ISSUE DATE: December 04, 2023

CASE NO(S).: OLT-22-003167 (Formerly LC190023)

PROCEEDING COMMENCED UNDER subsection 26(1) of the Expropriations Act, R.S.O. 1990, c. E.26, as amended

Claimant: 12908 Highway 7 Inc.

Respondent: His Majesty the King in Right of the Province of Ontario, as represented by the Ministry of Transportation

Subject: Land Compensation

Property Address/ Description: Part of Lot 27, Concession 7

Municipality: Town of Halton Hills

OLT Case No.: OLT-22-003167

Legacy Case No.: LC190023

OLT Lead Case No.: OLT-22-003167

Legacy Lead Case No.: LC190023

OLT Case Name: 12908 Highway 7 Inc. v. HMK in right of Ontario (Ministry of Transportation)

APPEARANCES:

Parties

Counsel/Representative*

12908 Highway 7 Inc. ("Claimant")

Conner Harris Sarah Spitz

His Majesty the King in Right of the Province of Ontario, as represented by the Ministry of Transportation ("Respondent")

Eunice Machado Brandon Fragomeni

AMENDING DECISION OF THE TRIBUNAL DELIVERED BY ROBERT G. ACKERMAN AND N. EISAZADEH

1In accordance with Rule 24.4 of the Tribunal's Rules of Practice and Procedure,

2OLT-22-003167

whereby the Tribunal may at any time and without prior notice to the parties correct a technical or typographical error made in a decision or order, the Decision and Order ("Decision") issued on November 28, 2023, is hereby amended.

2By adding the following citation to paragraph 114 of the Decision: Thomas C. Assaly Corp. v. Ottawa-Carleton (Regional Municipality), (1993) 50 L.C.R. 285, CarswellOnt 5190, (OMB) at paras. 8 & 24; aff'd (1995) 55 L.C.R. 79, CarswellOnt 4547 at para. 7 (Div. Ct.).

3And by changing the Respondent's name in the Title of Proceedings from Ministry of Transportation to His Majesty the King in Right of the Province of Ontario, as represented by the Ministry of Transportation.

4And by changing the Respondent's name in the OLT Case Name from (Minister of Transportation) to (Ministry of Transportation).

5In all other respects, the Tribunal's Decision remains the same.

"Robert G. Ackerman"

ROBERT G. ACKERMAN

MEMBER

"N. Eisazadeh"

N. EISAZADEH

MEMBER

Ontario Land Tribunal

Website: www.olt.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

The Conservation Review Board, the Environmental Review Tribunal, the Local Planning Appeal Tribunal and the Mining and Lands Tribunal are amalgamated and continued as the Ontario Land Tribunal ("Tribunal"). Any reference to the preceding tribunals or the former Ontario Municipal Board is deemed to be a reference to the Tribunal.

ISSUE DATE: November 28, 2023

CASE NO(S).: OLT-22-003167 (Formerly LC190023)

PROCEEDING COMMENCED UNDER subsection 26(1) of the Expropriations Act, R.S.O. 1990, c. E.26, as amended

Claimant: 12908 Highway 7 Inc.

Respondent: Minister of Transportation

Subject: Land Compensation

Property Address/ Description: Part of Lot 27, Concession 7

Municipality: Town of Halton Hills

OLT Case No.: OLT-22-003167

Legacy Case No.: LC190023

OLT Lead Case No.: OLT-22-003167

Legacy Lead Case No.: LC190023

OLT Case Name: 12908 Highway 7 Inc. v. HMK in right of Ontario (Minister of Transportation)

Heard:

March 27-31, 2023, by Video Hearing

May 8, 2023, in Writing

APPEARANCES:

Parties

Counsel

12908 Highway 7 Inc. ("Claimant")

Conner Harris Sarah Spitz

His Majesty the King in Right of the Province of Ontario, as represented by the Ministry of Transportation ("Respondent")

Eunice Machado Brandon Fragomeni

DECISION DELIVERED BY ROBERT G. ACKERMAN AND N. EISAZADEH AND ORDER OF THE TRIBUNAL

INTRODUCTION

1This is a hearing under Section 26(1) of the Expropriations Act, R.S.O. 1990, c. E.26, as amended (the "Act"), brought by 12908 Highway 7 Inc., (the "Claimant") against His Majesty the King as represented by the Ministry of Transportation ("MTO" also referred to as the "Respondent") for compensation arising out of the closure, during the construction of highway improvement works, of one of two accesses to the property known municipally as 12908 Highway 7, Halton Hills ("Subject Property"). The claim is a no-land taken claim, and compensation is therefore claimed pursuant to Section 21 and Section 1(1)(a)(ii) of the Act, or in the alternative, pursuant to Section 6 and Section 14 of the Public Transportation and Highway Improvement Act, R.S.O. 1990, c. P50, as amended ("PTHIA").

2The Claimant claims:

a) Compensation in the sum of $204,160 as either damages for injurious affection pursuant to the Act, or as due compensation pursuant to the PTHIA;

b) $7,684 for maintenance (snow clearing) costs;

c) $6,700 for the purchase of equipment to maintain the Subject Property;

d) $138,764.07 for replacement rental costs;

e) $7,500 for lost executive time; and

f) Interest and costs, pursuant either to the Act or as due compensation in accordance with Section 14 of the PTHIA.

3The Respondent submits that the Claimant is not entitled to damages for injurious affection, because:

a) The access which was closed was illegal and illegal uses are not compensable under the Act or the PTHIA;

b) The access which was closed was unsafe, and closure of an unsafe, illegal access cannot ground a claim in nuisance;

c) The closure did not result from the construction, but from the application of the Respondent's statutory authority, which it could have exercised at any time under the PTHIA.

THE HEARING

4In view of the Tribunal's findings below, the Tribunal will not be addressing the Claimant's alternative claim under the PTHIA.

5The five-day hearing was conducted by the Tribunal by video from March 27 to March 31, 2023. Final Argument was by written submissions and was completed on May 8, 2023. The Tribunal heard evidence from the following Witnesses on behalf of the Claimant and Respondent:

The Evidence

6For the Claimant:

• Pedro Nochez ("Mr. Nochez") – Co-owner of the Claimant;

• Anna Maria Nochez ("Mrs. Nochez") – Co-owner and President of the Claimant;

• Samuel Linds – Real Estate Appraiser who testified as an expert witness.

7For the Respondent:

• Kevin Kelly – Corridor Management Officer, MTO;

• Amaraine Laven – Planner, Niagara Escarpment Commission ("NEC"), who testified under Summons as a lay witness pursuant to the Tribunal's Order of March 15, 2023;

• Kevin Antonides – Real Estate Appraiser who testified as an expert witness.

8The following documents were filed as Exhibits by the Parties and with respect to their Written Submissions:

• Exhibit 1 – Agreed Statement of Facts dated March 21, 2023;

• Exhibit 2 – Joint Document Brief dated November 25, 2022;

• Exhibit 3 – Supplementary Joint Document Book dated March 21, 2023;

• Exhibit 4 – Acknowledgment of Expert Duty of Samuel Linds dated March 27, 2023;

• Exhibit 5 – Retrospective Narrative Appraisal with Report date of December 12, 2021, prepared by Mr. Samuel Linds;

• Exhibit 6 – Transcript of Examination for Discovery of Kevin Kelly dated August 11, 2020;

• Exhibit 7 – Excerpt from MTO Website as at June 30, 2017 entitled Highway Corridor Management;

• Exhibit 8 – Excerpt of policy 4.6.19 of the current Highway Corridor Management Manual dated 2022;

• Exhibit 9 – Niagara Escarpment Plan (2017);

• Exhibit 10 – Curriculum Vitae of Kevin Antonides;

• Exhibit 11 – Acknowledgment of Expert Duty of Kevin Antonides dated November 25, 2022;

• Exhibit 12 – Consulting Report of the Impact Upon Market Value Due to the Removal of a Second Driveway Access dated November 10, 2020, prepared by Kevin Antonides ("Antonides Report");

• Exhibit 13 – MTO Plan P-1715-58 Extracted from PDF page 22 of Antonides Report, with outline;

• Exhibit 14 – Service Ontario Property Index Map – Halton (No. 20) Extracted from PDF page 77of Antonides Report, with green outline;

• Exhibit 15 – CUSPAP 2020 Guidelines;

• Closing Argument Brief of the Claimant, dated April 14, 2023;

• Closing Argument Brief of the Respondent, dated May 1, 2023;

• Reply Argument of the Claimant, dated May 8, 2023;

• Brief of Authorities of the Claimant (3 vols.), dated April 14, 2023;

• Brief of Authorities of the Respondent (3 vols.), dated May 1, 2023;

• Supplementary Brief of Authorities of the Claimant (2 vols.), dated May 8, 2023.

Order of March 15, 2023, respecting the Conduct of the Hearing

9On March 15, 2023, the Tribunal heard Motions by the Claimant and by the Respondent arising out of the adjournment of the originally scheduled date of December 5, 2022, for the hearing. In its Decision issued March 15, 2023, the Tribunal Ordered that limitations be placed upon the evidence which could be provided by Ms. Laven of the NEC, as follows:

a. that the Testimony of the NEC Witness at this hearing be limited to the introduction of relevant documents produced by the Parties in this action;

b. that the Respondent produce to the Claimant any and all correspondence, instructions, and other documents provided to or received from the NEC in relation to this matter by Wednesday, March 8, 2023;

c. that the NEC Witness' testimony be limited to factual testimony alone; and,

d. the Parties to work together to generate an agreed-upon Statement of Facts that forms part of the record.

10The evidence of the NEC Witness, Ms. Laven, will be discussed below.

11The Agreed Statement of Facts was produced and marked as Exhibit 1.

Agreed Statement of Facts

12The Agreed Statement of Facts ("ASF") was filed as (Exhibit 1) and provides:

1. The Claimant is a corporation incorporated pursuant to the laws of Ontario and operates as a holding company that is owned and operated by Mr. Nochez and Mrs. Nochez.

2. The Claimant owns the Subject Property which is municipally known as 12908 Highway 7, Halton Hills, Ontario, and is legally described as:

• Part of Lot 27, Concession 7, Geographic Township of Esquesing, Municipality of Halton Hills, Regional Municipality of Halton, PIN 25006-0033(LT).

3. Highway 7 is a provincial highway governed, in part, by the PTHIA.

4. The Respondent is responsible for making any improvements to provincial highways in Ontario.

5. The Subject Property has frontage onto Highway 7 and, prior to November 1, 2017, had two entrances, one toward the north-western edge of the property and one toward the south-eastern edge of the property.

6. The entrances were connected by way of a long, paved u-shaped driveway.

7. The Subject Property was purchased by the Claimant on May 26, 2017.

8. The Subject Property is situated between the communities of Acton and Georgetown, Ontario.

9. The Subject Property is within the purview of the NEC and is subject to the Niagara Escarpment Plan (2017) ("NEP17"), pursuant to the Niagara Escarpment Planning and Development Act, RSO 1990, c N-2. The Subject Property is designated as "Escarpment Rural Area".

10. The Subject Property is improved with a 1400 square foot split-level, single family residential dwelling and a 1500 square foot heated garage, with double doors.

11. The Respondent has the authority to expropriate land and undertake works for the maintenance and improvement of highways pursuant to the PTHIA, among others.

12. Around June 2017, the Respondent announced the commencement of the construction works for improvements to Highway 7 in the vicinity of the Subject Property (the "Works").

13. The Works included, among other things, milling the existing asphalt and resurfacing the Highway, performing maintenance of the gravel shoulders and culvert replacement.

14. The Respondent notified the Claimant regarding its intention to remove the north-western access on June 27, 2017.

15. The Respondent offered the Claimant $2,500.00 (later increased to

$3,500.00) as compensation for the loss of this access.

16. The Highway 7 Works were undertaken pursuant to the Respondent's statutory authority to maintain and improve the highway. The closure of the western access to the Subject Property was undertaken pursuant to the Respondent's statutory authority to regulate entrances onto the highway.

17. The Respondent removed the north-western access to the Subject Property during or about November 2017 without the consent or approval of the Claimant, after providing the Claimant with notice of its intention to do so.

18. After the Respondent removed the north-western access of the Subject Property there was one remaining access point to the Property.

The Viva Voce Evidence for the Claimant

13Mrs. Nochez and Mr. Nochez testified on behalf of the Claimant.

14They both testified concerning the purchase of the Subject Property and dealings with the Respondent and the NEC regarding the removal of the driveway.

15Mr. Nochez testified that he is a heavy equipment mechanic by training. He immigrated to Canada from the country of El Salvador in 1980. He attended College in Canada where he studied heavy equipment mechanics and graduated in 1987. After working as a mechanic in an employed position for about 12 years, Mr. and Mrs. Nochez went into business as the owners of Luma Heavy Equipment Inc., where Mr. Nochez provides heavy equipment repair services and Mrs. Nochez administers the business.

16The Subject Property came to the attention of Mr. and Mrs. Nochez when it was listed for sale by the owner during or about the first half of 2017. It was a mixed-use property, having both a residential and a commercial component. It fronted onto Highway 7, had two access points, and sufficient area to allow heavy equipment to be brought onto the property by transport truck and to park the heavy equipment until space was available in the garage/shop to effect repairs. The real estate listing for the Subject Property, which was produced as Tab 2 of Exhibit 2, described that the Subject Property included a heated garage/shop which was separately metered from the residence, and that it was suitable for the business operations of a small contractor, electrician, plumber, or home renovator. Photographs of the garage/shop interior in the listing showed the commercial use of the seller and the presence of a fork-lift, industrial equipment and supplies.

17Mr. and Mrs. Nochez visited the Subject Property several times before deciding to purchase it, and they observed that the Property was being used for a commercial

business, in addition to its residential use. The Vendor was a corporation, Motaldi Holding Ltd. ("Motaldi"). Mr. Nochez testified that he met and spoke with the principal of Motaldi, Mr. Arsenault. Mr. Nochez related that Mr. Arsenault advised him that he was operating a welding and steel business from the Subject Property and had done so since his acquisition of the Subject Property. Mr. Nochez testified that he also learned from Mr.

Arsenault that the owner prior to Mr. Arsenault had operated a welding and steel business from the Subject Property for many years prior to Mr. Arsenault's purchase, and that to Mr. Nochez's knowledge, the Subject Property had been used for both residential and commercial purposes since construction.

18Mr. and Mrs. Nochez both testified that they believed that the Subject Property would provide them with the convenience of being able to live and work in the same location. They said that they believed that it would be perfect for their heavy equipment repair business because it fronted onto Highway 7, had two entrances to the Highway, and at 1.6 acres, sufficient area to bring their customers' heavy equipment onto the Property, park the equipment, and work on pieces of equipment one at a time in the garage/shop. The real estate listing for the Subject Property, referred to above (Tab 2 to Exhibit 2), describes, and the photographs therein show, that the garage/shop is a substantial structure, comprising approximately 1,500 square feet and having an interior height of 15 feet and equipped with double cargo doors.

19A building location survey was produced as Tab 7 of Exhibit 2 ("the Survey" – Attachment 1). The signed Survey certificate thereon indicated that the Survey had been prepared by R.E. Clipsham, O.L.S., and was dated November 16, 1987. The Subject Property was shown as fronting onto the south side of Highway No. 7 with a frontage of

97.88 metres (321.04 feet). The Survey shows two buildings improving the Property, a "one storey frame dwelling" and a "metal clad frame garage", both located at the westerly end of the Property. The Survey also shows a broad U-shaped "gravel drive" with entrances onto Highway 7 at the west end and at the east end of the Subject Property ("the East Entrance" and "the West Entrance", respectively). The gravel drive essentially follows the lot limits of the Subject Property, running south from the West Entrance onto

Highway 7, parallel to the westerly lot limit to the rear of the Subject Property and the metal clad frame garage, then along the rear southerly lot limit to the east end of the Subject Property, then north along the easterly lot limit to the East Entrance onto Highway 7. The western arm of the gravel drive runs between the dwelling and the westerly lot limit to the garage. A "concrete slab" is shown as lying between the gravel drive and the west wall of the residence. The evidence of Mr. and Mrs. Nochez was, and the Survey confirms, that the Subject Property could be accessed from Highway 7 by a flat-bed transport truck carrying a piece of heavy equipment at either the East or West Entrance, off-load the piece equipment for service or repair, and that the truck could then continue to circulate the Property and exit at the opposite Entrance without reversing onto Highway 7.

20The Claimant purchased the Subject Property on May 26, 2017.

21On June 27, 2017, Kevin Kelly, the Respondent's Corridor Management Officer responsible for Highway 7 in the vicinity of the Subject property, wrote a letter to the former property owner, Motaldi, which was produced as Tab 13 of Exhibit 2. The reference line on the letter stated that it was in reference to "Entrance Modification/Relocation/Removal to Highway 7". The letter stated that the Respondent had engaged a contractor to resurface Highway 7 in the vicinity of the Subject Property and to replace selected culverts, and that the Respondent had identified the need to remove the West Entrance to the Subject Property. The letter stated that although the West Entrance had "been in existence for many years" that "we feel that in the long-term interest of preserving the safety and operational efficiency of the highway, removal of the west access is desirable". By its proximity, the West Entrance appears from the Survey to have been the driveway entrance intended to facilitate access to the residence.

22The letter stated that the reason for the removal of the West Entrance was that the Respondent had determined that it did not meet the minimum stopping Sight distance ("SSD"), and that it did not meet the minimum "entering sight distance" ("ESD"). The letter offered compensation for the loss of the West Entrance in the sum of $2,500.

23Mr. Arsenault of Motaldi provided the letter from Mr. Kelly to Mr. and Mrs. Nochez on or about July 18, 2017. After reviewing it, Mrs. Nochez testified that she contacted Mr. Kelly by telephone and spoke to him concerning his letter and its implications. She testified that he explained to her that the West Entrance driveway had been identified as unsafe and that the Respondent was seeking the Claimant's consent to remove and close the Entrance. She testified that she believed that they had a choice in the matter and so told Mr. Kelly that she and Mr. Nochez did not wish to lose the West Entrance.

24Both Mr. and Mrs. Nochez testified that the closure of the West Entrance made it impossible to operate the Luna Heavy Equipment Repair business from the Subject Property because the trucking companies they used refuse to deliver or pick up equipment and machinery due to the difficulty and safety concerns they have in exiting the Property in reverse onto Highway 7.

25Mr. Nochez testified that, as the closure of the West Entrance rendered the use of the Subject Property for the Claimant's commercial purposes untenable, it was necessary to lease alternative commercial premises for the operation of the Luna Heavy Equipment Repair business. This required the Claimant to rent alternative premises for its operations commencing on October 1, 2018, at a rent of $2,618.19 per month, which was later increased to over $3,000 per month.

The Viva Voce Evidence for the Respondent

26Mr. Kelly and Ms. Laven gave evidence on behalf of the Respondent.

27Mr. Kelly testified that he had been employed by the Respondent in various capacities for over 35 years, and that he was the Corridor Management Officer for Highway 7 in the vicinity of the Subject Property during the period 2008 to 2018. Mr. Kelly stated that pursuant to the PTHIA, a permit was required for each access to a provincial highway such as Highway 7, and he referred to the 2013 version of the Respondent's

"Highway Access Management Manual", which was produced as Tab 75A to Exhibit 2 (the "Manual").

28Mr. Kelly testified that he was the author of the letter giving notice of the Respondent's intention to close the West Entrance described above as Tab 13 of Exhibit

2. Mr. Kelly confirmed in his testimony that before the Works began on Highway 7, the Respondent conducted an 'Access Management Review'. Mr. Kelly testified that Access Management is the Respondent's process for the management of entrances onto provincial highways and onto roads within the Respondent's permit control areas. Mr. Kelly testified that, as a result of the review of the Subject Property, the Respondent had concerns that the Property's West Entrance was unsafe as it did not meet the Minimum SSD, and that it was also an unnecessary Entrance.

29Mr. Kelly also related that, in his first conversation with Mrs. Nochez, he had advised her that the West Entrance was unnecessary because it is the Respondent's policy that a legal lot of record fronting onto a Highway is permitted to have only one Highway entrance. Mr. Kelly stated that this was known as the "one lot, one access connection" principle. He testified that the sole exception allowed by the Respondent is for auxiliary access connections to farmsteads.

30Mr. Kelly testified that he attempted to have discussions with Mr. and Mrs. Nochez to come to an agreement for the removal of the West Entrance. He stated that it is the Respondent's policy to make such overtures in an effort to resolve potential disputes with landowners when the closure of an access is proposed.

31Mr. Kelly testified that the Respondent offered to remove the West Entrance without charge to the Claimant and the sum of $2,500 as compensation, which was later increased to $3,500, in accordance with the provisions of the Manual regarding the removal of accesses. Payment of any amount would be pursuant to a full and final settlement as it was predicated on the Claimant's execution of an Entrance Works Agreement ("EWA") which included a release of all claims and an indemnity agreement.

32The Claimant refused to enter into the EWA. The Respondent removed the West Entrance to the Subject Property during or about November 2017 without the Claimants' agreement.

33Mr. Kelly testified that the Manual provides that, in addition to the requirement that each access have a permit, that access permits are non-transferable and each subsequent owner of a property must obtain a permit. He testified that he conducted a search of the Respondent's records and was unable to locate any access permits for either of the Subject Property's two accesses, either in the name of the Claimant or in the names of any of the Claimant's predecessors in title. When asked in cross-examination how it was that the Claimant was allowed to retain one of the two accesses if neither access had ever been the subject of an access permit, he referred to the Respondent's Entrance Removal Guidelines (Exhibit 2, Tab 76B, p.17):

Entrances that are already in existence along the provincial highway corridor and have been there for some time (i.e. at least 10 years) can continue to be used for their present use, regardless of whether the property owner can produce an MTO Entrance Permit.

34Under direct examination, Mr. Kelly referred to Section 5.5.2 of the Manual, which is entitled "Access Connection Grandfathering". The Manual had been released in 2013. He stated that an access that had been in existence for ten years or more, or which had been legally in existence prior to the release of the Manual, would be considered to be grandfathered and that he had determined that the East Entrance should be grandfathered but not the West Entrance.

35Mr. Kelly testified that the Subject Property was formerly part of a much larger parcel (the "Parent Parcel"). During or about 1969 the Respondent's predecessor, the Ministry of Transportation and Communications ("MTC"), expropriated a large portion of the Parent Parcel for the realignment of Highway 7 to its current configuration. The Subject Property remained and fronted onto the lands expropriated for the realignment of Highway 7. Mr. Kelly testified that when the realigned Highway 7 was designated as a

Highway, the designation did not include all of the lands which had been expropriated. A narrow strip remained which was not designated, and which lay between the Subject Property and the designated Highway 7 Lands. The remaining portions of expropriated lands that MTC retained but did not designate he referred to as "brown lands". The Tribunal understands that this does not refer to the lands which require environmental remediation, but to the fact that on MTO mapping such lands are identified by being coloured brown. The brown lands strip extends along part of the frontage of the Subject Property onto Highway 7 beginning at the westerly lot limit and terminating before the East Entrance. Mr. Kelly stated that permission is required to cross the brown lands, which was not obtained by the Claimant's predecessors in title and that this was another reason why the Western Entrance was not permitted.

36In cross-examination, Mr. Kelly was referred to and identified a letter dated December 20, 2017, from Morgan Lawrence, a 'Corridor Management Engineer' for the Respondent, to the Claimant's then counsel. The letter was produced as Tab 19 of Exhibit

2. The letter contained an acknowledgement that the configuration of the Subject Property with the two Entrances to Highway 7 had been in existence for many years. Mr. Kelly answered that he agreed that the two Entrances had been in existence for many years.

37Also in cross-examination, Mr. Kelly confirmed that he would have driven past the Subject Property countless times between 2008 and 2017 in his capacity as Corridor Management Officer for Highway 7. He was asked to explain why he had never objected to the West Entrance prior to the Respondent's Works being undertaken, and Mr. Kelly replied that 'Access Management Reviews' are only undertaken when work is planned for a particular stretch of the Highway.

38Also in cross-examination, when asked whether the Ministry was a commenting agency on development applications filed with the NEC, he replied in the affirmative. Mr. Kelly stated that the Respondent's predecessor, MTC, had no objections to the Development permit Application marked as Exhibit 3, Tab 4. In addition, Mr. Kelly confirmed that the NEC would have commented on the Application for the Development

Permit marked as Exhibit 3, Tab 5, and that the NEC would have circulated the Application for the Development Permit marked as Exhibit 3, Tab 6, to the Ministry.

39Referring to an Undertaking Answers from his Examination for Discovery, Mr. Kelly stated that the Respondent's backup records regarding access permits for the Subject Property may have been destroyed in a flood which had occurred at the Respondent's storage facility. The flood and resultant document destruction was referred to in the Respondent's Answers to its Undertaking Nos. 1 and 7 given on the Examination for Discovery of Mr. Kelly. The Undertaking answers were produced as Tab 75 to Exhibit 2. The Undertakings had required production of the contract documents for the Highway 7 Works and any documents relevant to the litigation, in the possession of the Respondent's Project Manager, Paul Ahn. The Answers to Undertakings Nos. 1 and 7 state:

1. Response: Unfortunately, two years ago, the storage facility where this file was kept was severely damaged by a flood. All back up information regarding this contract was destroyed. We do know that the contract was signed in November of 2016. The tender for the project usually goes out 4-6 months prior to the contract date.

2. Mr. Ahn is no longer working for Ontario. His notes, to the extent that any existed, would have been part of the file that was destroyed by the flood.

40Under cross-examination, Mr. Kelly admitted the Respondent's "permit system is far from perfect" and that the permit system "may not be a complete record" respecting the Subject Property.

41Ms. Laven appeared and gave evidence under summons by the Respondent. As stated above in paragraph 9], the Tribunal had previously ordered that Ms. Laven's evidence be limited to factual matters only and that she was precluded from providing any opinion evidence. She testified that she has been employed by the NEC since 2017, and was currently a Senior Strategic Advisor, but in 2017 her position had been that of a Planner, which entailed the processing of development applications. She referred to the NEP17 as an environmental land-use plan which originally came into force in 1985. The NEP17 was produced and marked as Exhibit 9. Ms. Laven referred to Section 1.5 on page

25 of the NEP17 entitled "Escarpment Rural Area" ("ERA") and she stated that the Subject Property is located within the ERA. She stated that Development Permits are required for lands within the ERA and the Permitted Uses are listed in Section 1.5.3 of the NEP17 on pages 26 – 29. She stated that the NEC is the Approval Authority for all development applications within the ERA as opposed to the municipality (Town of Halton Hills).

42Ms. Laven related that, at the request of Mr. Kelly, she had conducted a search of the NEC data base and records for documents relating to any development proposals, application and approvals at the Subject Property. She stated that all such documents in the possession of the NEC had been provided to either Mr. Kelly or to counsel for the Respondent. Production of these documents to the Claimant had been ordered by the Tribunal on March 15, 2023, and the documents were produced and marked as Exhibit 3 – Supplementary Joint Document Book. Ms. Laven stated that as all of the documents were old, they were stored off-site and had to be retrieved. In cross-examination Ms. Laven admitted that many documents were missing and that there were gaps in the information retained by the NEC. She referred to "gaps in the information", stating that with respect to the 1978 and 1981 Application for Development Permits, there would have been a Site Plan filed with each, but these were missing. With respect to the 1985 Application for a Development Permit the only document she located was the Permit itself, and that the entire Application was missing.

43Portions of development permit files were produced and contained within Exhibit 3. These included at Tab 4 of Exhibit 3, an Application, Recommendation for Approval and Notice of Decision dated July 7, 1978, and a Development Permit in the names of Eric and Helen Curnow to construct a single-family dwelling. The proposal was approved with the NEC staff commenting that the Subject Property had been in existence since before the NEC was created and that the Niagara Escarpment Planning Area would allow the residential development under the "Existing Lots of Record" policies. Staff Comments included that the Respondent's predecessor, the MTC, had no objection provided that the required permits were obtained. A site plan was not produced. Ms. Laven stated that it appeared that, in view of the documents produced at Tab 5 of Exhibit 3 regarding a

subsequent application, the proposed residence had not been built and that in such a case, the approval would have lapsed.

44At Tab 5 of Exhibit 3, NEC documents produced included a Notice of Decision dated March 24, 1981, and a Development Permit dated April 8, 1981, issued to Steve Makos, for the construction of a single family detached dwelling. The conditions of approval included: "That only the most southerly access be opened and that a turning area or circle be provided on the lot". A site plan was not produced. Ms. Laven indicated that a Site Plan would have been required and had been undoubtedly filed, but that it must have been lost. The evidence was that in this instance the proposed residence was built and that it appears to be the dwelling which currently improves the Subject Property. The meaning of the reference to the "most southerly access" is unclear as the Subject Property fronts onto the southerly limit of Highway 7 and its frontage runs east and west, and that throughout, the Entrances have been referred to as either the East and West Accesses, or the East and West Entrances.

45The NEC records produced at Tab 6 of Exhibit 3, include a Notice of Decision and Development Permit, with Site Plan attached, issued to Steve and Marie Makos for the construction of a one-storey detached garage on the Subject Property. The Site Plan, which is stamped "N.E.C. Approved" under date of May 23, 1985, shows the improvements on the Subject Property as they existed prior to the Highway 7 Works, being the existing residence, the then proposed 30 ft. x 45 ft garage and the "Existing" U-shaped driveway with two Entrances onto Highway 7 (the "1985 Site Plan" – Attachment 2). The location of the improvements, driveway and Entrances onto Highway 7 correspond to those shown on the Survey described above at Tab 7 of Exhibit 2, and which was prepared approximately two years later, in 1987. Ms. Laven stated that the 1985 Site Plan was the only Site Plan for the Subject Property which she located in the NEC records. The Application resulted in the issuance of a Development Permit on June 12, 1985. Condition No. 4 of the Development Permit stated: "That, prior to the issuance of a Building Permit, the applicant obtain a Building and Land Use Permit from the Ministry of Transportation and Communications District No. 3 (Stratford)."

46At Tab 1 of Exhibit 3, a total of five computer screen captures were produced respecting an application made during 1987 by George Waldrum for a permit to operate a commercial fencing business at the Subject Property and an office in the residence. The last screen capture indicated that the file was closed approximately two years later with no permit issued. No reason for the closure was indicated. No other NEC records regarding this or any other application were produced.

47In cross-examination Ms. Laven admitted that she could provide no further information regarding the four development applications for the Subject Property other than what appears on the face of the documents contained in Exhibit 3, and that while the records available do not include a permit to operate a commercial business in the name of Mr. Waldrum, the records do not indicate whether this was the result of a Decision by NEC or the withdrawal of the application.

48In cross-examination Ms. Laven was referred to Section 1.5.3 of the NEP17 which deals with Permitted Uses. She confirmed that existing uses are permitted use, and that existing uses in the NEP includes commercial uses. She stated that the version of the NEP she was relying on came into force on June1, 2017, and that the first version of the NEP came into force on June 12, 1985. This was the same date that the development permit had been issued to Steve and Maria Makos for the construction of the present garage/shop.

Appraisal Evidence for the Claimant

49Samuel Linds, AACI, was called to give appraisal evidence on behalf of the Claimant. Mr. Linds was qualified by the Tribunal to provide real estate appraisal opinion evidence in general, and respecting the issues in this hearing in particular. Mr. Linds had prepared a Retrospective Narrative Appraisal Report dated December 12, 2021, which was produced and marked as Exhibit 5.

50Mr. Linds testified that he carried out an appraisal of the Subject Property in order to estimate the damages attributable to the closure of the Subject Property's West Entrance, as at July 17, 2019. He stated that, in his opinion, based on the evidence in the record and which he had heard while observing the Hearing, and based on his professional experience, the removal of the driveway resulted in a partial loss of access to the Subject Property which rendered it less desirable. He testified that, all else being equal, a property with two entrances is better than a property with one entrance, and he stated that the West Entrance closure impacted both the commercial and residential uses of the Subject Property. It was therefore his opinion that the Subject Property had suffered a diminution in value. He stated that his market research yielded insufficient market data in the form of sales of rural mixed-use properties with two entrances to permit the use of the Comparable Sales approach to his appraisal and hence, he utilized a 'Before and After' analysis.

51Mr. Linds testified that in his opinion, the U-shaped driveway permitted an efficient circulation for commercial vehicle traffic through the Subject Property by offering entry at the West Entrance and exit from the East Entrance. Transport trucks were able to enter the Subject Property at the West Entrance to drop off or pick up machinery and equipment for repair. Trucks would proceed south to the garage/shop at the southwest corner of the Subject Property where the machinery and equipment would be dropped off or picked up. To depart, the truck would then proceed east on the Subject Property to the eastern lot limit, then north to the Highway 7 frontage and exit via the East Entrance.

52After closure of the West Entrance, trucks must enter through the East Entrance and traverse the Subject Property from East to West to the garage/shop. To exit the Property trucks are now required to back up in an easterly direction for the full width of the Property, then make a 90-degree turn in reverse and continue backing up in a northerly direction to the East Entrance and then, when safe to so, exit onto Highway 7, in reverse. Mr. Linds stated that there are two primary safety concerns with backing up along the driveway, which has a 90-degree bend and slope as it approaches the eastern lot limit. The driveway is now shared with the possibility that residential users, who may enter the

Subject Property at any time, could come into conflict with the heavy commercial truck traffic. In addition, reversing along the driveway requires the truck to exit the Subject Property in reverse onto Highway 7 raising safety concerns. He confirmed that Mr. and Mrs. Nochez have been advised that truck drivers no longer wish to enter the site.

53Mr. Linds concluded that the existing commercial use of the Subject Property is no longer possible, as trucks can no longer safely enter and exit the site. As a result, the Highest and Best use of the Subject Property, which had been Residential-Commercial Mixed-Use, has been downgraded to Residential only.

54Mr. Linds also described the impact of the West Entrance closure for residential users of the Subject Property. The residence is tenanted and the West Entrance was utilized by the residential tenants, due to its proximity to the residence and parking area. He stated he found that prior to the closure of the West Entrance, tenants drove about 140 feet from Highway 7 to park their cars next to the residence. Subsequent to the closure, the tenants must travel along approximately 555 feet of driveway from the East Entrance in order to park their vehicles at the west end of the Subject Property adjacent to the residence. In addition, the tenants have had difficulty navigating the lengthy driveway in the winter season, and as a result the driveway requires snow removal on a more frequent basis to accommodate the tenants who enter and exit the site on a daily basis.

55Mr. Linds stated that in order to estimate the loss in market value to the Subject Property, he estimated the cost to remediate the personal and business damages aspect of the injurious affection caused by the closure of the West Entrance, and that it is his opinion that the best method of estimating the injurious affection is employing the 'Cost to Cure' approach. He stated that this approach is appropriate where there is a scarcity of comparable market evidence that would support another appraisal approach, and Mr. Linds stated that this case is such a circumstance.

56The Cost to Cure approach requires that an estimate be obtained of the cost required to remediate the impacts on the Subject Property, so as to return it to a similar

level of utility as prior to the West Entrance closure. Mr. Linds stated his opinion, that in order to best remediate the damages caused by the West Entrance closure, an internal roadway loop must be constructed to enable trucks to easily enter and exit the Subject Property by the East Entrance, which will service the commercial use, while also providing residential users with a means to enter and exit the Subject Property while avoiding conflict with the commercial users and also the need to traverse the entire site on entry and exit.

He illustrated the proposed internal loop on an orthograph produced on page 56 of the Linds Appraisal, Exhibit 5. (Attachment 3)

57Mr. Linds stated that the Cost to Cure method is expressly provided for in the Respondent's own guidelines for compensation for closure of a secondary access. He referred to the Respondent's Bulletin 02/07 issued on November 5, 2007, by Robert Hazra, Head, Corridor Management and Property Office. The Bulletin was produced as an addendum to the Respondent's Entrance Removal Guidelines previously referred to as being produced at Tab 76B of Exhibit 2. Mr. Hazra's Bulletin at Appendix C directs on page 2:

If the loss of a secondary entrance(s) causes obvious damage to a property, the ministry should complete an appraisal to quantify the loss in Market Value or Injurious Affection or Cost to Cure in order to make an offer of compensation.

58Mr. Linds explained that the Cost to Cure approach simply involves determining the work required to restore the property to a level of functionality comparable to that which existed prior to the event causing the loss, and then obtaining contractor quotes to complete the work.

59Mr. Linds stated that he recommended the construction of an internal loop driveway, which will permit trucks to circle and exit the Subject property without reversing onto Highway 7. The residential tenants will be able to enter the site from the East Entrance and traverse the Property to the parking area adjacent to the residence while avoiding any interaction with commercial traffic.

60Mr. Nochez had confirmed in his evidence that the internal loop would restore a similar level of functionality to that which existed prior to the Respondent's Works.

61Mr. Linds testified that an experienced and qualified contractor named John Abel of Abel Asphalt was retained to estimate the work and costs necessary to implement the internal loop solution. Mr. Abel provided a written quote for the necessary excavating, soil removal, grading and paving with commercial grade asphalt, a total area of 6,000 sq. ft. This quote was produced at page 58 of the Linds Appraisal, Exhibit 5, and was in the amount of $149,160 including HST. Mr. Linds' estimate of the Claimant's damages for injurious affection incorporated and adopted Mr. Abel's quote which was therefore in the amount of $149,160. Counsel for the Claimant had proposed to call Mr. Abel to give evidence, but prior to so doing, the Tribunal was advised by both Counsel that Mr. Abel need not testify as the Respondent accepted the amount of his Quote for the construction of the internal loop. Mr. Abel was accordingly released without giving evidence.

62Mr. Linds also stated that he considered the lost land value arising from the area of the property that would need to become the "new driveway". He stated that the ordinary utility of this land would be lost as a result of its use for the new internal driveway. He used a direct comparison approach to determine the Highest and Best Use of the property as vacant, which was determined to be for single-family residential development. Using comparable sales of other rural residential properties, Mr. Linds opined that the 0.138 acres required for construction of the internal loop would have a market value of approximately $55,000.

63Mr. Linds therefore estimated that the total damages for injurious affection estimated using the Cost to Cure approach is the sum of $204,160.

Appraisal Evidence for the Respondent

64Kevin Antonides, AACI, was called to give appraisal evidence on behalf of the Respondent. Mr. Antonides was qualified by the Tribunal to provide real estate appraisal

opinion evidence in general and respecting the issues in this hearing in particular. Mr. Antonides had prepared a consulting report titled "Consulting Report of the Impact Upon Market Value Due to the Removal of a Second Driveway Access" (the "Antonides Report"), which was dated November 10, 2020, and was produced and marked as Exhibit 12. Mr.

Antonides stated that a Consulting Report is a broad ranging form of Report, is more encompassing than a typical appraisal report as it considers more than just market value. His approach was very different from that of Mr. Linds. The Antonides Report did not consider the Cost to Cure approach.

65Mr. Antonides stated that in his view the issue of what was legally permissible will determine the Subject Property's Highest and Best Use. He stated that Mr. Linds had "assumed" that the second access was lawful and that the business and commercial use were permissible. He stated that it was his understanding from the evidence that the West Entrance was an illegal entrance and that the commercial use of the Subject Property was an illegal use. He referred to Section 14(4) (c) of the Act in his evidence and in his Report as precluding compensation for illegal uses.

66Commenting upon Mr. Linds' use of the Cost to Cure approach, Mr. Antonides opined that Mr. Linds "jumped right to the remedy" when there was no evidence of a diminution in market value. Mr. Antonides stated his opinion that it is only appropriate to estimate a remedy once a loss has been proven using market evidence.

67Commenting upon the internal loop proposal, Mr. Antonides opined that a "hammer- head turnaround" in the vicinity of the residence should have been considered by Mr. Linds as it would be less expensive and would permit trucks to exit the Subject Property in a forward direction. He made no inquiries regarding the construction of such a turn-around, neither did he obtain and provide a cost estimate.

68Mr. Antonides stated his opinion that there had been no diminution in the market value of the Subject Property. Mr. Antonides' conclusion on Highest and Best Use, was for a single residential dwelling with ancillary buildings. In addition, he stated that the West

Entrance was not legal, as it was trespassing over the brown lands described by Mr. Kelly. Further, as full commercial uses are not permitted on the Subject Property, Mr. Antonides opined that the loss of the commercial use was not compensable. In his determination of whether there was a diminution in market value, Mr. Antonides stated that the illegal use must be ignored in determining whether any compensation is payable.

69Mr. Antonides testified that brown lands, such as the strip of land abutting the highway, in the vicinity of the western frontage of the Subject Property onto Highway 7 are often referred to as a One Foot Reserves by appraisers. He stated that lands not required for the publicly accessible Highway are lands assumed but not designated. He stated that the Respondent still owns such lands but that abutting property owners do not have a right to cross the lands without permission.

70Mr. Antonides opined that the brown lands were actually in the nature of One Foot Reserves retained by the Respondent as a means of controlling access to Highway 7. Appendix G of the Antonides Report Contains a copy of an email from Mr. Kelly which states:

As Eunice noted the entrance that was removed also crossed over MTO owned land (noted as brown land on the Title Record for this area). Stakeholders are often required to convey to the Ministry a 0.3 m reserve along their highway frontage. A 0.3 m reserve serves to inform future property owners that an access connection from the highway is either not available or restricted to a certain location along the highway frontage. As detailed on the Title Record , this reserve (small strip of brown land across the frontage of#12908 – Hwy 7) ends just short of the east (south) entrance to this property which indicates where an entrance to the property can be located. Our Geomatics Office has confirmed this reserve has been in place since May 1970. Thanks.

71Appendix D to the Antonides Report includes the Property Index Map and the Parcel Registers for the Subject Property and for the lands comprising Highway 7 which abut the Subject Property as well as other abutting lands owned by the Respondent. There is also a reference plan registered on July 9, 1969, showing the Subject Property and the adjoining Highway 7 lands. These documents show that, beginning in 1956, there have been a great number of expropriations and acquisitions by the Respondent's predecessor of lands in the vicinity of the Subject Property, assembling lands for the

purpose of the re-alignment and then widening of Highway 7. However, in none of these records does there appear a registration of a Transfer or of a Notice of a One-Foot Reserve lying between Highway 7 and the frontage of the Subject Property.

72It was the opinion of Mr. Antonides that no diminution in value would be evident or measurable as a result of having one driveway as opposed to two driveways servicing the Subject Property. In his opinion though, since the second driveway use was not permitted, no compensation would be payable under the Act by virtue of Section 14(4)(c) for a use that was "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."

ANALYSIS, FINDINGS AND DETERMINATIONS

The Legal Framework

73Section 21 of the Act requires that a statutory authority compensate property owners for loss or damage caused by the authority's construction activities and/or by its works, in the form of injurious affection. The obligation to compensate property owners for damages for injurious affection can arise irrespective of whether land has been expropriated. Where no land is taken, compensation for "injurious affection" is payable for the reduction in the market value of the land of the owner; and for personal and business damages, resulting from the construction and not the use of the works undertaken by the statutory authority. Section 1(1) requires that such an owner must prove, on a balance of probabilities, that the damages suffered are damages for which the authority would be liable for if the construction were not carried out under the authority of statute.

74The designation of lands as controlled access highways generally will not trigger an entitlement to compensation under the Act. Nor does the Respondent's refusal to issue an access permit when one is applied for. (Teubner v. Minister of Highways (1965), 1965 CanLII 362 (ON CA), 2 OR 221 at p. 235). But the situation is different when access is denied or interfered with by virtue of works undertaken by the Respondent on its own lands. In such circumstances, a claim

for injurious affection where no land is taken can arise. (Norway Pines Cabins Ltd v. Minister of Highways for Ontario, 1966 CanLII 263 (ON CA), [1967] 1 OR 12-18).

75Counsel for the Claimants submits that the claims by the Claimant fall into the latter category, as this is an instance where the Respondent exercised its statutory authority within the context of its own construction works to remove one of the Subject Property's Entrances onto Highway 7. This work was undertaken pursuant to the powers granted to the Respondent by Section 6 of the PTHIA. The exercise of that statutory power, and the construction related to it, caused damage to the Claimant, and gives rise to a right to compensation under the framework of the Act.

76Counsel for the Respondent submits that the second access was not a lawful access. The business use intended by the Claimant was not a lawful use. Citing Section

14(4)(c) of the Act, Counsel submits that to the extent that any losses exist, they are not compensable.

77Counsel for the Respondent submits further that a governmental authority, engaging in a lawful exercise of its statutory authority, cannot be required to compensate a party for loss of an illegal use. (Paciorka Leaseholds Ltd v. Windsor (City), [2007]

O.M.B.D. No. 1078 (OMB)).

78Counsel for the Respondent submits that there are three reasons that the second access was illegal, and that if this Tribunal agrees with any of the three grounds, it must find in favour of the Respondent and dismiss the claim. It was illegal because:

(i) It was unsafe;

(ii) It violated the "one lot, one access" principle; and

(iii) It required vehicles to trespass over the brown lands.

79Counsel for the Respondent acknowledges that there is a grandfathering provision which could allow old entrances to continue without a permit. But referring to the Manual at

Section 5.5.2, the grandfathering provisions do not apply in this case as no permit had ever existed for the property and the second access was unsafe.

80The Respondent submits that the Works consisted of the repaving of Highway 7 and that the closure of the West Entrance was not a part of the Works. Therefore, the Works did not impact the Claimant's enjoyment of their property and the closure of the West Entrance occurred independently of the Works and is therefore not compensable.

Whether the Brown Lands were a One Foot Reserve

81The Respondent submits that the so-called brown lands constituted a One Foot Reserve in its favour, that the West Entrance trespassed upon the One Foot Reserve, which entitled the Respondent to close the West Entrance, and disentitled the Claimant to compensation arising from the closure.

82A One Foot Reserve is a strip of land that is commonly used to prevent access to a public road from private property. A One Foot Reserve is a planning device used to control the orderly sequencing of land development, as well as to restrict functional access until servicing and financial obligations are met by the landowner. However, when such a reserve is created there is typically a registration, such as a transfer, of the lands being designating as a One Foot Reserve that will show on the Parcel Registers and hence on the PIN Map(s). Notice of the One Foot Reserve, such as a restrictive covenant, is also typically registered on title to the property whose access is being restricted, thereby giving the effected parties notice of the access restriction. This was confirmed in the email from Mr. Kelly to Mr. Antonides sent on November 12, 2020, produced at Appendix G (p. 126 of the PDF) to the Antonides Report, Exhibit 12.

83As noted above, there is no evidence before the Tribunal that any of this was done with respect to the brown lands. The Tribunal has examined the Parcel Registers and the Property Index Map for the Subject Property and for the lands comprising Highway 7 which abut the Subject Property as well as other abutting lands owned by the Respondent which

were produced by Mr. Antonides at Appendix D to the Antonides Report, Exhibit 12. There is no designation of a One Foot Reserve indicated in the Parcel Registers, there is no indication of the existence of a One Foot Reserve on the PIN Map, and there is no notice of the One Foot Reserve or a restrictive covenant referencing same, shown on title to the Subject Property. Mr. Antonides also produced a copy of Reference Plan R-1715-58 registered on July 9, 1969, which shows both the Subject Property and the Respondent's Highway 7 and other lands, no One Foot Reserve is indicated. Given the lack of a registration or notice, the Tribunal therefore determines that the so-called brown lands do not constitute a One Foot Reserve which would be enforceable against the Claimant.

Whether the West Entrance was Illegal for Lack of an Entrance Permit

84The Respondent submits that the West Entrance was illegal because it required an Entrance Permit, and the Respondent did not have a record of such an Entrance Permit having been applied for or issued to the Claimant or to any of the Claimant's predecessors in title.

85The Tribunal notes that the Respondent admitted that its file and documents relating to the Subject Property had been lost or destroyed several years ago in a flood at its document storage facility. Mr. Kelly stated that he would have driven by the Subject Property on Highway 7 countless times in the course of his duties in Corridor Control, and that he acknowledged that the West Entrance had been in existence for many years. The existence of the West Entrance for many years had also been admitted by the Respondent's Engineer, Mr. Lawrence, in a letter to the Claimant's previous counsel (Exhibit 2, Tab 19). The Tribunal notes that the 1985 Development Permit issued by the NEC with the attached Site Plan clearly shows both the West Entrance and the East Entrance and that the Respondent's predecessor, the MTC, would have been a commenting agency on that 1985 Development Application. The Building Location Survey prepared in 1987 shows both Entrances, the U-shaped driveway and the improvements on the Subject Property as it existed prior to the closure of the West Entrance. Mr. Kelly

admitted that the Respondent's permit system is far from perfect and that it may not be a complete record.

86Having considered all of the evidence of the witnesses for both the Claimant and for the Respondent, both in direct and cross-examination, the evidence that both Entrances had openly existed and been in use for decades, and the admitted gaps and missing documents in both the records of the Respondent and of the NEC, and in particular the 1985 Development Permit and the 1987 Survey, both showing the two Entrances onto Highway 7 the Tribunal finds that the West Entrance and the East Entrance had both been in existence since at least 1985, and that the Respondent granted the Claimant's predecessor in title the necessary permission(s) and permit(s) for the West Entrance and for the East Entrance, and in the case of the West Entrance, with any required permission to cross the brown lands, and that the records of the permissions and permits have become lost. The Tribunal also finds that both Entrances were therefore "grandfathered" pursuant to provisions of the Manual referred to by Mr. Kelly in his direct examination.

87On the issue of illegality, the Tribunal finds on the evidence that, at some point between the issuance of the 1981 Development Permit and the construction of the single- family residential dwelling, the Claimant's predecessor in title decided to construct a U- shaped driveway with two entrances onto Highway 7 instead of a turning circle on the lot. The Tribunal also finds on the evidence of the witnesses and based on the 1985 NEC approved Site Plan and the 1987 Survey that, the U-shaped driveway was approved by the Niagara Escarpment Commission and by the Respondent either explicitly or by implication in its comments (or lack thereof) on the 1985 Development Permit Application. The Ministry was aware that the West Entrance crossed its brown lands as of 1985 and it consented, by necessary implication , to the Western Entrance crossing the brown lands.

Whether the West Entrance was Illegal because it was Unsafe

88The Respondent submits that the West Entrance was illegal because it was unsafe. The Tribunal has found above that the West Entrance was not an illegal entrance onto

Highway 7 because it had been an entrance crossing the Respondent's brown lands which had been implicitly approved and permitted by the Respondent. On the issue of whether the West Entrance was illegal because it was unsafe, the Tribunal noted that Mr. Kelly wrote a letter to the Claimant's predecessor in title on June 27, 2017, giving notice of the Respondent's intention to close the Entrance which was produced as Tab 13 of Exhibit 2. The letter did not unequivocally state that the West Entrance must be closed because it was unsafe. Neither did it state that the West Entrance was illegal. The letter stated that, "although the current entrance configuration has been in existence for many years, we feel that in the long-term interest of preserving the safety and operational efficiency of the highway, removal of the west access is desirable". In the Tribunal's view, stating that the closure is desirable from the standpoint of safety and operational efficiency is a far cry from declaring that the West Entrance is unsafe and therefore illegal. The Tribunal observes that the West Entrance had been in use for in excess of 30 years, without objection by the Respondent or incident.

89Accordingly, the Tribunal finds that the West Entrance was a legal entrance onto Highway 7.

Whether the Commercial Use of the Subject Property was Illegal

90The Respondent's Counsel submits that the commercial use of the Subject Property was illegal because there is no record of the commercial use being authorized by the NEC. The Respondent's Counsel also submits that the Tribunal has no jurisdiction to find otherwise because the NEC is not a Party to this proceeding.

91While the Tribunal agrees that it cannot make a finding in these proceedings which is binding on the NEC, it nevertheless can make a finding as between the Parties before it. Section 26 of the Act grants the Tribunal exclusive jurisdiction to decide claims brought under the Act. Section 8 of the Ontario Land Tribunals Act, 2021, S.O. 2021, Chapter 4, Schedule 6, grants to the Tribunal the "authority to hear and determine all questions of law and fact with respect to all matters within its jurisdiction, unless limited by this or any other

Act". Section 2(4) of the Act provides that "where there is a conflict between a provision of this Act and a provision of any other general or special Act, the provision of this Act prevails". The Tribunal therefore has the jurisdiction to determine the issue of whether the business was a lawful use.

92The Tribunal was referred to the 1996 Realty Tax Bill for the Subject Property which was produced as Tab 8 of Exhibit 2. It was addressed to Island Steel Erectors & Welding Services Limited ("Island Steel"), a business operated by one of the Claimant's predecessors in title. The Tax Bill indicates that the Assessment for the Subject Property is "Residential & Farm; Commercial & Industrial Business Assessment".

93The Tribunal notes that the Parcel Register for the Subject Property produced by Mr. Antonides indicates that Island Steel acquired title on August 31, 1995, and that it owned the Subject Property for approximately 17 years before transferring title to Fenlou Holdings Ltd. on October 30, 2012, who in turn transferred title to the Claimant's Vendor, Motaldi Holdings Ltd., just over two weeks later, on November 16, 2012.

94The evidence was that Mr. Nochez met and spoke with the principal of Motaldi, Mr. Arsenault, and that Mr. Arsenault advised him that he was operating a welding and steel business from the Subject Property and had done so since his acquisition of the Subject Property in 2012. He also stated that the prior owner had also operated a welding and steel business from the Subject Property for many years and that to his knowledge, the Subject Property had been used for both residential and commercial purposes since construction.

95Ms. Laven of the NEC testified on behalf of the Respondent under subpoena. In cross-examination Ms. Laven admitted that she could provide no further information regarding the four development applications for the Subject Property described above other than what appears on the face of the documents. It was apparent from Ms. Laven's testimony, that the NEC records regarding the subject Property are as incomplete and deficient as the Respondent's records. There were many documents missing from the records of the NEC which could have filled in the gaps in the Subject Property's

development history. Such gaps in the record must be resolved in favour of the Claimant. Given the number of missing documents and records in both the Respondent's files and in the NEC's files, the fact that a document such as a permit is not present, cannot be concluded to mean that such a permit was never issued, or that such document never existed. It is at least as likely that the permit was issued or that the document at one time existed, and that both have become lost. On the facts of this case, where the West Entrance was openly in existence and use for in excess of thirty years, and the Respondent raises the defence of illegality, the onus lies with the Respondent to establish that the West Entrance was illegal. That onus has not been discharged.

96In cross-examination, Ms. Laven was asked about the permitted uses listed in Section 1.5.3 of the ERA. She confirmed that existing uses are a permitted use, and that existing uses in the NEP17 could include commercial uses.

97Having considered all of the evidence of the witnesses for both the Claimant and for the Respondent, both in direct and cross-examination, that the Subject Property was used for commercial and residential purposes since at least 1995 when it was acquired by Island Steel, which is period of 22 years prior to acquisition of the Subject Property by the Claimant, that the Municipal Assessment (Exhibit 2, Tab 7) shows both a residential and a commercial and industrial assessment the Tribunal finds that the NEC had either authorized and permitted the commercial use, or that the NEC had accepted it as an existing use as allowed by the NEP17, and that the commercial use was accordingly legal.

Whether the Claimant suffered damages for Injurious Affection

98Section 1(1) of the Act defines an "expropriation" as the taking of land, without the consent of the owner, by an expropriating authority in the exercise of its statutory powers. Where land is expropriated, a claimant is entitled to claim compensation limited to the categories contained in Section 13(1) and (2) of the Act. The categories of compensation include market value of the land expropriated; damages attributable to disturbance; damages for injurious affection to any remaining land; and compensation for any special

difficulties in relocation. A claimant's entitlement to compensation is "as of right", the governing principle being that, when land is taken, compensation must be paid.

99The Act provides for the payment of compensation, in limited circumstances, where no land is expropriated. This is compensation for injurious affection under the second branch of the definition contained in Section 1(1)(b) of the Act, which provides that:

"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, and the for the purposes of this clause, part of the lands of an owner shall be deemed to have been acquired where the owner from whom lands are acquired retains lands contiguous to those acquired or retains lands of which the use is enhanced by unified ownership with those acquired; (emphasis added).

100Section 1(1)(b) creates an exception to the defence of statutory authority that typically precludes tort claims arising from public works. It is not a matter of compensation for land expropriated. It is more akin to a question of tort law and of the interaction of the nuisance concept with the defences of statutory authority and Crown immunity (Ontario Law Reform Commission, "Report of the Ontario Law Reform Commission on the Basis for Compensation on Expropriation" (1967)).

101The test for injurious affection where no land has been taken is comprised of three elements, all of which must be satisfied on a balance of probabilities by a claimant:

a. The work underlying the claim must have been carried out pursuant to statutory authority (the "statutory authority rule");

b. The damage claimed must arise from the construction, and not the use, of the works (the "construction and not the use rule"); and

c. The actions complained of must be ones that would give rise to liability if it were not undertaken pursuant to statutory authority (the "actionability rule").

(Antrim Truck Centre Ltd v. Ontario (Minister of Transportation), 2013 SCC 13 at para 5)

102The Tribunal finds that, on the basis of paragraph 16 of the Agreed Statement of Facts (Exhibit 1), and on the evidence of Mr. Kelly, the closure of the West Entrance was carried out as a part of the Works, and that it was done pursuant to the Respondent's statutory authority granted by Section 6 of the PTHIA.

103In its Decision in City of Windsor v. Larson (1980), CanLII 1573, 344, 1980 CanLII 1573 (ON HCJ), 29 O.R. (2d) 669 (Div Ct), the Divisional Court held that in determining whether the damages claimed were caused by the construction or by the use of the public works, regard should be had to whether the works as constructed, if left unused, would nevertheless interfere with the owner's enjoyment of the property. The evidence is that the closure of the West Entrance interferes with the Claimant's use and enjoyment of the Subject Property. The Tribunal accordingly finds that the claim arises from the construction of the Works, and not from the use of the Works.

104This claim engages the law of nuisance. Following the decision of the Supreme Court in Antrim (cited above), the Claimant is required to establish that the removal of the West Entrance has caused a substantial and unreasonable interference with its use and enjoyment of the Subject Property.

105In Antrim, the Supreme Court held that a substantial interference must be non-trivial and amount to more than a slight annoyance or trifling interference. A substantial interference will include interferences that alter the nature of the property at issue, or which interfere to a significant extent with the actual use being made of the property.

106In Norway Pines Cabins Ltd. v. Minister of Highways for Ontario, 1966 CanLII 263 (ON CA), [1967] 1 O.R 12- 18, a stated case under the former Expropriation Procedures Act and the former Highway Improvement Act, submitted to the Court of Appeal by the Ontario Municipal Board, the Court considered whether interference with access to a property caused by the construction of curbs and traffic control islands, would give rise to a claim for compensation. The Court held that interference with access does give rise to a claim for compensation. Laskin J.A. (as he then was) writing for the Court stated: "It is enough to say that where interference with access is shown, its degree and extent relative to the abutting land go to quantum. I do not rule out the possible application of a de minimis principle in this branch of the law." The Tribunal finds that the Respondent, through the construction of its Works, has caused an interference to the Subject Property which has altered the Claimant's access, use and enjoyment of the Subject Property. The Tribunal therefore finds that the removal of the West Entrance has caused a substantial and unreasonable interference with the Claimant's use and enjoyment of the Subject Property as required by Antrim.

107Counsel for the Respondent submits that if the Tribunal determines that the Claimant has suffered damages for injurious affection, it is restricted to the reduction in market value for which there is none. Counsel for the Claimant submits that this is an incorrect statement of the law having regard to both the case law and the wording of the Act. The Tribunal agrees. The definition of injurious affection includes compensation for both "reduction in the market value of the land of the owner" and "personal and business damages". This applies to both claims for injurious affection where land is taken and where land has not been taken. The difference is that where no land is taken, damages are only compensable if the damages arise from the construction, and not the use, of the works.

108Mr. Antonides, the Respondent's appraisal witness, referring to Section 14(4)(c) of the Act, testified that he considered the issue of what was legally permissible on the Subject Property to be fundamental in order to determine damages for injurious affection, and that as both the West Entrance and the Commercial Use were illegal, no compensable damages for injurious affection had been suffered. Therefore, the Highest and Best Use of the Subject Property as improved, would not have changed as a result of the closure of the West Entrance. He stated that he found evidence of demand in the marketplace for rural residential properties similar to the Subject Property in size, having only one driveway, and being subject to NEP restrictions limiting use to single family residential, with limited non- intensive commercial uses permitted. He stated that a second driveway would only matter to a commercially zoned and heavily travelled use such as a fuel service station, fast food restaurant, highway travel center, drive through, or other such use.

109Counsel for the Respondent argues that Section 14(4)(c) of the Act precludes this Tribunal from awarding compensation for what the Respondent alleges is an "illegal use". This was also the stated opinion of the Respondent's appraisal expert, Mr. Antonides. The Respondent's submissions rely heavily on the arguments that no compensation is payable pursuant to Section 14(4)(c) because the West Entrance was illegal and the commercial use was illegal. For the reasons below the Tribunal finds that Section 14(4)(c) has no application to the facts of this case.

110Counsel for the Claimant submits that Mr. Antonides' opinion, and the Respondent's arguments, are incorrect as a matter of law. The Tribunal agrees. A review of Section 14 discloses that it provides directions for the determination of the market value of land. However, the issue for the Tribunal to determine is whether the Claimant suffered personal and business damages which constitute damages for injurious affection within the meaning of Section 1(1)(b) of the Act. A market value determination is not in issue and therefore Section 14 is not engaged.

111The Respondent submits that, in the event that this Tribunal finds that the Claimant has suffered damages for injurious affection, such damages are restricted to the diminution

in the market value of the Subject Property, and that since Mr. Linds stated that there was insufficient evidence in the market to complete a Before and After Analysis of the market value impact on the Subject Property, there was no reduction in market value proven by the Claimant, and hence no compensation damages for injurious affection proven.

112Mr. Linds opined that due to a lack of market data, the Before and After approach to valuation was not appropriate in this case, and so he relied upon the Cost to Cure approach. The Tribunal finds that this approach was appropriate in the circumstances of this case, as it is directed to quantifying the Claimant's personal and business damages as damages for injurious affection. Mr. Linds assessed the relevant factors that resulted in damage to the Claimant from the access closure, and then applied the Cost to Cure approach to assess the quantum of those damages. The Tribunal finds that this was a reasonable approach to assessing damages in the circumstances.

113The Tribunal observes that the definition of injurious affection in Section 1(1) of the Act is not limited to diminution of market value and includes personal and business damages whether an Authority has acquired land or not.

114The Tribunal prefers the evidence of Mr. Linds and agrees that the Cost to Cure approach is a legitimate method of quantifying damages for injurious affection. It has been accepted by this Tribunal and its predecessors, and upheld by the Divisional Court, to quantify injurious affection where land is taken. The Tribunal is of the view that the approach can be applied to claims for injurious affection where no land is taken, and the Tribunal finds that it is appropriate in this case.

115Mr. Linds used the Cost to Cure approach to determine the cost required to restore the Subject Property's utility to a level similar to that which it enjoyed prior to the removal of the West Entrance. In other words, to cure, as near as possible, the harm caused by the closure of the West Entrance. His evidence was that an internal loop constructed on the Subject Property would permit transport trucks to service the commercial use while enabling residential tenants to avoid traversing the entirety of the Subject Property when

entering or exiting. Mr. Nochez was questioned concerning the internal loop proposal during his Direct Examination, and stated his view that the internal loop as proposed would restore the functionality of the Subject Property.

116The Tribunal, after carefully reviewing the evidence, the testimony of the Parties' representatives and expert witnesses, together with the Written Submissions of Counsel for the Parties makes the following findings and determinations:

a) The Tribunal finds that the West Entrance was a legal entrance onto Highway 7 and its closure by the Respondent was the result of the construction of the Highway 7 Works by the Respondent.

b) The Tribunal finds that the commercial use of the Subject Property was a legal and permitted use and that the West Entrance accommodated and facilitated the commercial use.

c) The Tribunal finds that, as a result of the closure by the Respondent of the West Entrance, the Claimant has suffered damages for injurious affection in the form of personal and business damages in the sum of $149,160 for the costs to remedy the injurious affection by construction of the internal loop driveway.

d) The Tribunal agrees with Mr. Antonides' opinion respecting the loss in value of the area of the Subject Property which will become the internal loop driveway. Mr. Linds estimated the loss in value as being 100 per cent of the land's unit value totalling $55,000. Mr. Antonides did not take issue with Mr. Linds' unit value but was of the opinion that as the Claimant would still enjoy ownership and the use of that portion of the Subject Property, and that compensation should be assessed on the same basis as compensation for a permanent easement, and that an appropriate valuation would be based upon 50 per cent of the unit value. The Tribunal agrees and assesses the

sum of $27,500 as additional compensation for the Claimant's damages for disturbance.

e) The Claimant sought the costs of additional snow clearing in the sum of

$7,684. In the Tribunal's view the Claimant would have been required to clear the snow in any event and therefore makes no award on account of this portion of the claim.

f) The Claimant sought payment of the sum of $5,000 for the loss it took on the sale of used snow removal equipment it had purchased. In the Tribunals' view the Claimant had made an unfortunate purchase of used equipment for which it overpaid. This loss is too remote and no award on account of this portion of the claim will be made.

g) The evidence of Mr. Nochez was that, as a result of the Highway 7 Works, the Claimant was compelled to lease premises from which to operate its business, commencing on October 1, 2018. It seeks recovery of the rents it has paid totalling $138,764.07 up to April 2023. The evidence of Mr. Nochez was that construction of the internal loop would be a satisfactory solution and that it would restore the commercial viability of the Subject Property. However he did not do so. The Claimant had a duty to mitigate its losses, and in the view of the Tribunal, the obligation to mitigate required the Claimant to construct the internal loop driveway. The Tribunal therefore finds that the Claimant failed to take appropriate steps to mitigate its damages and makes no award on account of this portion of the claim.

h) Mr. Nochez seeks payment for his executive time in the sum of $7,500. There is authority for the Tribunal to make such an award. However, the Claimant is the corporation which was constituted to own the Subject Property. The corporation which operates the heavy equipment repair business is not a party to this Proceeding. The Tribunal therefore makes no award on account of this portion of the claim.

117In view of the Tribunals findings on the issue of injurious affection, the Tribunal makes no finding regarding the Claimant's alternative claims under the PTHIA.

ORDER

118THE TRIBUNAL ORDERS THAT the Respondent shall pay to the Claimant the following amounts:

a) $149,1660 as damages for injurious affection;

b) $27,500 as damages for disturbance;

c) Interest pursuant to Section 33 of the Act and costs pursuant to Section 32 of the Act.

119In the event that the Parties are unable to resolve the issues of interest and costs within 30 days of the date of issuance of this Decision, the Tribunal shall remain available to assist them and, in that event, directs that the Claimant file its Written Submission addressing Statutory Interest and Costs within 15 days and that the Respondent file its Reply Written Submissions within a further 15 days.

"Robert G. Ackerman"

ROBERT G. ACKERMAN

MEMBER

"N. Eisazadeh"

N. EISAZADEH

MEMBER

Ontario Land Tribunal

Website: www.olt.gov.on.ca Telephone: 416-212-6349 Toll Free: 1-866-448-2248

The Conservation Review Board, the Environmental Review Tribunal, the Local Planning Appeal Tribunal and the Mining and Lands Tribunal are amalgamated and continued as the Ontario Land Tribunal ("Tribunal"). Any reference to the preceding tribunals or the former Ontario Municipal Board is deemed to be a reference to the Tribunal.

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