ANTRIM TRUCK CENTRE LTD. v. HMQ IN RIGHT OF ONTARIO, as represented by the MINISTER OF TRANSPORTATION, 2010 ONSC 304

COURT FILE NO.: 84/09

DATE: 20100112

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

J. WILSON, HILL and LAX JJ.

BETWEEN:

ANTRIM TRUCK CENTRE LTD.

Claimant

(Respondent and Appellant by cross appeal)

– and –

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO, AS REPRESENTED BY THE minister of transportation

Respondent

(Appellant)

Douglas R. Adams, for the Respondent

Leonard Marsello, and Willaim MacLarkey, for the Appellant

HEARD AT TORONTO: November 12, 13, 2009

J. Wilson J.

REASONS FOR JUDGMENT

The Appeal

[1] The Claimant/Respondent Antrim Truck Centre Ltd. (“Antrim”) owned a truck stop in the Hamlet of Antrim on Highway 17, which was formerly part of the Trans-Canada Highway. In September 2004, a new section of Highway 417 was completed, rerouting the former Trans-Canada Highway. The Antrim truck stop property (“the Property”) consisted of 13.66 acres and included 947 feet of frontage on Highway 17.

[2] Antrim sued the Minister of Transportation (“MTO”) for damages for injurious affection under the Expropriations Act, R.S.O. 1990, c. E.26 (“the Act”) as a result of the construction of Highway 417.

[3] Antrim alleged that the closure of Highway 17 substantially interfered with their use and enjoyment of the Property and founds a claim for injurious affection. The change to the highway had the effect of essentially putting Antrim out of business. The shareholders of Antrim took steps to mitigate their losses and relocated. Antrim claimed damages for injurious affection in the amount of $8,224,671.00, which included the costs of relocation and construction of the new premises.

[4] The Minister of Transportation on behalf of Her Majesty the Queen in Right of Ontario appeals the order of the Ontario Municipal Board (“OMB”) dated January 9, 2009 awarding Antrim damages in the amount of $393,000.00 for injurious affection to the Property (“the OMB Decision”). The MTO seeks an order dismissing Antrim’s claim.

[5] Antrim cross-appeals seeking increased damages in the amount of $7,680,126.44 for the costs of construction and relocation.

The Issues Raised

[6] MTO asserts that the OMB erred in three respects, raising the following questions:

• Did the OMB apply the correct test for actionable nuisance?

• Did the OMB fail to adequately balance the public and private interests in determining whether an actionable claim in nuisance had been established?

• Did the OMB correctly apply the “construction not the use” test stipulated in s. 1(1) of the Act?

[7] In the cross-appeal Antrim raises the issue of whether the principle of restitutio in integrum should apply in assessing business damages to allow recovery for the costs of construction and relocation of the business pursuant to s. 1(1)(b) of the Act.

Jurisdiction

[8] This court has jurisdiction to hear the appeal on questions of law or fact or both, pursuant to s. 31 of the Act. This court has the authority to refer any matter back to the Board, or to make any decision that the Board has the power to make.

Standard of Review

[9] Counsel disagreed as to the appropriate standard of review for the various issues raised.

[10] The appellant asserts that all of the questions raised in the appeal and cross-appeal are questions of law outside the expertise of the OMB engaging the standard of correctness. The respondent argues that the questions raised are mixed fact and law, and that the standard of reasonableness applies to the questions raised in the OMB Decision.

[11] The standard of review for decisions of the OMB has been held to be correctness on general questions of law, and reasonableness on questions of fact or mixed fact and law: London (City) v. Ayerswood Development Corp. (2002), 2002 3225 (ON CA), 167 O.A.C. 120 (C.A.) at para. 7. This approach appears to be consistent both before and after Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190.

[12] The leading expropriation case considering the standard of review before Dunsmuir is Toronto Area Transit Operating Authority v. Dell Holdings Ltd., 1997 400 (SCC), [1997] 1 S.C.R. 32. The Supreme Court held that the standard of review was correctness in Dell, based on the lack of a privative clause and the broad right of appeal in the Act, and the fact that the question being considered did not engage the particular expertise of the OMB.

[13] Another example of the application of the standard of correctness is found in Henery v. London (City) (2007), 2007 51338 (ON SCDC), 231 O.A.C. 210 (Div. Ct.) at para. 6. Henery was an appeal from an OMB decision refusing to order production of certain documents, and striking paragraphs from the statement of claim. On the motion to strike, the court had to consider whether the plaintiffs had a claim for injurious affection on the first branch of the partial taking provision. The court considered these to be questions of law and applied correctness.

[14] The Divisional Court has applied a reasonableness standard to questions of fact or mixed fact and law in cases engaging the expertise of the OMB on expropriation issues, particularly in enunciating the principles that apply for the calculation of damages: see Toronto and Region Conservation Authority v. Gadzala, 2009 30143 (ON SCDC), [2009] O.J. No. 824 (Div. Ct.) at paras. 15-16; Toronto and Region Conservation Authority v. Gadzala, 2006 12974 (ON SCDC), [2006] O.J. No. 1635 (Div. Ct.) at paras. 50-54; and Ottawa (City) v. Wright (2007), 228 O.A.C. 101 (Div. Ct.) at paras. 30-32 (following Gadzala).

[15] Following Dunsmuir and Dell, correctness should apply to the OMB’s articulation of common law principles outside its particular expertise. However, the application of these principles falls within the expertise of the tribunal, engaging the standard of reasonableness.

[16] The OMB was required to articulate the common law of nuisance and then apply it in the context of injurious affection. Although injurious affection is a defined term in the Act, nuisance law is not within the OMB’s expertise. The evolution of the common law of nuisance is complex, nuanced and an issue of general application. Therefore the OMB’s articulation of the law of nuisance engages the standard of correctness. The OMB’s application of the law of nuisance in the context of injurious affection is a question of mixed fact and law which engages the expertise of the tribunal and the standard of reasonableness applies.

[17] In the second issue the OMB was required to determine whether there is a requirement to balance the public interest against the individual interest in determining whether an actionable claim in nuisance has been established. This question of law is outside the expertise of the tribunal and engages the standard of correctness. However, the balancing of the public and the private interest in the facts of each case squarely engages the expertise of the OMB, is an exercise of discretion, and engages the standard of reasonableness: Dunsmuir at para. 53.

[18] The issue of the meaning and application of the construction not the use test is unique to the law of injurious affection and is codified in the Act. While the enunciation of the test is a question of law, it is not a question of law that is of general application in the legal system. Consideration of the meaning of this statutory provision is within the OMB’s specialized expertise. The application of the test is a question of mixed fact and law. The OMB’s interpretation and application of the construction not the use test engages the expertise of the Tribunal, and the standard of review is reasonableness.

[19] The issue, raised by the appellant by cross-appeal is whether the principle of restituo in integrum should apply in determining the scope of business damages contemplated by s. 1(1)(b)(ii) of the Act, where the land has not been expropriated. This question of law is outside the expertise of the Board, and therefore the standard of correctness applies. The Divisional Court decision Lee Brothers Ltd. v. Windsor (City) (2005), 45 R.P.R. (4th) 177 (Div. Ct.) applying the standard of reasonableness to the factual assessment of whether an expropriation caused a business loss is distinguishable.

The Statutory Framework and the Recognized Principles of Law

[20] Section 21 of the Act confirms that “a statutory authority shall compensate the owner of land for loss or damage caused by injurious affection.”

[21] Section 1 of the Act defines differently injurious affection when land is taken by expropriation by a statutory authority, in contrast to a situation when land is not taken. The scope of recoverable damages and the approach is quite different in the two scenarios.

[22] In this case the claimant’s land was not taken in an expropriation, and therefore the applicable section of the Act to be interpreted is s. 1(1)(b) of the Act:

“injurious affection” means,

(a) 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,

(b) where the statutory authority does not acquire part of the land of an owner,

(i) such reduction in the market value of the land of the owner, and

(ii) such personal and business damages,

resulting from the construction and not the use of the works by the statutory authority, as the statutory authority would be liable for if the construction were not under the authority of a statute. [Emphasis added.]

[23] The OMB cites the governing principles for a claim for injurious affection in an expropriation, as outlined in Dell, at pp. 7-8 of its decision, including the significant difference between the treatment of owners when land is taken, compared to a claim for injurious affection when there has been no taking:

In Toronto Area Transit Operating Authority v. Dell Holdings Ltd., 1997 400 (SCC), [1997] 1 S.C.R. 32 at paras 34 and 36 the Supreme Court of Canada stated:

Where land is taken the statute will be construed in light of a presumption in favour of compensation but no such presumption exists in the case of injurious affection where no land has been taken. In such a case the right to compensation has been severely circumscribed by the courts …

It is as well significant that the Act itself makes a clear distinction between those situations in which compensation is paid where no land is taken and compensation paid where land is in fact taken. Where land is taken, compensation is primarily provided for in ss. 13, 15, 18, 19, 23 and in the definitions of [1(1)(e)(i)]. The circumstances in which compensation is to be paid where no land is taken are provided for in section 21 and in s. 1(1)(e)(ii). There is no provision for recovery for disturbance damages where no land is taken. Injurious affection damages can be recovered both where the land is taken and where the land is not taken but the tests to be met are very different. Where land is taken, the damages may relate to construction and the use of the works but where no land is taken the damages are limited to those flowing from the construction of the works even if the use also causes damages. There is therefore a clear foundation for concluding that there is a very real and significant difference between awarding compensation in those situations where land is expropriated from those where it is not. It follows that damages for disturbance can appropriately be awarded in situations where there has been an expropriation even though no disturbance will be awarded in situations where there has not been an expropriation. [Citations omitted.]

[24] The OMB confirmed the correct test to prove a claim for injurious affection without the taking of land as found in St. Pierre v. Ontario (Minister of Transportation and Communications, 1987 60 (SCC), [1987] 1 S.C.R. 906 at p. 909. The claimant must prove on a balance of probabilities that:

1. The damage resulted from an act rendered lawful by statutory powers of the person performing the act (the statutory authority rule);
2. The damage was such as would have been actionable under the common law, but for the statutory power (the actionable rule);
3. the damage must be occasioned by the construction of the public work, not its use (the construction and not the use rule).

Antrim’s Claim for Injurious Affection

[25] Highway 417 (“the 417”) was designated as the Kings Highway by Order in Council on November 26, 1970. It was registered, and then designated as a controlled access highway by Order in Council on February 4, 1971. The parties did not dispute that the statutory authority rule, the first branch of the St. Pierre test, was met.

[26] The dispute between the parties was whether the second and third branches of the St. Pierre test for injurious affection had been met.

[27] Before the construction of the 417, Antrim’s business was located on the former Trans-Canada Highway. What was in issue in this case with respect to the second branch of the St. Pierre test, as confirmed by the OMB at p. 11 of its decision, was “whether there has been a complete destruction, or a severe restriction of the common law right of access” as a result of the construction of the 417 that bypasses the Property.

[28] Antrim based its claim on the tort of nuisance. The test for private nuisance requires unreasonable, substantial interference with the use and enjoyment of property: see Allen M. Linden and Bruce Feldthusen, Canadian Tort Law, 8th ed. (Markham: LexisNexis, 2006) at p. 568; St. Pierre at para. 10.

[29] At common law, the owner of land abutting a highway is entitled to access to the highway from his/her land as a legally enforceable right beyond the right of public passage that the owner shares with other members of the public: see Loiselle, 1962 72 (SCC), [1962] S.C.R. 624; Re City of Windsor and Larson et al. (1980), 1980 1573 (ON SC), 29 O.R. (2d) 669 (Div. Ct.); Toronto Transit Commission v. Swansea, 1935 4 (SCC), [1935] S.C.R. 455 at p. 457. One way this right of access may be enforced is through an action in nuisance.

[30] In this case, interference with the right of access founds the claim in nuisance to meet the second branch of the St. Pierre test for injurious affection, which requires the claimant to prove an action under the common law.

[31] Antrim argued that the construction of the 417, the bypass of the Property and the inadequate access roads from the 417 to the Property, not the use of the 417, caused the claimant’s damages.

The Background Facts

[32] The OMB hearing included 13 days of evidence given by 15 witnesses. Following the evidence, the parties presented two days of argument.

[33] There were a variety of motions brought by both parties that were dealt with in the reasons. One motion, brought by the claimant and resisted by the MTO, was to have an on-site visit for the OMB to better understand the context of the access, construction and use issues. The OMB ruled in favour of the claimant on this motion, and such a visit did take place.

[34] The capacity of the former Highway 17 was a maximum of 12,000 cars per day. Over 13,000 cars were using the road.

[35] The MTO’s rationale for building the four-lane Highway 417 was public safety. The growing traffic volume on the two-lane Highway 17 was resulting in many accidents, and the highway was becoming known as the “Killer Highway.”

[36] The topographical map filed as an exhibit confirms that the Hamlet of Antrim has few houses and, with the exception of the claimant’s business, may be described as very undeveloped.

[37] Mr. and Mrs. Cameron are the shareholders of Antrim. Antrim acquired the Property in 1978. When Antrim acquired the Property the shareholders were aware that in the future a new highway might be constructed and that its alignment had not been finalized.

[38] From 1978 to 2004, Antrim operated a truck stop with a restaurant, gift shop, gas bar, offices, truck sales, leasing and service centre and diesel fuel bar.

[39] The business was significant. It generated gross revenues of $15,076,000.00 annually in 2003 and employed approximately 100 people.

[40] Fifteen per cent of Antrim’s business was local. For the balance of the business clientele, access from the Trans-Canada Highway to the Property was of crucial importance.

[41] During the planning phase, the MTO visited the Cameron property before the Public Information meetings to discuss the proposed alignment of the 417. The meeting minutes show that the Camerons understood the need for the new highway, but that they were concerned about the survival of Antrim and questioned their right to compensation.

[42] During the planning phase, the MTO explored with the Camerons two alternative plans for the alignment of 417 that avoided bypassing the Property. These options were rejected by the MTO experts.

[43] The final decision for the realignment resulted in the 417 running parallel at a distance of 500 feet to Highway 17 and the Property. Therefore, both eastbound and westbound traffic on the 417 bypass the Property.

[44] The significant issue in this proceeding is the nature of the access provided by the MTO between the Property and Highway 417.

[45] The MTO offered Antrim signage on Highway 417 at Regional Road 20 to identify the exit for food and fuel at Antrim’s. Antrim did not respond.

[46] A large aerial map filed as an exhibit makes clear the scenario before and after construction of the 417. The OMB also visited the site for an inspection.

[47] Traffic coming from either the east or west on the 417 can access the Property at the Regional Road 20 interchange, by turning off onto Regional Road 20 and from there onto Highway 17. Once on Highway 17, traffic would access the Property as before. The distance from the interchange at the 417 to the Property is approximately two kilometres.

[48] The claimant challenged the safety of the proposed access to the Property via Regional Road 20 and the interchange for large truck rigs. The OMB concluded that the Regional Road 20 interchange was safe.

[49] Practically speaking, both eastbound and westbound traffic would access the Property from the exit at Regional Road 20. Westbound traffic could exit Highway 17 earlier, at the Panmure interchange. However, this suggestion is not realistic as traffic would be required to travel some considerable distance and would have to make the three directional detour described below, including a portion travelled on a dirt road, to access the Property.

[50] To understand the construction not use test it is important to understand the traffic flow eastbound and westbound from the Property on Highway 17.

[51] A portion of Highway 17 east of the Property was permanently closed. A three directional detour was created to allow access between the functional Highway 17 and the 417 to the east.

[52] To facilitate this change, Highway 17 was closed temporarily east of Antrim’s property from September 24, 2004, until October 28, 2004, in order to merge Highway 17 with Grants Side Road, which is a dirt road. On October 28, 2004, the MTO removed the barricade and connected the former Highway 17 with Grants Side Road, which is about 1.5 kilometres east of the Antrim site, and runs perpendicular to the former Highway 17.

[53] Eastbound traffic leaving the Property travelling on Highway 17 is required to make the detour of three right-angled turns along three roads including traveling along a one kilometre stretch of dirt road to reconnect with the 417 eastbound. First, vehicles would make a 90 degree turn onto Grants Side Road, which is the dirt road. From there, as stated by the OMB, “it is possible to travel some distance on the dirt road to intersect with Donald Munro and then Panmure Drive which intersects with Highway 417 at an interchange.”

[54] From the west, as stated, traffic would come from Regional Road 20. Highway 17 was not substantially altered for vehicles travelling westbound, and no portion of Highway 17 was closed.

[55] The Camerons concluded that Antrim’s business was no longer viable with the alignment of the 417, the bypass of the Property, and the inadequate access offered.

[56] The gas bar located at the Property closed October 12, 2004, the restaurant closed November 12, 2004, and the truck repairs closed January 15, 2005.

[57] The Camerons had acquired two properties on White Lake Road beginning in 1986. The last acquisition from the MTO linking the two previous land acquisitions was finalized in March 2004. Antrim relocated its business in 2004 after the construction of Highway 417 from Highway 17 to 580 White Lake Road, about 15 kilometres west of the former site.

[58] Antrim continues its business at the White Lake Road location.

Analysis

Issue 1: Was the test for actionable nuisance met?

[59] The appellant argues that the test for actionable nuisance was not met for three reasons.

[60] First, the MTO argues that there was no physical interference with the Property, as the claimant still had access to Highway 17. The distance from the Property to 417 was approximately two kilometres, which the MTO argues is within the normative distances of truck stops to highways. The MTO argues that actionable nuisance in common law requires actual physical interference with the property in question, which was not met in this case.

[61] Second, the MTO argues that the interference was not proximate to the Property.

[62] Finally, the MTO argues that the interference was not substantial.

[63] The MTO has misconstrued the test for nuisance in the context of this case. A claimant may establish an actionable claim in nuisance by proving a substantial interference with the common law right of access. A review of the case law confirms that actual physical interference with the property in question is not a requirement.

[64] Part of the confusion in applying the historic case law to the present case is that as the common law of injurious affection developed, the concepts of right of access, injurious affection and nuisance have been used interchangeably.

Codification of injurious affection

[65] In Ontario, the meaning of injurious affection was codified in s. 1 of the Act in 1969, drawing on the principles that emerged in the historic cases. It is important to understand the history of the codification of the definition of injurious affection in the Act, to assess which principles continue to apply from the historic case law. It is then necessary to clarify the relationship between the concept of nuisance and the right of access.

[66] Prior to the statutory amendments in 1969, the leading case on injurious affection was R. v. Loiselle, 1962 72 (SCC), [1962] S.C.R. 624. In Loiselle, the Supreme Court adopted the four-part test established through the English common law at p. 627:

The conditions required to give rise to a claim for compensation for injurious affection to a property, when no land is taken, are now well established; Autographic Register Systems Ltd. v. Canadian National Railway Company 1933 579 (CA EXC), [1933] Ex. C.R. 152.]; Challies "The Law of Expropriation", p. 136. These conditions are:

(1) the damage must result from an act rendered lawful by statutory powers of the person performing such act;

(2) the damage must be such as would have been actionable under the common law, but for the statutory powers;

(3) the damage must be an injury to the land itself and not a personal injury or an injury to business or trade;

(4) the damage must be occasioned by the construction of the public work, not by its user.

[67] Loiselle was a Quebec case and dealt with injurious affection under the federal St. Lawrence Seaway Authority Act, R.S.C. 1952, c. 242. At that time, there were few current Ontario cases considering the issue of injurious affection.

[68] The Ontario Law Reform Commission considered the application of injurious affection in Ontario shortly after the Loiselle decision, in the context of its Report of the Ontario Law Reform Commission on the Basis for Compensation on Expropriation (Toronto: Department of the Attorney General, 1967) (“OLRC Report”).

[69] The OLRC recommended that compensation for injurious affection be extended to circumstances when land is not taken. Following these recommendations, the test for injurious affection was codified in the Ontario statute. Subsection 1(1) of The Expropriations Act, 1968-69, S.O. 1968-69, c. 36 provided the same definition of injurious affection as is found in the present Act, cited at para. 23 of these reasons. The primary change from the test cited in Loiselle and St. Pierre is that the third branch, “damage must be an injury to the land itself and not a personal injury or an injury to business or trade,” was removed. The Act now explicitly provides for recovery of personal and business damages and the injury does not need to be to the land itself. The construction not use test was also explicitly included in the statutory definition.

[70] The statutory definition of injurious affection now requires a three-part test:

1. The damage resulted from an act rendered lawful by statutory powers of the person performing the act (the statutory authority rule);

2. The damage was such as would have been actionable under the common law, but for the statutory power (the actionable rule);

3. the damage must be occasioned by the construction of the public work, not its use (the construction and not the use rule).

[71] In order to meet the second part of the test, claimants must prove that the damage would have been actionable under the common law. The actionable rule may be satisfied by demonstrating a claim in nuisance. Interference with access has been confirmed in the common law as an actionable nuisance.

[72] The common law tort of private nuisance has been defined as “an unreasonable interference with the use and enjoyment of land”: Linden and Feldthusen at p. 568; St. Pierre at para. 10; Tock at para. 17.

[73] Proving a claim for nuisance is very fact-specific, but principles emerge from the case law. Courts have considered the following factors in determining whether the inference is actionable in nuisance:

(1) the severity of the interference;

(2) the character of the neighbourhood;

(3) the utility of the defendant's conduct; and

(4) the plaintiff’s sensitivity.

See: Tock v. St. John's Metropolitan Area Board, 1989 15 (SCC), [1989] 2 S.C.R. 1181 at para. 17; 340909 Ontario Ltd. v. Huron Steel Products (Windsor) Ltd. (1990), 73 O.R. (2d) 641 (H.C.J.), aff’d (1992), 1992 7668 (ON CA), 10 O.R. (3d) 95 (C.A.).

[74] The Supreme Court of Canada applied the test for private nuisance in the context of injurious affection in St. Pierre at para. 10:

The only basis for an action to recover damages in the circumstances of this case would be the tort of nuisance. Nuisance has been variously described. In this case both parties have suggested definitions and there seems to be little if any dispute between them on the general description of the concept of nuisance. Reference has already been made to the comprehensive definition in Fleming, The Law of Torts. I would add the definition expressed in Street, The Law of Torts (6th ed. 1976), at p. 219:

A person, then, may be said to have committed the tort of private nuisance when he is held to be responsible for an act indirectly causing physical injury to land or substantially interfering with the use or enjoyment of land or of an interest in land, where, in the light of all the surrounding circumstances, this injury or interference is held to be unreasonable.

I am far from suggesting that there are not other definitions, and I do not suggest that the categories of nuisance are or ought to be closed. The above definitions, however, cover the general concept and we must now seek to apply it in the circumstances of this case. [Emphasis added.]

[75] The facts in St. Pierre did not involve an interference with access. Rather, the Supreme Court found that the appellants’ claim was for loss of amenities or loss of a view. The court declined to extend the law of nuisance to cover this category of injury.

[76] Coates and Waqué describe the approach dictated by St. Pierre at p. 10-154.19 as follows:

This [case] directs a lawyer to analyze landowners’ rights of action arising from the public work by setting out the nature of the owner’s complaints into discrete categories that have been tested at common law. This analysis is called for when one considers an action in nuisance in the Supreme Court and, therefore, is also required to determine if the second test in the Loiselle case has been met.

[77] Although courts have not always explicitly stated that interference with access is one way to meet the test for nuisance, the origins of the concept in the English common law confirm that interference with access was founded in nuisance: Iveson v. Moore (1692), 1 Ld. Raym 486; Chichester v. Lethbridge (1738), Willes 71; Chamberlain v. The West End of London and Crystal Palace Railway Company (1863), 2 B & S 617 at p. 1202.

[78] Canadian case law confirms that interference with access may satisfy the actionable rule in certain circumstances. The interference must be proximate and substantial, but there does not need to be a direct, physical interference with the plaintiff’s property or a complete obstruction of access for a claim to be established: see Loiselle; Re City of Windsor and Larson et al. (1980); 1980 1573 (ON SC), 29 O.R. (2d) 669 (Div. Ct.); Jesperson's Brake & Muffler Ltd. v. Chilliwack (District) (1994), 1994 1662 (BC CA), 40 B.C.A.C. 279, leave to appeal to S.C.C. refused, [1994] S.C.C.A. No. 177; Airport Realty Ltd. v. Newfoundland (Minister of Works, Services, and Transportation) (2001), 2001 NFCA 45, 205 Nfld. & P.E.I.R. 95 (C.A.); Autographic Register Systems Ltd. v. Canadian National Railway Co., 1933 579 (CA EXC), [1933] Ex. C.R. 152; and Empringham Catering Services Ltd. v. Regina (City) (2002), 2002 SKCA 16, 217 Sask.R. 138 (C.A.).

[79] The OMB relied in particular on Loiselle and Larson in finding that the actionable rule was satisfied. A brief overview of the facts in these cases illustrates the types of interference that have been held to be actionable at common law.

[80] The plaintiffs in Loiselle owned a service station on an east-west highway that was diverted due to the construction of the St. Lawrence Seaway. The highway was relocated to the south of the claimants’ property and passed through a tunnel beneath the canal. The old highway, on which the service station was located, became a dead-end shortly beyond the property. Access to the property was not completely cut off, but the service station went from being situated on a major highway to being, as the court states at p. 626, “located in a cul-de-sac at the very end of a street, some 80 to 90 feet from one of the canals and some 1500 feet from the intersection of the re-located highway.”

[81] Nuisance is not mentioned in this case. The Supreme Court of Canada in Loiselle found it “obvious” that the actionable claim component of the test for injurious affection was met, based on loss of direct access, at p. 627:

As to the second of the four conditions, it seems obvious that had the Seaway Authority or any other person, without statutory authorization constructed a canal and blocked the main highway adjacent to respondent's property, the latter -- aside from any other remedies which might have been open to him -- would have had a valid claim in damages under the general law. The learned trial judge so found and in my respectful opinion he was right in so doing. The statutory authority given to construct the works in question was however expressly made subject to the obligation to pay compensation for damage to lands injuriously affected.

[82] In Larson, the road alongside the plaintiffs’ motel was widened and a median added down the middle, so that traffic could only access the motel from the north. The Divisional Court, following Loiselle, confirmed that access does not need to be completely obstructed for the actionable rule to be satisfied:

In the present case, where the median strip has been referred to as interfering with turning access to the same extent as if it were a 20-foot wall in height, a private right of access has been interfered with. I see no difference in principle between a barrier that allows access for traffic from one direction only and the creation of a cul-de-sac road that has substantially the same effect. The present claim is one in which the city would be liable if the construction were not under the authority of the statute. Needless to say, in each case a claimant must prove damages as a result of the intereference with the private right.

[83] The recent cases of the British Colombia Court of Appeal in Jesperson’s Brake and the Newfoundland Court of Appeal in Airport Realty, above, reflect a pragmatic modern approach to the questions raised in this case.

[84] In Jesperson’s Brake, the claimants were compensated for non-physical interference with their property based on reduced access and visibility from the highway, which reduced the property value. The B.C. Court of Appeal upheld compensation. The Court distinguished at para. 32 between St. Pierre, where the issue was loss of a view, and cases like Loiselle and Larson where the issue was substantial interference with access.

[85] The facts and issues raised in Airport Realty are very similar to those in this case. In Airport Realty, the claimant’s hotel was located on the main access road to the St. John’s airport in Newfoundland. Various changes to the road system around the inn were made so that the main road, in essence, bypassed the inn. The City agreed, upon the claimant’s request, to provide an alternative access road to the hotel. It declined to re-design the new access road so that the hotel remained on the main access to the airport.

[86] The court upheld the board’s determination that the claimant had an actionable claim in nuisance due to the loss of direct access, despite the provision of alternative access, at paras. 35 & 36, as follows:

… Here, what the Airport Inn suffered was not just a loss of prospect or a loss of view, as in St. Pierre, or an inconvenience in the nature of an irritant, as in Par Holdings. As in Loiselle, Larson and Gerry's Food Mart, the realignment of the roadway in the area around the St. John's Airport, in the manner as described in the Agreed Statement of Facts, to paraphrase McIntyre J. in St. Pierre, so changed the situation as to greatly reduce the Airport Inn's value for the use to which it had been put prior to the realignment and could, therefore, be classed as a nuisance.

The interference was substantial and was not reasonable, having regard to the surrounding circumstances, including the provision of an alternate access. At the end of the day, the fact remained that the hotel constructed on the sole roadway to and from the St. John's Airport and plainly visible to all who came and went was, as a result of the highway realignment, relegated to a secondary road away from the new access road to the airport, reachable by routes not obvious to most first time visitors and not taken by normal traffic to and from the airport. [Emphasis added.]

[87] It is clear from a review of the case law that where the change in access following the construction of a public work amounts to a substantial interference with a landowner’s right to reasonable use and enjoyment of their property, an actionable claim in nuisance may be founded.

Findings of the OMB

[88] The appellant concedes that the OMB correctly set out the common law test for nuisance in the context of a case based on interference with access at pp. 10 and 11 of the reasons:

The Claimant has based its claim on the law of Nuisance. At common law the owner of land abutting a highway is entitled to access to the highway from his or her land as a legally enforceable right beyond the right of public passage which he or she has in common with other members of the public over the highway. The Board agrees with the Respondent that diversion of traffic flow and the loss of visibility as factors by themselves are not actionable, Zadworski et al v. Minister of Transportation and Communications (1972), 4 L.C.R. 100 at 130 (Ont.LOB), St. Pierre, 1987 60 (SCC), [1987] 1 S.C.R. 906 at paras. 12-13. What is at issue is whether there has been a complete destruction or severe restriction of the common law right of access. [Emphasis added.]

[89] The OMB considered all of the arguments raised by the MTO at page 12 of its decision, and reached its conclusions at pp. 14 and 15 that the claimant had proved a serious impairment in nuisance in the nature described in Loiselle:

The Board in contrasting the public benefits with the individual’s detriment is not satisfied with the Respondent’s position that access on Highway 17 remains as before. The evidence of Mr. Pawliuk was that prior to construction of Highway 417, Highway 17 was a Trans Canada Highway from Ottawa to North Bay. Vehicles passing on Highway 17, both east and west did so in front of the Claimant’s property. Physical changes to Highway 17 were made. After the opening of Highway 417 on September 24, 2004, Highway 17 was closed east of the Claimant’s property until October 28, 2004. The purpose of this was to merge Highway 17 with Grants Side Road. Grants Side Road is a dirt road. The Respondent argues no change in a Highway running east/west joining a dirt road running north/south. While it is possible to travel some distance on the dirt road to intersect with Donald Munro and then Panmure Drive which intersects with Highway 417 at an interchange it is indeed a stretch to assert no significant change to Highway 17. In responding to the Board, Mr. Pawliuk admitted the former Highway 17, approximately 2 kilometres east of the Claimant’s property, was intersected by Highway 417, and no access was available there from Highway 17 to Highway 417 due to change in grade. The evidence of Mr. Pawliuk was that a similar alteration was made to the west on Highway 17 so that Highway 17 from North Bay now runs directly into Highway 417 west of the Claimant’s Antrim property in the same manner that traffic from the east bypasses the Claimant’s former Antrim site. Mr. Pawliuk was reluctant to call the changes to Highway 17 a bypass because he said that would apply in a more urban setting.

Mr. Pawliuk’s evidence is that the Ministry had to consider the environment, residents and safety in the planning process for the alignment of Highway 417. In his review of alternatives, the twining of Highway 17 was considered but the cost of constructing access from new service roads for existing residents (not from controlled access Highway 417) was a concern. The Respondent attempted to place the Claimants in other locations without success. The Respondent was helpful perhaps knowing what the impact might be on the Claimants. Mr. Pawliuk admitted to sharing the concerns of Mr. Cameron for the viability of his business and that two of the alternative designs considered by the Respondent in the planning process for Highway 417, provided direct access to the Claimant’s property.

The Board finds that the ending of Highway 17 at Grants Side Road cannot be disguised as a continuation of a paved highway on an unpaved local road. Highway 17 remains but a shadow of what it was before Highway 417. The Respondent witness Forbes described the before and after as putting the Claimant on a service road or secondary road as opposed to a main road. That the Board finds amounts to liability but for the benefit of Statute, as serious impairment in nuisance, in the manner of Loiselle Supra. [Emphasis added.]

The issues raised by MTO

[90] The MTO argued that the conclusions of the OMB were not reasonable as the law of nuisance requires that there be actual physical interference with the land or complete obstruction of access, that the interference must be proximate, and it must be substantial. The MTO argues that these prerequisite conditions were not proved in the facts of this case.

[91] The respondent asserts that its common law right of access to and from the Property to Highway 417 has been severely restricted. Antrim does not suggest that the right of access has been completely destroyed or blocked. Antrim argues that actual physical interference with the land is not a prerequisite for a finding of nuisance and injurious affection. The respondent argues that the interference in this case is proximate and substantial.

[92] The MTO’s arguments are not persuasive.

[93] The branch of the St. Pierre and Loiselle test requiring that damages be to the land itself, and not a personal injury or an injury to business or trade, has been removed by amendments to the statutory definition of injurious affection in s. 1 of the Act]. Further, there is a substantial body of current and historic case law confirming that to prove injurious affection it is not necessary to establish that the interference with access is complete: see Caledonian Railway Company v. Walker’s Trustees, [1882] 7 H.L. 259; Chamberlain v. The West End of London and Crystal Palace Railway Company (1863), 2 B & S 617; Airport Realty; Jesperson’s Brake; Larson; and Loiselle.

[94] Loiselle and Larson confirm that the test is not whether access has been completely obstructed, but whether, as stated in St. Pierre at para. 11 and recognized by the Board at p. 11, “the construction of the public works in close proximity to the lands so changed their situation as to greatly reduce if not eliminate their value for the uses to which they had been put prior to the construction and could, therefore, be classed as nuisances.”

[95] In both Jesperson's Brake and Airport Realty, access was not permanently blocked, yet the courts concluded that the actionable rule was satisfied.

[96] In this case, the Board found that Highway 17 was “but a shadow of what it was before Highway 417.” The Board accepted the appellant’s evidence that the market value of the Property diminished by $335,000.00. On these facts, the Board’s conclusion was reasonable that the construction of the works, including both the construction of the 417, the bypass of the Property, and the merger of Highway 17 eastbound with the dirt side road detour was actionable within the meaning of Loiselle.

[97] The case law confirms that the interference must be proximate. The MTO argued that the interference was not sufficiently proximate to the Property. What is proximate will turn on the facts of the case. The respondent’s use and enjoyment of the Property in this case depended upon the ability of trucks to readily access the Property from both Highway 17 and Highway 417.

[98] In Loiselle, the service station was located approximately 1500 feet from the re-located highway, or less than 0.5 kilometres. In this case, the Property was located approximately two kilometres from the closest intersection with Highway 417. The merger of Highway 17 with Grants Side Road was approximately 1.5 kilometres east of the Property.

[99] In the context of a business dependent on trucking, we find that the interference was sufficiently proximate to support an actionable claim, and that the OMB’s decision in this regard was reasonable.

[100] Finally, the appellant argued that interference must be substantial. The determination of what amounts to a substantial interference will turn on the facts of the case. The Board confirmed “that the ending of Highway 17 at Grants Side Road cannot be disguised as a continuation of a paved highway on an unpaved local road. Highway 17 remains but a shadow of what it was before Highway 417.” The Board further confirmed that the Property, once on the busy Trans-Canada Highway, was now “on a service road or secondary road as opposed to a main road.” The Board’s conclusions that the interference was substantial, were reasonable, and fully supported by the evidence.

Issue 2: Does nuisance require balancing private and public interests? Did the OMB apply the correct test and was the conclusion reached reasonable?

[101] In St. Pierre, the Supreme Court of Canada noted at para. 13 that the balancing process between public and private interests is “inherent” to the law of nuisance. The textbooks also indicate that private nuisance requires a balancing test: see e.g. Linden and Feldthusen at p. 569.

[102] Private nuisance requires balancing the harm to the plaintiff with the utility of the defendant’s conduct: Tock at para. 17. In cases of injurious affection, it will necessarily involve balancing public and private interests, since the defendant is the Crown.

[103] In Jesperson’s Brake, Finch J.A. questioned at para. 32 whether St. Pierre, Loiselle or Larson required the balancing process to be conducted.

[104] We conclude that it is clear, in accordance with St. Pierre, that the law of nuisance requires balancing between the public interest and the individual interest. The reasonableness and utility of the defendant’s conduct in constructing the public work will be factors to consider in assessing whether the plaintiff has an actionable claim.

[105] The OMB correctly identifies and adopts the necessity of applying the balancing test referred to in St. Pierre and applies it as a prerequisite of demonstrating an actionable claim in nuisance as outlined at p. 15 of the reasons.

[106] The OMB clearly considered the issue, and balanced the public and private interests when considering whether an actionable claim in nuisance had been established at p. 11 of the decision:

The Court referred to the law of nuisance as the striking of a tolerable balance of the need for highways against disruption and injury to others. After holding that the claim in St. Pierre failed because it was based on the use (noise) of the new highway rather than its construction, the court went on to state at para. 13:

All highway construction will cause disruption. Sometimes it will damage property, sometimes it will enhance its value. To fix the Minister with liability for damages to every landowner whose property interest is damaged, by reason only of the construction of a highway on neighbouring lands, would place an intolerable burden on the public purse. Highways are necessary: they cause disruption. In the balancing process inherent in the law of nuisance, their utility for the public good far outweighs the disruption and injury which is visited upon some adjoining lands. The law of nuisance will not extend to allow for compensation in this case.

The Court in St. Pierre referred to the construction of the works in Loiselle and Larson as having reduced or eliminated the value for the uses to which they had been put prior to construction and that such works could therefore be classified as nuisances.

The Board does not interpret the St. Pierre reasoning as to the necessity of highway construction as argued to be obiter, but rather a finding in that case on whether on its facts and with the necessary balancing of interests was the second test of being actionable at common law met.

[107] The OMB agreed with the MTO that the diversion of traffic flow and the loss of visibility are not in themselves actionable. The OMB confirmed that the issue was whether there was complete destruction or severe restriction of the common law right of access in its assessment of the private versus the public interest.

[108] The finding of the OMB that Highway 17 remains but a “shadow” of what it was before the construction of Highway 417 is a finding that access to the Property was substantially changed as a result of the construction of Highway 417.

[109] Notwithstanding the public interest in determining the appropriate alignment of the 417 and the OMB’s earlier confirmation that Highway 17 needed to be changed for safety reasons, the OMB concluded that the inadequate access from the 417 to the Property constituted a serious impairment. The OMB found that this impairment establishes an actionable claim in nuisance, relying on the principles outlined in the Loiselle decision.

[110] The OMB conducted the appropriate weighing of the public and the private interest and its findings are reasonable and supported by the evidence.

Issue 3: Did the OMB fail to properly apply the “construction not the use” test stipulated in [s. 1(1)](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e26/latest/rso-1990-c-e26.html) of the [Act](https://www.canlii.org/en/on/laws/stat/rso-1990-c-e26/latest/rso-1990-c-e26.html)?

[111] The appellant argues that the OMB failed to correctly enunciate and apply the construction not the use test. The construction not use test developed through the common law and has been codified in s. 1(1) of the Act since 1969. The Act explicitly differentiates between injurious affection when land is taken and injurious affection when land is not taken. For the former category, damages that result from both the construction and the use are compensable. When land is not taken, damage is compensable only for construction, and not from the use of the facility.

[112] Section 1(1) of the Act provides:

“injurious affection” means,

(b) where the statutory authority does not acquire part of the land of an owner,

(i) such reduction in the market value of the land of the owner, and

(ii) such personal and business damages,

resulting from the construction and not the use of the works by the statutory authority, as the statutory authority would be liable for if the construction were not under the authority of a statute [Emphasis added.]

[113] In the New Law of Expropriation, Coates and Waqué provide the following analysis of the test at pp. 10-154.26 – 10.154.27:

The clearest examples of “use” as distinguished from “construction” would appear to be highway noise, or noise emanating from the operation of an airport. Another example is the contamination of land owned by a claimant adjacent to a buffer zone owned by a regional municipality next to an old landfill site: Barnside Sand and Gravel Ltd. v. Ottawa-Carleton (Regional Municipality) (2000), 71 L.C.R. 216 (O.M.B.).

The clearest example of a loss resulting from “construction” is business loss arising from interference with access during the construction of a public work. Loiselle, supra and the Windsor case seem to lie somewhere in the middle, but given the tenor of judicial thinking, it seems evident that where the completed work interferes with access to an owner’s land he or she will be compensated for any loss which directly results from that interference.

[114] The leading case considering the meaning of the construction not use test is Larson. This case confirms at para. 17 that the test is “whether the works as constructed, if left unused, would interfere with the actual enjoyment of the property”.

[115] The OMB enunciates the applicable test and reaches its conclusions at page 15 of its reasons:

This rule emanates from the definition of Injurious Affection in the Statute and case law. Challies on the Law of Expropriation, 2^nd ed. (1963) at p. 138 as adopted in Larson supra provides:

The test of whether the property is actually damaged by operation or use is to consider whether the works as constructed, if left unused, would interfere with the actual enjoyment of the property; if not, no compensation is payable.

The Board finds that the construction of Highway 417 as impairing Highway 17 in the manner described above – effectively ending Highway 17 but for a dirt road extension, damages the Claimant’s property at Antrim and that the damages are not by the use of Highway 417.

[116] Although the OMB’s reasons on this issue are brief, the conclusion reached must be considered in the context of the findings of fact made by the OMB.

[117] When one views the aerial photograph and how the Property would be impacted if Highway 417 was constructed but not used, this issue becomes clear. If Highway 417 was not used, traffic coming from the east would not be able to access the Property from the Regional Road 20 interchange. Instead, this traffic would have to make a significant detour, as Highway 17 ends shortly eastward of the Property and merges with Grants Side Road. Vehicles coming from this direction would be required to follow a three-directional detour involving abrupt 90 degree turns and a section of unpaved road in order to reach the Property on Highway 17.

[118] The OMB had the benefit of visiting the site providing context to assess the extent of the interference, and whether the damages were caused by the construction of an inadequate detour or link between the Property and Highway 417.

[119] The OMB found that the construction of the 417, and in particular the construction of the detour arrangements going eastbound from the Property where a portion of the former Trans-Canada Highway was closed, caused the interference with access to the Property, and not the use of the 417.

[120] The finding of the OMB that the damages to the Property were caused by construction not use engaged the expertise of the tribunal. The conclusion was reasonable and fully supported by the evidence.

Issue 4: The Cross-Appeal

[121] Antrim cross-appeals from the decision of the OMB refusing to award damages for relocation costs or construction costs of the new premises.

[122] The OMB concluded that it was without jurisdiction in the context of the definition of injurious affection in s. 1(1) of the Act to apply the common law principle of restitutio in integrum and to broaden the claimant’s entitlement to include damages for disturbance damages and relocation costs. It concluded at page 9:

It is clear to the Board that in the absence of an expropriation of all or part of the land of an owner that the resulting claim for injurious affection cannot include disturbance damages and relocation costs at White Lake Road. Both sections 18 and 19 refer to an expropriation. The Expropriations Act defines “expropriate” to mean “the taking of land without the consent of the owner by an expropriating authority in the exercise of its statutory powers.”

[123] The statutory entitlement for damages for injurious affection that may be claimed by an owner is far broader when land is taken in an expropriation, in contrast with a claim for injurious affection without a taking. This is clear from a review of the Act, particularly sections 18, 19 and 23 of the Act, which are attached to these reasons as Schedule A.

[124] We agree with the conclusions reached by the OMB. There is a world of difference between a claimant’s entitlement to damages when a public authority takes an individual’s land, as compared to the situation in this case where land is not taken. For public policy reasons the right to damages for injurious affection must be limited in accordance with the terms of the Act, to allow statutory authorities to complete works for the general public good.

[125] The appellant by cross-appeal had not one authority to support its argument. The damages for the construction and relocation of the claimant’s business are not recoverable damages in accordance with the Act.

[126] In light of this finding, it is not necessary to consider the issues of significant betterment.

[127] The finding of the OMB on the cross-appeal that the Board did not have jurisdiction to award the damages claimed is correct. The cross-appeal is dismissed.

Costs

[128] It is not necessary to canvass the issue of costs as the parties have reached an agreement with respect to costs, dependent upon the outcome of the appeal and cross-appeal.

jANET wilson J.

HILL J.

LAX j.

Released: January 12, 2010