law implemented the approved MSSP, re-zoning lands from Fourth Density to Mixed Use Holding, Limited Commercial Holding, and Public Open Space.

23Schedule “C” of the By-law provides a density table, containing the attributed densities under the density transfer mechanism. This table indicates that 31 units were attributed to Lot 18, and 25 units were attributed to Lot 20. Thus, the House Properties, zoned Public Open Space, were given a total Mixed Use density of 56 residential units, should the City decide not to acquire the lands for the Local Park. In accordance with the general density transfer provisions of the MSSP, the By-Law provided that the 56 units could be transferred to another development parcel, provided that the House Properties were dedicated to a public authority and certain other conditions were met. Significantly, the House Properties were to be acquired for Local Park purposes not later than six months following the approval by the City of a site plan within the Motel Strip totalling 2,000 residential units (the “trigger” provision). In addition, the density attributed to Open Space lands could only be transferred to lands designated as Mixed Use Holding.

24The portions of the Motel Properties to be acquired by the TRCA were zoned Waterfront, and the balance of the Motel Properties were zoned Limited Commercial Holding and Mixed Use Holding. The Motel Properties were given a total Mixed Use density, through the specific density transfer provisions of the MSSP, of 293 residential units, 153 of which were attributed to the southerly shore and submerged areas. Unlike the density transfer applicable to the House Properties, this transfer was automatic; it was deemed to occur when the By-law came into effect.

The Expropriations

25On February 28, 1996, the MTRCA registered Expropriation Plan 12119, taking parts of the Motel Properties, including all of the water lots and a triangular area from Parcel 12. The purpose of the takings was so the TRCA could construct the Linear Park with an associated road to facilitate access to the park. This park is located partly on existing land but primarily on land created by filling in Lake Ontario. As an attraction, the park’s appeal extends outside the local area to the Greater Toronto area and beyond.

26Expropriation Plan 12121 was also registered on February 28, 1996, by the MTRCA, taking a one-metre strip from the House Properties immediately north of the Lake Ontario shoreline for the purpose of the Linear Park.

27On December 23, 1997, by Expropriation Plan 12134, the City of Etobicoke took the remainder of the House Properties, except a small area of accreted land between the one-metre strip and the shoreline, for the purpose of the Local Park. The Local Park was to encompass not only the House Properties but also other lands in public and private ownership.

28Mr. Gadzala requested an Inquiry Hearing of Necessity, pursuant to the Expropriation Act, R.S.O. 1990, c. E.26 (the “Act”), for the purpose of determining whether the proposed expropriation was “fair, sound and reasonably necessary in the achievement of the City’s objectives”. At that hearing, he objected to the proposed expropriation on the basis that it was premature.

29In his report, Inquiry Officer Goldkind discussed the ability of Mr. Gadzala to transfer the 56 density units from the House Properties to the Motel Properties upon dedication of the House Properties to the City for park purposes. However, he also stated that Mr. Gadzala did not want to dedicate the House Properties to the City (Report, October 23, 1997, pp.1, 9, and 18-19).

30After the expropriation on December 23, 1997, the City transferred the 56 units of density that had been assigned to the House Properties to Newport, a developer within the Motel Strip, in accordance with an agreement it had reached with Newport. The land base was incorporated into the Local Park.

31The parties agreed that claims for market value and injurious affection in respect of the TRCA takings would be determined as of March 10, 1996, and claims for market value with respect to the City takings would be determined as of January 19, 1998.

THE PROCEEDINGS BEFORE THE BOARD

32The documentary evidence before the Board consisted of 215 exhibits comprising more than 15,000 pages. Twenty-five witnesses, all but two of whom were experts, gave evidence at the hearing which lasted about 50 days, including 7 days of final submissions supported by over 700 pages of written argument. The hearing involved extensive land use planning, appraisal, architectural design, engineering, infrastructure servicing and accounting testimony.

33The issues before the Board revolved around land use planning and valuation of losses to the Claimants resulting from the expropriation. In its written decision dated October 4, 2004 and spanning some 68 pages, the Board addressed the issues and determined compensation and costs payable to the Claimants by the TRCA and the City (subject to some recalculation in accordance with the Board’s reasons).

34In reaching its conclusions, the Board relied upon the expert testimony that it accepted, the relevant case law and the following general principles of expropriation enunciated in Toronto Area Transit Operating Authority v. Dell Holdings Ltd., [1997] 1 S.C.R. 32:

1. The primary policy considerations must be the indemnification for losses suffered by the expropriated party (at para. 17).

2. An expropriation statute is a remedial statute enacted for the specific purpose of adequately compensating those whose lands are taken to serve a public interest (at para. 19).

3. Taking all or part of a person’s property constitutes a severe loss and a very significant interference with a citizen’s private property rights. It follows that the power of an expropriating authority should be strictly construed in favour of those whose rights have been affected (at para. 20).

4. As the Act is a remedial statute, it must be given a broad and liberal interpretation consistent with its purpose (at para. 21).

5. The Act should be read in a broad and purposive manner in order to comply with its aim to fully compensate a landowner whose property has been taken (at para. 23).

35At the conclusion of its decision, the Board attached a chart indicating the items for which compensation was claimed, as well as the compensation ordered payable to the Claimants by the TRCA and by the City. Interest and costs were to be determined in accordance with the relevant sections of the Act.

THE STATUTORY FRAMEWORK

36Section 13 of the Act sets out the formula for the determination of compensation payable to an owner where land has been expropriated. Section 13(2) provides that where the land of an owner is expropriated, the compensation payable shall be based upon one or more of four heads of damages including, in addition to the market value of the land, damages attributable to disturbance and for injurious affection. It reads as follows:

13(2) Where the land of an owner is expropriated, the compensation payable to the owner shall be based upon,

(a) the market value of the land;

(b) the damages attributable to disturbance;

(c) damages for injurious affection; and

(d) any special difficulties in relocation,

but, where the market value is based upon a use of the land other than the existing use, no compensation shall be paid under clause (b) for damages attributable to disturbance that would have been incurred by the owner in using the land for such other use.

37The Act defines market value of expropriated land in s. 14(1) as “the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer.” Pursuant to section 14(4) of the Act, in determining the market value of land, no account shall be taken of:

(a) the special use to which the expropriating authority will put the land;

(b) any increase or decrease in the value of the land resulting from the development or the imminence of the development in respect of which the expropriation is made or from any expropriation or imminent prospect of expropriation; or

(c) any increase in the value of the land resulting from the land being put to a use that could be restrained by any court or is contrary to law or is detrimental to the health of the occupants of the land or to the public health.

38Section 18 of the Act deals with disturbance damages, stating that “the expropriating authority shall pay to an owner other than a tenant, in respect of disturbance, such reasonable costs as are the natural and reasonable consequences of the expropriation”. The Act includes as disturbance damages relocation costs and costs of finding another residence.

39“Injurious affection” is defined in s. 1(1) as follows:

where a statutory authority acquires part of the land of an owner,

(i) the reduction in market value thereby caused to the remaining land of the owner by the acquisition or by the construction of the works thereon or by the use of the works thereon or any combination of them, and

(ii) such personal and business damages, resulting from the construction or use, or both, of the works as the statutory authority would be liable for if the construction or use were not under the authority of a statute …

40In determining compensation for market value, any benefit of the scheme must be ignored. However, that is not the case with damages for injurious affection. Section 23 of the Act allows a set-off of benefits from the scheme against damages for injurious affection to the owner’s remaining lands in the following terms:

The value of any advantage to the land or remaining land of an owner derived from any work for which land was expropriated or by which land was injuriously affected shall be set off only against the amount of the damages for injurious affection to the owner’s land or remaining lands.

41The onus is on the Claimants to prove damages for disturbance and damages for injurious affection.

THE PRELIMINARY ISSUE

42As a preliminary issue, the Appellants brought a motion to have all references to a Globe & Mail article published in April, 2005 and the article itself struck from the record. The Claimants brought a cross-motion opposing this “unless the new public policy arguments” in the Appellants’ facta were deleted or struck. According to the Claimants, the newspaper article directly contradicts the Appellants’ new policy arguments. Thus, if it is struck from the record, the policy arguments should incur a similar fate.

43We disagree. The article in question quotes a City employee explaining “… how we got a $100 million waterfront park for a fraction of its costs.” In our view, the article constitutes hearsay opinion evidence which is inadmissible and irrelevant to this hearing. The quotation represents the opinion of one individual as to a matter, the gist or basis of which is somewhat unclear, but which would likely not have affected the result below in any event. It in no way meets the tests for the admission of fresh evidence, as set out in R. v. Palmer, [1980] 1 S.C.R. 759.

44In our view, the Appellants’ suggestion that the Board’s award will “dramatically expand the scope of expropriation compensation” and “have an impact beyond the scope of this particular case limiting the use of expropriation to complete public projects” constitutes argument only and is properly included in their materials. A comment about the alleged impact of the decision below does not constitute fresh evidence.

45Accordingly, the motion to strike from the record all references to the newspaper article and the article itself is allowed. The Claimants’ cross-motion to delete the public policy arguments from the facta is denied.

THE ISSUES

46The issues in this appeal may be succinctly stated as follows:

The Appeal Issues of the TRCA

1. Did the Board err in assessing the market value of the Motel Properties at $2,100,000 rather than $94,450?

2. Did the Board err in applying the Pointe Gourde rule?

3. Did the Board err in awarding damages for injurious affection in an amount to be agreed upon not less than $1,860,000?

4. Did the Board err in awarding disturbance damages for delay of $4,000,000?

5. Did the Board err in awarding compensation of $1,048,000 for loss of riparian rights?

The Appeal Issues of the City

1. Did the Board err in awarding disturbance damages of $1,850,000 for loss of opportunity for parkland dedication?

2. Did the Board err in awarding disturbance damages for delay of $4,000,000? (This issue is appealed jointly with the TRCA).

3. Did the Board err in assessing the market value of the House Properties at $1,960,000 rather than $1,736,000, plus interest from June 16, 1996?

THE COURT’S JURISDICTION

47Pursuant to s. 31(1) of the Act, an appeal lies to the Divisional Court from any decision or order of the Board in accordance with the rules of court, except that the appeal may be taken at any time within six weeks from the day the decision or order was served on the parties.

48Pursuant to section 31(2) of the Act, an appeal may be made on questions of law or fact or both, and the Divisional Court may (a) refer any matter back to the Board; or (b) may make any decision or order the Board has the power to make.

THE STANDARD OF REVIEW

49The applicable standard of review is determined using a “functional and pragmatic approach” based on consideration of four contextual factors: (1) the existence or absence of a privative clause in the enabling statute of the administrative tribunal; (2) the expertise of the tribunal relative to the court; (3) the purpose of the legislation; and (4) the nature of the problem: Pushpanathan v. Canada (Minister of Citizenship and Immigration) (1998), 160 D.L.R. (4th) 193 (S.C.C.) at 208-215; Ryan v Law Society of New Brunswick (2003), 2003 SCC 20, 223 D.L.R. (4th) 577 (S.C.C.) at 587-592, paras. 27-42; Dr. Q. v. College of Physicians & Surgeons (British Columbia) (2003), 2003 SCC 19, 223 D.L.R. (4th) 599 (S.C.C.) at 609-13.

50The Supreme Court of Canada in Dell Holdings, supra, para. 48, concluded that the standard of review applicable to the expropriation decision in that case was correctness. At issue in that case was a question of law: whether damages for delay could constitute disturbance damages under the Act. The Court concluded that the absence of a privative clause, the wide right of appeal to the Divisional Court, and the lack of expertise of the Board in respect of the issue resulted in a standard of correctness.

51The Ontario Court of Appeal has stated subsequently that deference is owed to the Board where the issue is one in which the Board has particular expertise. In the expropriation context, the Board’s expertise in the market valuation process merits a degree of deference (747926 Ontario Limited v. Upper Grand District School Board, [2001] O.J. No. 3909 (C.A.) at para. 23). More recently, the Divisional Court in Tri-Lag Corp. v. York Region District School Board (2003), 169 O.A.C. 217 (Div. Ct.) adopted a reasonableness standard in reviewing a decision of the Board dealing with market valuation (at para. 11).

52All parties agree that the expertise of the Board in the market valuation process merits deference, and the appropriate standard of review is reasonableness simpliciter. However, the Appellants submit that the appropriate standard of review on the issues of disturbance damages for delay and lost parkland credit is that of correctness. The Claimants contend that all issues raised on the appeal involve a question of fact or of mixed fact and law and that the standard is reasonableness throughout.

53In our view, there are no pure questions of law raised in this appeal. Rather, the issues raised are questions of fact or mixed fact and law. Given the Board’s expertise in market valuation and expropriation, the appropriate standard of review on all the issues is reasonableness.

54However, where the Board makes an award in the absence of supporting evidence or misapprehends the evidence, that is a reviewable error (Pollidor Holding Ltd. v. Ontario Minister of Transportation and Communications) (1985), 36 L.C.R. 1(Div.Ct.)).

TRCA Issue No. 1: Did the Board err in assessing the market value of the Motel Properties at $2,100,000 rather than $94,450?

The Board’s Findings

55The Board found, in accordance with the agreement of counsel, that there were two separate schemes in respect of the expropriations. For the City, the scheme involved the construction of the Local Park (“the City scheme”). For the TRCA, it involved the construction of the Linear or Regional Park along the waterfront, including a road near the waterfront (“the TRCA scheme”).

56The Board properly held that in determining the highest and best use of the properties, it must disregard the scheme. It also took into consideration that the location of the Motel Properties enhanced their value (Reasons, pp. 33-34). Ultimately, it determined the market value of the expropriated Motel Properties to be $2,100,000, based on a use for 28 stacked townhouses valued at $75,000 per unit. In reaching its decision, it gave detailed reasons as to why it preferred the valuation of the expert for the Claimants, David Atlin, over that of the expert for the TRCA, Robert Robson.

57Both Mr. Atlin and Mr. Robson used the Direct Comparison Method to appraise the properties. As the Board stated (Reasons, p. 35):

Inherent to this approach is an acknowledgement of an investigation of reasonably similar properties and to make adjustments where the subject property and the comparable properties differ.

58The Board noted that the valuators had made adjustments to the value of the properties based on a number of factors: real property rights conveyed, financing, conditions of sale, motivation of the parties, market conditions (time), location, physical characteristics and use (Reasons, p. 37).

59The Board specifically rejected Mr. Robson’s conclusions that the expropriated dry land had only limited development potential, perhaps as part of a future public amenity area, and the water lots had no development potential. It concluded that there were development possibilities for both the dry and filled areas of the Motel Properties (Reasons, pp. 37-38 and 41-42).

60In support of its conclusion, the Board observed that Mr. Robson had erred in failing to screen out the TRCA scheme when determining market value. The Board also noted that Mr. Robson had stated in his report that the location close to the lake made this an attractive area for development. As well, the existing residential developments at the eastern and western ends of the Motel Strip had made use of filled land. Finally, the Board relied on the evidence of John Bousfield, an expert witness on planning who appeared on behalf of the City. He had stated that a development proposal made in 1990 to the City of Etobicoke Planning Department, which contemplated a significant area of filled land, represented good land use planning.

61The Board preferred Mr. Atlin’s analysis and valuation of the properties. In order to determine the market value of the expropriated motel land, Mr. Atlin had relied on the report of the Claimants’ planner, Peter Weston, showing how the Motel Properties would have developed in the absence of the TRCA scheme. In considering the value of the land before and after expropriation, the Board accepted Mr. Weston’s evidence with respect to the preferred options for development of the Motel Properties, before and after. Mr. Weston had relied on densities and units contained in Schedule C of By-Law No. 1994-97 in determining how the properties would develop. In his view, these numbers were reasonable, and the Board accepted his evidence.

62The scenario in his report contemplated a high rise development and 28 stacked townhouses before expropriation and only a high rise building after expropriation. The proposed development options were both premised on some filling along the lakeshore, and the Board, in coming to its conclusion, accepted that a prudent developer would have included filling as part of any development (Reasons, p. 45).

63Mr. Atlin concluded that 28 stacked townhouse units, each worth $75,000, could have been built on the expropriated land. The figure of $75,000 per unit was obtained by analyzing eight townhouse sales in other parts of the City. The Board accepted Mr. Atlin’s valuation of townhouse land sales at $75,000 per unit as of March 10, 1996 and thus concluded that the value of the Motel Properties was $2,100,000. In reaching that conclusion, the Board also commented that the location on the lake and the evidence of a real estate expert, Irma Eibech, added to its confidence in Mr. Atlin’s appraisal (Reasons, p. 42).

The Issues

64The TRCA submitted that the Board erred in its award of market value for the Motel Properties because of its treatment of bonus density and the parkland dedication credit, which, in its submission, resulted in triple compensation.

65More precisely, the TRCA submitted that the Board failed to take into consideration the 1992 and 1996 decisions of other panels of the Board, which had awarded “bonus” density transfers from the submerged lands to the dry lands. In those earlier decisions, the Board imputed 153 density units to the submerged lands, which were then transferred to the dry lands, which already had 140 units assigned. This would allow 293 residential units to be developed on the Motel Properties. The TRCA submitted that this grant of density was meant to compensate the Claimants for the transfer of the shore and submerged lands to it, and therefore, the Board had erred in failing to recognize the value of the transferred density units as compensation, with a value in 2004 of $4,590,000 (that is, 153 units at $30,000 a unit).

66TRCA placed particular reliance on the following passage from the 1992 decision of the Board, which dealt with the MSSP:

The full utilization of gross density on a net site is a form of compensation to achieve the desired public elements, where it can be allowed within the necessary design and performance standards and thereby reflects good and sound planning principles. (1992 Reasons, p. 63)

In the Board’s view, imputing density to shore and submerged lands and transferring it to dry lands would provide a catalyst to encourage owners to dedicate their land for construction of a linear park and waterfront road (1992 Reasons, pp. 46-47).

67The Board’s 1996 decision on the zoning by-law also dealt with density transfers, and the TRCA relied on the following passage (at p. 23 of that decision):

Density was attributed to the water lots and other lands to be acquired for public ownership solely for the purpose of ‘facilitating’ the acquisition. It is MTRCA’s firm belief that the Official Plan laid out the scheme and the scheme provides for a transfer of density to the mainland portion of the ownership as compensation for the lands acquired by dedication or by expropriation. Therefore, the by-law itself does not depress or change the values of any lands as it merely directly implements a scheme of public acquisition laid out in an Official Plan document approved by the Ontario Cabinet in 1992. These property owners will not have lost anything but have gained by preserving the density on their mainland portion.

68In this appeal, the TRCA also relied on the fact that during the course of the expropriation hearing, the TRCA, the City and the Claimants had agreed to a parkland dedication credit of .48 hectares, which was the subject of a consent order. That credit was valued at $1.1 million at the date of value and $1.55 million at the date of hearing. The TRCA argued that there is duplication of compensation in the Board’s further award of $2.1 million for market value of the expropriated lands plus $1.4 million for riparian rights. According to the TRCA, given the parkland dedication credit, the Board erred in valuing the land based on its use for 28 stacked townhouses. Instead, the market value should be tied to open space use, and the appropriate amount that should be awarded in compensation for the market value of the expropriated motel properties is $94,450 (based on Mr. Robson’s valuation of $75,000 per acre).

69The TRCA also argued that the Board erred in assuming that development could occur as contemplated by the Claimants’ experts, because the Board failed to consider planning considerations such as the 10 metre setback and the 100 year storm upsurge, which would permit the construction of 18 townhouses, not 28 units as found by the Board. The TRCA also argued that the Board erred in its treatment of lake fill, as post-1990, private developers were unlikely to obtain permission to fill.

Analysis

70In our view, the Board made no error in failing to consider the density transfer of 153 units when valuing the expropriated Motel Properties. The passages cited by the TRCA from the 1992 and 1996 decisions of other panels of the Board do not deal with the issue of compensation for expropriation. This is clear at pp. 23-24 of the 1996 decision, where the Board stated that compensation for expropriation would be determined by another panel under the Act. The Board’s task, in the 1996 decision, was to determine whether the proposed zoning by-law constituted good planning. The task of the Board in the present case was to determine the market value of the expropriated lands, based on highest and best use, and it did so.

71Nor did the Board err in assessing market value without considering the parkland dedication credit agreed upon by the parties. The agreement on a parkland dedication credit occurred during the hearing, but it was not determinative of market value, which remained an issue for the Board to determine. Indeed, the TRCA argued that the market value was $94,450, based on the use as open space, and the Board rejected that argument.

72The TRCA also argued that the expropriated lands would likely have been dedicated for parkland use by a developer if they were not expropriated, given their irregular configuration. However, the right to compensation is not affected by the probability that the expropriated land would have been dedicated if developed (Markpal Holdings Ltd. v. Metro Toronto (No. 2) (1977), 13 L.C.R. 270 (L.C.B.) at pp. 282-83; Meadow Acres Investments Co. v. Metro (1985), 34 L.C.R. 158 (O.M.B.) at pp. 185-86, aff’d [1986] O.J. No. 2494 (Div. Ct.)). Therefore, the fact that these lands would probably have been dedicated if the Claimants’ lands were redeveloped does not result in a reduction in the compensation to which they are entitled.

73The TRCA is, in effect, asking this Court to substitute its views for those of the Board in valuing the expropriated Motel Properties and to interfere with its findings of fact, even though deference is owed to the Board’s expertise in the market valuation process (747926 Ontario Ltd. v. Upper Grand District School Board, supra at para. 23).

74There was ample evidence to support the Board’s conclusion with respect to market value, and we see no reason to interfere with the valuation of the expropriated Motel Properties. The Board rejected Mr. Robson’s view that the expropriated properties did not have development potential. It found as a fact that if the TRCA scheme was ignored, as required by the Act, the expropriated lands had the same development potential as the other lands on the Motel Strip. It also found that to facilitate development, some filling of the submerged lands would likely have been permitted. There was evidence to support those conclusions.

75The Board also stated clearly why it preferred Mr. Weston’s development options and why it preferred Mr. Atlin’s valuation to Mr. Robson’s. In our view, the Board reached a conclusion on market value of the Motel Properties that was reasonable, given the evidence before it. Therefore, this ground of appeal is denied.

TRCA Issue No. 2: Did the Board err in applying the Pointe Gourde rule?

76The Pointe Gourde rule, as legislated in s. 14(4)(b) of the Act, provides that in determining the market value of expropriated land, no account shall be taken of any increase or decrease in the value of the land resulting from the development or the imminence of the development in respect of which the expropriation is made, or from any expropriation or imminent prospect of expropriation.

77The TRCA submitted that the Board erred in disregarding designations of the expropriated lands for low intensity open space use in the City and Metro Official Plans. According to the TRCA, these designations were not intended to down-zone the land the TRCA intended to acquire (as the Board had found), but were the result of a community-wide planning exercise, and they were an appropriate use for these lands.

78The TRCA relied on the decision in Kramer v. Wascana Centre Authority, [1967] S.C.R. 237. There, the appellant’s lands had been zoned for single family detached dwellings, but were rezoned to public service. The arbitrator valuing the land had held that the by-law was an independent zoning enactment, and not part of the expropriation machinery, and the Supreme Court of Canada upheld that finding (at p. 239).

79The TRCA submitted that the Board disregarded over 30 years of waterfront planning that achieved a balance between open space with low intensity uses along the water’s edge and high densities south of Lakeshore Boulevard West. In its submission, redevelopment could only have occurred through a secondary plan that made adequate provision for infrastructure and parks.

80In this case, the Board made findings of fact both with respect to the TRCA scheme, the highest and best use of the property, and the purpose of the open space zoning. These were matters within its expertise, and there was evidence to support its conclusions, as set out in the preceding section of these reasons. Therefore, its findings should not be disturbed.

81The TRCA also argued that the Board erred in applying s. 14(4)(b) of the Act because it failed to screen out the positive values of the TRCA scheme, including the new storm water management facility, the Linear Park and the waterfront road, from the value of comparable properties in the Motel Strip area. In its submission, without scheme-related public investment in infrastructure, the prospect of development would have been remote, and the market value of the expropriated lands would have been lower. Moreover, the Board compounded its error by placing reliance on six sales of land in the Motel Strip, all of which were increased in value by the scheme.

82In addition, the Board is said to have erred because it did not take into account the necessity for a developer of the Motel Properties to contribute to the costs of municipal services and to meet the higher parkland requirements for the area. The comparable townhouse properties chosen by Mr. Atlin and relied upon by the Board were in serviced areas, and therefore, the market value should have been adjusted downwards to reflect the cost of contributions for infrastructure.

83In our view, there was no error in applying s. 14(4)(b) of the Act. Mr. Atlin’s valuation of the townhouses was based on comparable townhouse sales in other areas of the City, which he adjusted because of the various factors set out in his report. He did not base the townhouse valuation on properties in the Motel Strip.

84Moreover, he was asked about his treatment of servicing costs in his valuation, and he explained that he worked on the assumption that there would be no extraordinary costs of servicing the Motel Properties in order to develop them. He made no adjustment for the higher parkland dedication requirement, as he concluded that the market did not understand the higher requirements.

85The Board accepted his valuation, and there was ample evidence to support its conclusions. In doing so, the Board did not err by failing to screen out the scheme in valuing the property. Therefore, this ground of appeal fails as well.

TRCA ISSUE NO. 3: Did the Board err in awarding damages for injurious affection in an amount to be agreed upon not less than $1,860,000?

The Board’s Findings

86“Injurious affection” is defined in s. 1(1) of the Act, quoted earlier. It encompasses damages caused by the acquisition, the construction of the works on the land taken, the use of the works on the land taken, or any combination of these events. In this case, the Claimants bore the onus of proving that their remaining lands have been reduced in market value because of the expropriation, and that the injurious affection is causally connected to the expropriation.

87In discussing the matter of injurious affection, the Board succinctly stated the issue as follows (at p. 58 of its Reasons):

In the Board’s view it is un-arguable that what could be built before the taking cannot now be built after the taking. The evidence indicates that after expropriation, a form of preferred development that included townhouses, because of the expropriation is replaced with less valuable high-rise units. This is a result of a reduction in landmass. That is, it is alleged that the Claimants’ lands have been compromised by the taking. The acquisition, therefore, has led to a claim for injurious affection of the lands.

88The Board held that there should be no set-off pursuant to s. 23 of the Act, because the public works built in the area would benefit other adjacent landowners in the same way as the Claimants. Rather than calculate an amount for damages for injurious affection, the Board left it to the parties to agree on a quantum, which was to be less than $1,860,000. If the parties could not agree, the Board could be spoken to. Because of this appeal, the quantum of the damages for injurious affection has never been quantified.

The Issues

89The Claimants argued that the nature of potential development on the remaining lands has been altered by the acquisition, in that before expropriation, townhouses and a high-rise condominium could have been built on the property, whereas post-expropriation only condominium units can reasonably be built there. The nature of the change was described by the Claimants as being an element of “compression”, since after expropriation there was less land upon which to build.

90The TRCA contends that the Board erred in not determining the quantum of compensation for injurious affection. In addition, the TRCA submits that there is a lack of evidence establishing linkage or causal connection between any reduction in market value of the remaining lands and the takings. As well, the Board is said to have erred in not setting off betterment arising from the scheme against injurious affection pursuant to s. 23 of the Act, as $20 million public investment in infrastructure, the transferred density and other scheme-related benefits enhanced the value of the Claimants’ remaining lands.

Analysis

91The Board found that the remaining lands have been injuriously affected “at least by the acquisition of part of the Claimants’ lands” (Reasons, at p. 59) - that is, the reduction in market value was linked or causally connected to the expropriation. We would not interfere with that finding. Although the Board did not calculate the loss per se, it properly stipulated that the award should not include assessment of the 56 density units allocated to the House Properties.

92In order to set off betterment against damages for injurious affection, the advantage to the remaining land must be a special or distinct advantage and not a general benefit: see Starr v. Metro Toronto (1969), 1 L.C.R. 40 (Ont. Co. Ct.); Admiral Leaseholds v. Ottawa Carleton (1983), 29 L.C.R. 142 (O.M.B.) and Parks v. Ontario (Ministry of Transportation) (1995), 56 L.C.R. 166 (O.M.B.), aff’d (1997), 62 L.C.R. 252 (Ont. Div. Ct.). Despite public amenities, which in the Board’s words, “certainly enhance the lands that edge onto these facilities”, and notwithstanding the expenditure of public funds “for utility improvements that benefited lands within and probably beyond the motel strip lands,” the Board found that “the adjacent developers enjoy the same benefits as the Claimants from the public works” (at p. 59).

93In denying the TRCA’s claim for a set off because of betterment, the Board noted, among other things, certain standards for payback by developers, particularly the adoption by the Municipality of Metropolitan Toronto (as it then was) of a recommendation from its Management Committee, stating that:

…the private sector, through the development process, funds the costs of roads, piped services, creation of storm water management facility and the local park. (Reasons, p. 61)

94In the result, the Board rejected the TRCA’s argument that the Motel Properties, being located at the west end of the Motel Strip, benefited in a way that was “special and unique”. Indeed, the Board found that no special advantages inured to the Claimants that were not shared by other properties in the neighborhood. If any benefit were derived from the project, it was conferred on the other properties located near the Linear Park beside Waterfront Drive. Moreover, the public expenditures were largely recoverable through the development process. The Board’s finding in that regard is, in our view, reasonable and well-supported by the evidence. The appeal of the TRCA on the issue of injurious affection and set off is, therefore, denied.

TRCA Issue No. 4 AND city issue no. 2: Did the Board err in awarding disturbance damages for delay of $4,000,000?

95Section 13(2)(b) of the Act provides that the expropriating authority shall pay to an owner compensation for “the damages attributable to disturbance”. Section 18(1) of the Act provides that the expropriating authority shall pay to an owner, in respect of disturbance, “such reasonable costs as are the natural and reasonable consequences of the expropriation”.

The Board’s Findings

96The Board ordered the TRCA to pay disturbance damages in the amount of $4,000,000 in respect of the claim for delay to the Claimants’ ability to redevelop the lands for residential purposes. This award was based on the Board’s findings that from 1986 onward, the achievement of the TRCA’s objectives delayed any meaningful development of the Claimants’ lands. Using words from the decision, the Board accepted the Claimants’ position that the “imminence of the Scheme, in a sense ‘mothballed’ the development of their land” (Reasons, p. 62).

97While this award was made solely against the TRCA, it was raised as an issue by both Appellants for reasons including an intergovernmental agreement whereby the City agreed to pay 50 percent of the award.

98The Board started its analysis of entitlement to damages for delayed development opportunity by acknowledging the relevance of the principles set out in Dell Holdings, supra and Devine v. Ministry of Transportation (2002), 76 L.C.R. 89 (Ont. C.A.) to the effect that the Act is to be interpreted in a broad, liberal and flexible manner in considering damages flowing from expropriation. The Board then focused in on the important issue of causation by quoting a passage from LaFleche v. Ministry of Communications (1975), 8 L.C.R. 77 (Ont. Div. Ct.), quoted with approval in Dell, to the effect that compensation must be for damages incurred as long as they are not too remote and are the natural and reasonable consequence of the expropriation.

99The Board grounded its conclusion as to entitlement to disturbance damages on three findings of fact. First, the Board accepted the opinion of the Claimants’ planner, Barry Morrison, that the scheme caused delay. In Mr. Morrison’s opinion, given the normal evolution of the planning process, adoption of the District 7 plan in the 1970’s would “probably have led to the issuance of building permits by the mid 1980’s” (Reasons, p. 62). The Board went on to find that this “natural planning process was placed on hold because of the pursuit of a public amenity area and a Marine Parade Drive along the Ontario Lake frontage of the Motel Strip” (Reasons, p.62). The Ontario Cabinet decision that the McLaughlin Plan could only proceed on a comprehensive land assembly basis was a “death knell” to that plan. Because of the Cabinet’s decision and the related need to develop a public amenity area and the Marine Parade Drive, prior to complete assembly of the lands, development of the lands between 1977 and 1996 was just about impossible (Reasons, p. 63).

100The Board then went on to find that the Claimants acted reasonably in refusing the substantial offers to purchase their lands received during the period from 1971 to 2000 and in not pursuing a development application for their lands.

101In the face of these findings, the Board reasoned that the Claimants were entitled to disturbance damages as follows:

In the Board’s view, the Claimants, given the uncertainty surrounding the Scheme and its obvious implications between 1984 and 1992, could not sensibly have provided a development plan for approval to the City. (Reasons, p. 65)

102The Board then proceeded to consider the amount of the award for damages for delayed development opportunity. The starting point was based on the Board’s acceptance of Mr. Morrison’s evidence that the delay commenced in 1986. In calculating quantum, the Board relied on the only expert who provided evidence on that issue, Glen Tautrims, an accountant and business valuator who testified on behalf of the Claimants. Mr. Tautrims calculated the amount of money that the Claimants were out of pocket as a result of not being able to sell their lands because of the delay. He estimated the sale price they might have achieved through sales of the properties between 1985 and 1989, added an estimated investment return on the estimated sale proceeds and then deducted from these amounts the notional sale proceeds in 1998 and income the Claimants actually earned during the period of delay. In this way Mr. Tautrims estimated a loss ranging between $2,368,000 and $24,162,000. The Board accepted the amount of $4 million, the figure the Claimants “settled” upon as “bearing no risk of over compensation” (Reasons, p. 65).

103The Board refused to reduce the award due to the fact that Mr. Tautrims had not included income taxes in his calculations based on what it referred to as settled law that income tax is not to be deducted from awards made under the Act.

The Issues

104The TRCA submits that the Board incorrectly applied the tests as to whether the Claimants suffered disturbance damages and also erred in the calculation of any such damages. Similarly, the City submits that the disturbance damage award is “fraught with legal and factual errors”, is therefore incorrect and ought to be set aside.

105The thrust of the Appellants’ arguments that the Board erred in awarding damages for delay focused on the issue of causation. They argue that the circumstances in this case are very different from those that formed the basis for the disturbance damage awards in Dell and Devine, supra. In those cases the expropriating authority was found to have delayed pending development applications. Here, however, the claim for damages for delay is hypothetical and speculative. The scheme did not disturb, delay or interfere with the Claimants’ opportunity or ability to deal with the property, and the Board erred in so finding. In the absence of a development application, the statutory planning process, part of which the Claimants themselves invoked, cannot form the foundation for disturbance damages. Moreover, the Claimants did not list their properties for sale, rejected all offers, and at two prior Board hearings, they took the position that they had no immediate intention to sell or develop their lands.

106The TRCA and the City advance an additional argument based on the concluding words of s. 13(2) of the Act, providing that where the market value is based upon a use other than the existing use, no compensation shall be paid for disturbance damages that would have been incurred by the owner in using the land for such other use. The Appellants argue that the existing use was commercial for the Motel Properties and single family residential for the House Properties. The Board held that the highest and best use was for a future mixed-use residential development. As the market value was based on a land use other than the existing use, no compensation should have been awarded for delay.

107The TRCA also submits that in using transferred units, the Board erred in calculating the damages for delay. Mr. Tautrims’ conclusions assumed the availability of 349 units in 1986. TRCA says that this number of units included 153 compensatory units and 56 units which the Board held could not be transferred from the House Properties. The TRCA’s position is that this approach more than doubled the damages for delay.

108With respect to the tax consequences of the award for disturbance damages, the TRCA argues that the Board misapplied the decision of the Divisional Court in City Parking Ltd. v. City of Toronto (1980), 20 L.C.R. 159 (Ont. Div. Ct.). Counsel submits that in the City Parking case the lost profits were attributable to specific years and would be taxable as income upon receipt of the award. In the present case, the disturbance damage award was quantified using the values produced by two hypothetical sales. The award of compensation would trigger no actual tax obligations.

109The Claimants submit that the Appellants’ arguments with respect to this issue are primarily factual. They were properly awarded disturbance damages for the loss of opportunity to deal with their property during the delay period as identified by Mr. Morrison. The Board made no error of law in so finding. They further argue that, as in Dell, the concluding words of s. 13(2) of the Act have no application in the circumstances present here.

110Concerning the tax treatment the Claimants submit that the argument that the award for compensation for damages for delay would trigger no tax consequences is without evidentiary foundation.

Analysis

111For the following reasons, we find that the Board’s award of disturbance damages against the TRCA was not reasonable and should therefore be set aside.

112It would appear that the understanding of the nature of disturbance damages as expressed by the Board in Black v. Brant (1972), 1 L.C.R. 325 has been consistently applied. At p. 333 of that decision, the Board described disturbance damages as follows:

Disturbance damages as referred to in ss. 13 and 18 of the Act, are the same damages as at common law, that is, all damages, costs and expenses that are directly attributable to the expropriation of lands on which a business or undertaking was carried on, provided they are not too remote…

113In our view, the Board, in awarding disturbance damages, erred in departing from this definition. More precisely, the Board erred in finding that the expropriation caused disturbance damages in the form of a lost opportunity to realize on property, the use of which did not involve any business or undertaking that was disturbed by the pending expropriation.

114To be entitled to an award for disturbance damages, the Claimants bear the burden of proving that the expropriation process caused them to be in a position where they could not proceed with their business of developing their property. As stated in Dell, the damages must be the “natural and reasonable consequence of the expropriation” (at p. 91).

115The Board’s findings that led to its conclusion that the Claimants were entitled to damages for delayed development opportunity do not fall into the same category as the findings upon which the awards of disturbance damages were grounded in Dell and Devine. In those cases, the process of expropriation had the effect of taking the owners’ development plans off the approval track. In Dell, the determination that part of the claimant’s property might be required for a GO station “froze” the entire parcel of land, in the words of Cory J., as the municipality could not grant zoning approval for development of any part of the property (at para. 28). He went on to say that the loss resulting from Dell’s inability to use any of its land for development purposes clearly came within the definition of a business disturbance (at para. 31). Similarly, in Devine, the plan to expropriate part of the owner’s property prevented the owner from continuing with plans for development or sale.

116While disturbance damage awards are not limited to circumstances where there is a pending development application, the facts must support a finding that the Claimants intended to use the land for a specific business purpose but were prevented from doing so for a period of time due to the expropriation process. Here, the Claimants were not developers, did not list their properties for sale, did not negotiate with the many prospective purchasers who tendered offers and did not submit a development application. They continued to operate the motels on their properties and asked for a Hearing of Necessity at the time of the City expropriation.

117The Board’s findings that the Claimants were reasonable in not accepting the various offers to purchase and that they were interested developers, even if supported by the evidence, do not lead to an award of disturbance damages. The missing factor is fundamental to an award of this nature – a lost opportunity in the form of a finding that the Claimants had an active business plan pertaining to the affected lands that was delayed by the expropriation process. Without evidence of this nature, the Claimants are unable to establish that disturbance damages are a natural and reasonable consequence of the expropriation, and the Board reached an unreasonable decision in awarding disturbance damages for delay.

118Furthermore, the Board erred in implicitly attributing the entire period of delay from 1986 to the expropriation process. In the Motel Strip area, land use planning was very complex, focusing on comprehensive planning involving numerous stakeholders and a multitude of issues. The Board erred in not distinguishing between the adverse consequences that trigger a claim for compensation and those that do not – such as the time needed for the completion of this planning process. On this basis alone the award is not reasonable, as it gives the Claimants a windfall benefit in the form of compensation for an alleged delay in development essentially arising from the appeals under the Planning Act, R.S.O. 1990, c. P.13, some of which the Claimants themselves invoked.

119We find that the Board also erred in failing to address the issue of mitigation. In Dell, the Court, in addressing the claimant’s duty to mitigate, found that Dell could not take any action that would mitigate its loss in the development of its properties. The company had purchased its land for development and was in the process of seeking the necessary approval for development when the authority expressed its interest in a portion of Dell’s land. The result was that its lands were frozen while the authority resolved the extent of the taking. In these circumstances, there “was nothing Dell could do but to wait for the Authority’s decision before it could get on with its business of land development” (para. 41).

120The circumstances in this case are very different. There is no evidence that the Claimants could do nothing other than wait for the expropriation. Nor is there any evidence that they were prevented from negotiating with any of the numerous prospective purchasers or that they could not have submitted a development application as had other Motel Strip landowners. In fact, there was considerable evidence that the Claimants had ample opportunity to develop and/or sell their properties.

121Given our conclusion that this award for disturbance damages ought to be set aside, the remaining arguments advanced in relation to this issue are no longer necessary to determine. However, for completeness we provide the following brief analysis.

122We next turn to the Appellants’ arguments concerning the concluding words of s. 13(2) of the Act. This provision is intended to prevent double recovery, in the sense that the claimant is not entitled to compensation for the highest and best use and for disturbance damages with respect to the existing use of the land.

123We agree with the Claimants’ submissions on this point. The claims for disturbance damages all pertained to the highest and best use of the lands and/or were causally connected to the taking but did not pertain to the existing use of the lands, and therefore, the residual section of s. 13(2) of the Act has no application.

124Nor was there any error in accepting Mr. Tautrims’ calculations based on the density units which had been transferred to the Motel Properties and the density units attributed to the House Properties. Mr. Tautrims based his calculations on the assumption that there had been a delay in the development of all the properties. In our view, the Board was entitled to accept his decision to use the 349 units in making his calculations. Moreover, we note that the TRCA’s expert, Mr. Dyson, in commenting on Mr. Tautrims’ analysis, used the same number of units.

125Finally, we see no basis upon which to interfere with the Board’s reliance on Mr. Tautrims’ treatment of the tax implications of the award for disturbance damages. Mr. Tautrims ignored both possible capital gains taxes on the notional sale and income taxes on the yearly income that he imputed to those proceeds. According to the evidence, the decision to ignore possible capital gains was based on the conclusion that on a notional sale of the Motel Properties, a rollover would be available if the proceeds were used to purchase a similar replacement property. Mr. Tautrims decided not to deduct taxes from the yearly income that he attributed to the notional sale because, in his opinion, the rate of return that he used was very low. His evidence was that had he utilized a higher rate of return and subjected it to tax, the net position would have been the same.

126The Board was entitled to accept Mr. Tautrims’ calculation of the award for disturbance damages based on a gross amount without tax deduction as this amount, if paid, would be taxable in the hands of the Claimants. The Board properly followed the Divisional Court in City Parking, supra.

Conclusion

127We return to the basis of our conclusion that the Board’s award of disturbance damages for delay in development opportunity must be set aside. Simply put, the Claimants in their capacity as landowners, without more and especially without any evidence of an intention to develop their land into a business opportunity, are not able to demonstrate an entitlement to disturbance damages. On the facts, such damages are remote and are therefore not the natural and reasonable result of the expropriation or the expropriation process.

TRCA ISSUE NO. 5: Did the Board err in awarding compensation of $1,048,000 for loss of riparian rights?

128The market value of a property is comprised of the current value of the entire bundle of privileges associated with the land, including riparian rights, which the Board defined as follows:

In common law the owner of lands adjoining a river, stream or lake has certain rights related to the use of water. The rights arise from the ownership of the bank, that portion which adjoins the upland with the water itself. The Latin word for bank is “ripa” hence the rights are called “riparian” rights, and the owner is similarly referred to as “riparian owner”. Since riparian rights are part of common law, there is no requirement for them to be expressly conveyed in a deed or title certificate. (Reasons, p. 54)

The Board’s Findings

129After canvassing various categories of riparian rights, the Board identified the two in issue as being the right of access to the water and the right of accretion. The right of access is considered a compensable item in an expropriation settlement even though no land is taken, and access is still available from other points on the riparian owner’s remaining waterfront lots. There are two types of accretion: the gradual deposit of alluvium on the banks creates one; the other results from the gradual recession of the waters to a lower level. In either case, the additional dry land normally belongs to the riparian owner.

130Based on the evidence before it, the Board found that the Claimants had a compensable claim for the loss of riparian rights and accretion lands. The Board then went on to value the claim.

131For this, the Board relied on the evidence of Mr. Atlin. The Board accepted his evidence as demonstrating that the TRCA, in settling riparian rights with other owners along the lake, had established a market value for such rights. Based on the available market data, Mr. Atlin made the necessary adjustments relevant to the subject property and appraised the loss as 10% of the market value of the properties. In its summary of compensable findings, found at the conclusion of the Reasons, the Board calculated these values as $880,000 in relation to the Motel Properties and $168,000 in relation to the House Properties.

The Issues

132The TRCA submits that the Board erred in concluding that, in addition to the market value of the land expropriated, the Claimants were entitled to compensation for loss of riparian rights. They argue that there was no market evidence that a purchaser would pay a premium for such rights if the properties were going to be used for multi-family residential purposes. Furthermore, they say that the award contravenes ss. 14(1) and 14(4)(b) of the Act.

133Finally, the TRCA submits that in calculating 10% of the upland value, the Board erred by adding the value of the 153 compensatory units. This over-stated the compensation for riparian rights by $459,000.

134The Claimants argue that the Board’s findings as to entitlement to and market value of loss of riparian rights were both supported by the evidence and sound. In contrast, say the Claimants, the contrary views of Mr. Robson, the TRCA’s expert, were not in accord with the facts or the law.

Analysis

135The mainstay of the TRCA’s argument on this issue was that, given the use to be made of the properties, no value should be attributed to the riparian rights. The Board, in rejecting this position, relied heavily on the expert evidence of Mr. Atlin that there was a market value for such rights and the amount of that value.

136The evidence shows that the transactions upon which Mr. Atlin relied in forming the opinion the Board accepted, were sales to the TRCA based upon objective, pre-expropriation, market value appraisal evidence. In each case the TRCA acquired lakefront property and paid separately the market value of riparian rights. It was reasonable for the Board to award compensation on the basis of this analysis, as the TRCA itself had, in its own dealings, accepted that riparian rights were a compensable interest.

137The TRCA raises an understandable concern about a potential danger in relying on sales to an expropriating authority, as often they are below market value given the inequality of bargaining power. However, in this case the Board’s acceptance of this evidence was reasonable. Decisions such as Gagetown Lumber Co. v. R. (1956), 6 D.L.R. (2d) 657 (S.C.C.) make it clear that provided sales of this nature are fair transactions in the marketplace, they are appropriate evidence. The fact that they are to an expropriating authority is a matter of weight.

138Here, the Claimants relied on the TRCA’s sales at values based on independent valuations. Furthermore, the TRCA led no evidence that it paid too much. In these circumstances, the rationale for excluding sales to an authority does not apply.

139Mr. Robson’s opinion that a condominium developer would not pay a premium for the shore and submerged lands and associated riparian rights, knowing they would have to be dedicated for development purposes, is factually sound. However, it is not legally correct, as the law requires the prospect of a dedication to be ignored for purposes of determining compensation. In decisions such as Meadow Acres Investments Co. v. Metro, supra, it has been consistently held, based on, among other things, s. 14(4) of the Act, that the compensation payable in the event of expropriation will not be affected by the likelihood that had the land not been expropriated, and the owner had applied to develop it, then the land would likely have been dedicated.

140Mr. Robson disputed Mr. Atlin’s opinion in a number of other areas, but the Board accepted Mr. Atlin’s opinion for reasons set out in the decision. In our view, the Board reached a conclusion on the value of the loss of riparian rights that was reasonable, given the evidence before it. There was no error in the treatment of the 153 transferred units, given the Board’s findings with respect to the density of the Motel Properties discussed earlier in these reasons.

141The Board’s decision to include a value for loss of riparian rights, primarily due to the market evidence contained in Mr. Atlin’s report and Mr. Atlin’s calculation of the amount of that award, was reasonable based on the evidence before it that the Board was entitled to accept. The appeal on this issue is therefore dismissed.

CITY ISSUE NO. 1: Did the Board err in awarding disturbance Damages of $1,850,000 for loss of opportunity for parkland dedication?

The Board’s Findings

142The Board found that the Claimants’ loss of opportunity to obtain a parkland credit was the natural and reasonable consequence of the expropriation. At p. 53 of its Reasons, the Board stated, “Before expropriation the Claimants had a right to the credit and after expropriation they lost that right”. The Board refused the claim to transfer the 56 units from the House Properties to the Motel Properties, as that would be double counting of compensation payable as a result of taking the house lands. However, the Board ordered compensation for both the market value of the House Properties ($1,960,000) and disturbance damages for the lost opportunity for parkland dedication, valued at $1,850,000.

143The Board made reference to “a level of secrecy as to how the parkland dedication credit worked” (Reasons, p. 48). It went on to state that “[e]ach development bargained with the City regarding the parkland dedication and ensuing credit”. Quoting Policy 15.7.3 of the MSSP, the Board also acknowledged that the City had discretion with respect to parkland credits. However, it also made reference to the fact that Monarch and Newport, two developers within the Motel Strip, received both density transfers and parkland credits for lands acquired by the City after dedication of their properties (at p. 51). Finally, the Board concluded that the Claimants had not failed to mitigate their damages by failing to dedicate the House Properties, as they were “shut out” of doing a deal with the City, because the City had entered into an agreement with Newport to allow Newport to acquire the density from the House Properties.

The Issues

144The City submits that the Board made a series of legal and factual errors in concluding that the Claimants were entitled to disturbance damages in the amount of $1,850,000 for the loss of opportunity to dedicate the House Properties for parkland and obtain a parkland credit. More precisely, it erred in awarding damages for loss of a parkland credit and also awarding market value for the House Properties on the basis of their development for residential use. As well, the City submits that the Board erred in finding that the Claimants had a “right” to dedicate the House Properties to the City and obtain a corresponding parkland credit, which could be used to offset future parkland dedication requirements arising on development of the Motel Properties, to be imposed under the Planning Act, supra.

145The Claimants argue that the Board made no error of law and that they were properly awarded disturbance damages for the loss of a parkland dedication credit in order that they be treated equally and fairly with Monarch and Newport.

Analysis

146In order to deal with this issue, one must start with the law and policies relating to parkland dedication. Section 42 of the Planning Act sets out the parkland dedication requirements applicable to all developers. Section 42(1) specifically confers the power on a municipal council to pass a by-law requiring conveyance of a percentage of land for park or other public recreational purposes “as a condition of development or redevelopment of land”. The term “development” is defined in s. 41(1) to mean, in part, “the construction, erection or placing of one or more buildings or structures on land or the making of an addition or alteration to a building or structure that has the effect of substantially increasing the size or usability thereof…”. Pursuant to s. 42(3), the municipality may require a higher amount of land be conveyed if the development is for residential purposes.

147Subsection 42(6) confers discretion on the municipal council to accept payment instead of a conveyance of land. The determination of the value of the land is tied to the day before the day the building permit is issued in respect of the development or redevelopment.

148In October 2000, City Council amended the City’s Alternative Parkland By-law to include the Humber Bay Shores Secondary Plan (that is, the Motel Strip). The parkland dedication rate for the Motel Strip was fixed at 0.5 hectares per 300 units, which is the minimum requirement in the MSSP.

149The MSSP dealt with parkland dedication in Policy 15.7.3, which states in part:

As a condition of approval for development or redevelopment of land for residential purposes, Council may require the dedication of land to the City for parks or other public recreation or cultural use at a minimum rate of 0.5 hectares and to a maximum rate of 1.0 hectares for each 300 units proposed …

… In calculating the rate of parkland dedication, Council may consider a reduced rate where a development provides a needed public facility which is deemed to be of benefit to the larger community, or where a development makes a significant contribution to the implementation of the Waterfront Public Amenity Area. The City may require cash-in-lieu of parkland or a combination of land and cash where the size, configuration or location of the site is not appropriate for park purposes.

150Policy 15.7.4 is also relevant. It deals with parks acquisition in the following terms:

Council shall secure needed local park areas within the motel strip through dedication. …

151Policy 15.2.3 must also be considered. It deals with density transfers, and reads in part:

Density transfers within a redevelopment site shall be considered where lands are dedicated for the Public Amenity Area, the proposed internal public roads 1 to 6 on Schedule B, including road 7 where this is dedicated as a public road, and lands dedicated for the widening of Lake Shore Boulevard, or where Council or the School Boards considers it appropriate to accept the dedication of all or part of a property for parks or other public facilities including schools. …

It is also recognized that the size and configuration of certain properties make them unsuitable for high density development, and that it may be appropriate to transfer density between properties to achieve desirable public elements of this Plan (e.g. internal public roads, submerged portions of water lots, public amenity area, view corridors, public open space or school sites etc.) A transfer between two or more individual properties may therefore be permitted where the resulting development on the receiving lot conforms with the objectives of this Plan, and where the donor lots are dedicated to the City, school boards, Metropolitan Toronto or the Metropolitan Toronto and Region Conservation Authority for public use. Full utilization of the density on the net site is subject to the provisions of Sections 15.3.2., 15.4.2. and 15.5.5. of this Plan.

152As stated earlier in these reasons, the House Properties were zoned “OS” (“Public Open Space”), but had been given a total “Mixed Use” density of 56 residential units. In accordance with the general density transfer provisions of the MSSP, the zoning by-law provided that the 56 units could be transferred to another development parcel, provided that the House Properties were dedicated to a public authority and certain other conditions were met (Zoning By-law 1994-197, s. 11(f) and Schedules A and C).

153Neither the Planning Act nor the by-law refers to “parkland credits”. However, there was evidence from Tim Park, an expert planning witness for the City, that the City had developed certain policies with respect to parkland credits in the late 1990’s. Developers would receive credits for high and dry lands acquired by the TRCA (whether by dedication or expropriation) for the Linear Park. The credits would be determined in accordance with a chart prepared for the City by the TRCA. In addition to the credits referred to in the chart, it would be possible for developers to receive credits for lands dedicated to the City for public park purposes. In situations outside the scope of the chart, owners whose lands were expropriated would not be considered for a credit.

154The chart showed that the Claimants qualified for a credit in the amount of 0.2241 hectares for the high and dry portions of the Motel Properties expropriated by the TRCA for the Linear Park. This credit was granted in the consent order made during the Board’s hearing. However, the City takes the position that the Claimants were not entitled to a parkland credit for the House Properties, both because it was a condition precedent that the properties be dedicated and because the grant of such a credit was in the discretion of the City.

155In our view, the Board erred in awarding disturbance damages for the loss of opportunity to obtain a parkland credit for a number of reasons.

156First, in doing so, it awarded double recovery for market value. Market value is defined as “the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer”. It includes the entire bundle of rights and potentialities associated with the land. In Upper Grand District School Board, supra, the Ontario Court of Appeal held that an expropriated owner can not supplement the market value of the lands by claiming disturbance damages, stating (at para. 25):

Disturbance damages are not intended to supplement the market value that s-s.14(1) of the Act prescribes: they are directed to damages that are a consequence of the expropriation and are not addressed by the compensation for market value as described in s-s.14(1). Relocation expense is a classic example of disturbance damages. Business disruption is another ….

In that case, the Board erred in awarding disturbance damages for loss of profit, because the market value would have adjusted for the undeveloped land’s potential for future development.

157The Claimants submit that there was no market for a parkland dedication credit and accordingly, the loss of that right could not be reflected in the award of market value. Therefore, they submit that the loss of opportunity to obtain a parkland credit should be awarded as disturbance damages.

158In our view, this is a case where Upper Grand applies. The House Properties were valued at their highest and best use – namely, the development of 56 residential units. The bundle of rights and potentialities associated with the land included any ability to dedicate the House Properties as parkland and to obtain a parkland credit. There was no evidence that market value would be increased because of the opportunity to dedicate. Moreover, the Claimants’ experts Mr. Atlin and Mr. Edwardh characterized the potential use of the House Properties for parkland dedication as an alternative to their highest and best use for high density residential or mixed use development. Indeed, dedication of the House Properties for parkland is logically inconsistent with development of the same lands for the 56 units of attributed density. Therefore, the Board erred in awarding disturbance damages for the loss of the parkland dedication credit, as this was double recovery.

159In the alternative, the Board also erred in finding that the expropriation caused disturbance damages in the form of a lost opportunity for a parkland credit. As these reasons have already said, disturbance damages must be the natural and reasonable consequence of the expropriation (Dell, supra at p. 92). Claims which by their nature are indirect or speculative are not compensable. In Costello v. City of Calgary (1997), 62 L.C.R. 161, the Alberta Court of Appeal discussed the principles applicable to an award for damages based on loss of opportunity, stating at p. 209:

Relief is not available under the loss of opportunity principle if the evidence shows that the plaintiff merely was deprived of a speculative chance of receiving a benefit.

The Court went on to say that the plaintiff must show that there was a “real and substantial possibility” that the event on which they based their claim would have occurred.

160In our view, the Board erred in determining the Claimants lost their “right” to a parkland credit, as they had no such right. Indeed, elsewhere in its reasons, the Board recognized that the grant of a parkland credit was a decision within the discretion of the City and one which occurred after negotiations with developers. Often those negotiations took several years.

161Section 42 of the Planning Act sets out the parkland dedication requirements applicable to all developers. Nothing in that Act, the Motel Strip planning documents, or the Board’s previous decisions specifically requires the City to give, or entitles a landowner to receive, a parkland credit in any particular situation. Section 42 of the Planning Act and the provisions of the MSSP confer discretion on the part of Council to “consider” a reduced rate of parkland dedication (that is, a credit) where certain circumstances exist – namely, dedication of land. Confidential information disclosed by the City at the Board hearing showed that all owners who proceeded with redevelopment of their lands were subject to parkland dedication requirements, and that the specific requirements in each case were the result of negotiations between the developer and the City and, ultimately, were subject to the City’s discretion.

162The Claimants were not developers, and they had never submitted a development application which would have triggered the parkland dedication requirement under the Planning Act. Therefore, the Board erred in concluding that there was a right to a parkland credit.

163The Board made a further error in allowing damages for the loss of the parkland credit, as the evidence does not support a conclusion that this was a loss directly caused by the expropriation. In order to obtain a parkland credit, the other owners had dedicated lands to the City, obtained density transfers to other lots and negotiated a credit to offset parkland dedication requirements. In this case, the Claimants’ inability to obtain a parkland credit was caused not by the expropriation, but by their decision to receive the market value of the lands on expropriation, rather than to dedicate the properties.

164The Board rejected the City’s contention that the Claimants opposed the expropriation on the basis that it was premature and not on the basis that they wished to dedicate the House Properties to the City (p. 50 of the Reasons). However, the Board made no finding that Mr. Gadzala intended to dedicate the properties and that he was prevented from doing so. Indeed, the evidence does not support such a finding. Instead, the findings in the Hearing of Necessity, as well as letters from the Claimants to the City and Mr. Gadzala’s evidence at the Board hearing show that he did not wish to dedicate the properties, even though he was aware of that option, at the latest, at the time of the Hearing of Necessity. Therefore, the evidence does not support a conclusion that there was a real and substantial possibility that the Claimants would dedicate these properties, and the Board erred in concluding that they lost an opportunity to obtain a parkland credit.

165The Board concluded that the transactions between the City and Monarch and Newport were supportive of the parkland credit claim, because those parties each received a parkland credit as well as a density transfer when they dedicated land for the Local Park. In their argument, the Claimants emphasized the fairness of treating the Gadzalas in the same way by awarding them compensation for the density as well as a parkland credit.

166The issue in an award of disturbance damages is the loss to the Claimants, not the fairness of the way in which others were treated. More importantly, however, the Claimants were not in the same position as Monarch and Newport. Both of these parties were developers who had already submitted development applications. As indicated above, owners who proceeded with redevelopment of their lands were subject to parkland dedication requirements, with the specific requirements the result of negotiations between the developer and the City. Ultimately, the particular requirements were subject to the City’s discretion, as the Board acknowledged. Monarch and Newport both dedicated their lands and received no payment from the City. Instead, they received density transfers, and they negotiated a parkland credit.

167In the case of the Claimants, there was no dedication, and they had never applied for redevelopment of their lands. Their lands were expropriated and, after a lengthy hearing, they received full market value for the properties, which compensated them for the entire bundle of rights and potentialities associated with the properties, including any potential value as a parkland dedication. By allowing the parkland claim, the Board placed the Claimants in a superior position to Monarch and Newport by giving them the benefit of an incentive designed to promote dedication, although they had chosen not to dedicate and, instead, chose to obtain fair market value for the property.

168In rejecting the City’s position, the Board also made reference to the fact that the TRCA and the City had agreed to a parkland credit of 0.2249 hectares for the Motel Properties. The Board erred in factoring this credit into its rejection of the City’s position on the House Properties, as the Board again misapprehended the discretionary nature of the City’s powers to grant parkland credits. The fact that the City exercised its discretion with respect to a parkland credit for the Motel Properties in settlement of the claim for injurious affection in the TRCA expropriation ought not to be converted into an entitlement to such a credit in the City expropriation of the House Properties.

169Where a municipality has discretion, it must not act arbitrarily or in bad faith (Congrégations des Témoins de Jéhovah v. LaFontaine (2004) 2004 SCC 48, 241 D.L.R. (4th) 83 (S.C.C) at pp. 91-92; Les Entreprises Sibeca Inc. v. Frelighsburg (Municipality), [2004] SCC 61 at para. 24). There is no evidence that the City improperly exercised its discretion or acted in bad faith in negotiating with Monarch and Newport, which had both submitted development applications and dedicated property. As Mr. Gadzala never sought to dedicate the House Properties, it would be purely speculative to determine whether a parkland credit would have been given to him and the amount thereof.

170In discussing the duty to mitigate, the Board suggested that the Claimants had been shut out of a deal with the City and, therefore, were not in a position to mitigate their loss by dedicating the properties. However, the evidence is clear that they could have dedicated the land at any point up to the expropriation, but the Claimants did not wish to do so, nor did they take any steps to do so.

171Moreover, the evidence of the agreement between Newport and the City shows that the agreement would not have prevented dedication by the Claimants. The agreement to sell the density from the House Properties to Newport was conditional on the City acquiring title to the lands by December 31, 1997 so as to permit the transfer of density. Had the Claimants come forward at any time prior to expropriation and dedicated their lands to the City, the agreement between the City and Newport would have been frustrated.

172The Claimants submit that the Board determined that they met the test for mitigation, despite the failure to dedicate the properties. However, the issue of mitigation does not arise in this case unless there is first proof that disturbance damages were caused by the expropriation. Given the lack of evidence of an intention to dedicate by the Claimants and given the fact that there was no right to a parkland credit, the Claimants failed to show a real and substantial possibility that they were deprived of a parkland credit because of the expropriation. Therefore, the Board reached an unreasonable decision in finding that there was a loss of opportunity to obtain a parkland credit that was compensable as disturbance damages, and this part of its order is set aside.

CITY ISSUE NO. 3: Did the Board err in assessing the market value of the House Properties at $1,960,000 rather than $1,736,000, plus interest from June 16, 1996?

173The Board ordered the City to pay the Claimants the sum of $1,960,000 plus interest from June 16, 1996, in respect of the remaining portions of the House Properties expropriated by the City on December 23, 1997. The City asks that the award for the market value of the House Properties be set aside and an order be substituted awarding the Claimants $1,736,000 for market value plus interest from January 19, 1998 on the unpaid balance.

174The parties agreed that the effective date of the City expropriations was January 19, 1998. The parties also agreed that, for purposes of the City expropriations, the Local Park scheme is to be disregarded pursuant to s. 14(4)(b) of the Act in order to determine market value. Moreover, it is undisputed that, pursuant to s. 25 of the Act, the City has paid the Claimants on account of the market value of the House Properties the sum of $1,250,000.

175The Claimants are entitled to compensation on the premise that the House Properties had available, at the moment of expropriation, 56 units of residential density; and that the highest and best use of the House Properties, in the absence of the City scheme, was for future mixed-density residential redevelopment. These matters are not in contention.

176The sole area of disagreement at the hearing before the Board was the appropriate unit value as at the effective date of expropriation. The Claimants’ appraiser, Mr. Atlin, estimated the unit value of the residential portion of the lands as at January 19, 1998 to be $35,000 per unit whereas the City’s appraiser, Mr. Robson, estimated the unit value to be $31,000. The Board preferred and accepted Mr. Atlin’s evidence as to the value of a single residential unit at the relevant time.

177The City alleges that the Board “totally overlooked Robson’s evidence as to the market value of the House Properties,” since no reference to it appears in the decision, nor is Mr. Robson noted as a City witness on this issue in the witness chart. It, therefore, invokes the ratio in R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869 at para. 31, citing Estey J. in Harper v. The Queen, [1982] 1 S.C.R. 2 at p. 14:

Where the record, including the reasons for judgment, discloses a lack of appreciation of relevant evidence and more particularly the complete disregard of such evidence, then it falls upon the reviewing tribunal to intercede.

178A review of the totality of the Board’s reasons in this case reveals no lack of appreciation of relevant evidence such as contemplated in R. v Sheppard. Further, as noted in that case, not every piece of evidence need be addressed in a decision.

179The Board’s reasons demonstrate an appreciation of the various criteria underlying the analysis of highest and best use and the differing approaches utilized by the experts. Further, there is specific reference to Mr. Robson’s evidence with respect to market conditions at the time, and it would appear likely that this analysis implicitly applied to both the House and the Motel Properties.

180The City is, in effect, asking this Court to re-try the case and make findings of fact in its favour. The Board made a specific finding of fact accepting Mr. Atlin’s opinion of value based on his lengthy and detailed report. It clearly preferred the evidence of Mr. Atlin as to the value of land designated for residential purposes at the relevant time. It was entitled to do so. The award of $1,960,000 for the market value of the House Properties shall stand.

181Given the concession by the Claimants’ counsel that the relevant date for the interest calculation should be January 19, 1998, interest on the award shall be calculated pursuant to s. 33 of the Act from January 19, 1998, and is payable on the unpaid balance of the award, from time to time, taking into account the s. 25 payment. The appeal of the City on the issue of market value is, in other respects, denied.

CONCLUSION

182Therefore, the TRCA appeal with respect to disturbance damages for delay is allowed, and the order of the Board is varied to delete the award of $4,000,000. The balance of the TRCA appeal is dismissed.

183The City’s appeal with respect to damages for the loss of opportunity to obtain a parkland credit is allowed, and the order is varied to delete the award of $1,850,000 and to award interest from January 19, 1998. The balance of the City’s appeal is dismissed.

184If the parties are unable to agree on costs, they may make written submissions in accordance with the following timetable: the Claimants shall make their submissions within 30 days of the release of this decision, with the Appellants to make responding submissions within 21 days thereafter, and the Claimants to make any reply within seven days.

Chapnik J.

Epstein J.

Swinton J.

Released: April 24, 2006

COURT FILE NO.: 598/04 and 599/04

DATE: 20060424

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CHAPNIK, EPSTEIN And SWINTON JJ.

B E T W E E N:

TORONTO AND REGION CONSERVATION AUTHORITY

Respondent (Appellant)

• and –

EDWARD GADZALA, V & E GADZALA HOLDINGS LIMITED and 412264 ONTARIO LIMITED

Claimants (Respondents on Appeal)

B E T W E E N:

CITY OF TORONTO (formerly City of Etobicoke)

Respondent (Appellant)

• and –

EDWARD GADZALA, V & E GADZALA HOLDINGS LIMITED and 412264 ONTARIO LIMITED

Claimants (Respondents on Appeal)

REASONS FOR JUDGMENT

by the court