Newgen Restaurant Services Inc. v. Metrolinx, 2023 CanLII 138676

Ontario Land Tribunal

Tribunal ontarien de l’aménagement du territoire

CORRECTION NOTICE

OLT CASE NO(S).:

OLT-22-003177

DECISION ISSUE DATE(S):

March 22, 2023

CORRECTION NOTICE ISSUE DATE:

March 25, 2023

RE: Newgen Restaurant Services Inc. v. Metrolinx

Correction to: The Hearing dates (on page 1) and (in paragraph 14) should reflect the correct dates as “April 24 – 28, 2023” instead of “March 24 – 28, 2023”

The Appearance List (on page 1) should reflect the correct spelling of the name of counsel for Newgen Restaurant Service Inc. as “Conner Harris” instead of “Connor Harris”

Originally:

Corrected to:

(On page 1) March 24 – 28, 2023 by Video Hearing (In paragraph 14) March 24 to March 28, 2023 (On page 1) Connor Harris

(On page 1) April 24 – 28, 2023 by Video Hearing (In paragraph 14) April 24 to April 28, 2023 (On page 1) Conner Harris

“Euken Lui”

EUKEN LUI

REGISTRAR

Ontario Land Tribunal

Website: 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.

Ontario Land Tribunal

Tribunal ontarien de l’aménagement du territoire

ISSUE DATE:

March 22, 2024

CASE NO(S).:

OLT-22-003177

PROCEEDING COMMENCED UNDER section 26(1) of the Expropriations Act, R.S.O. 1990, c. E.27

Claimant

Newgen Restaurant Services Inc.

Expropriating Authority

Metrolinx

Subject:

Determination of compensation

Description:

Newgen Restaurant Services Inc. (o/a Smith Bros. Steakhouse Tavern) seeks compensation for injurious affection and disturbance damages

Property Address:

1940 Eglinton Avenue E

Municipality/UT:

Toronto/Toronto

OLT Case No:

OLT-22-003177

Legacy Case No:

LC200025

OLT Lead Case No:

OLT-22-003177

Legacy Lead Case No:

LC200025

OLT Case Name:

Newgen Restaurant Services Inc. v. Metrolinx

Heard:

March 24 – 28, 2023 by Video Hearing May 25, 2023, In Writing

APPEARANCES:

Parties

Counsel

Newgen Restaurant Service Inc. (“Claimant”)

Connor Harris Leah Cummings

Metrolinx (“Respondent”)

Christel Higgs Jessica Karban

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

BACKGROUND

1Since 1979, the Claimant, Newgen Restaurant Services Inc. (“Newgen”), and its parent company, Champs Food Systems Ltd., operated a restaurant in a commercial plaza known as Eglinton Corners (“Plaza”), located at 1940 Eglinton Avenue East (“Eglinton”) at the intersection of Eglinton with Warden Avenue (“Warden”), in the City of Toronto (“Subject Property”). At the relevant time, the Claimant’s restaurant was operated under the name and style Smith Bros. Steakhouse Tavern (“Smith Bros.”).

2The Claimant owned three other restaurants, which at the relevant time operated under the name Tucker’s Marketplace (“Tucker’s”). Smith Bros. had previously operated as a Tucker’s location. Tucker’s was a chain of restaurants that were owned and operated by the Claimant as full-buffet-style restaurants. Smith Bros. represented a departure from the format of the Claimant’s other restaurants as it was a full-service restaurant.

3In 2015, the Respondent expropriated a portion of the Subject Property’s frontage along Eglinton to facilitate construction of the Eglinton Light Rail Transit Project (“the Expropriation,” “the Eglinton LRT,” and “the Works”). The Expropriated Lands were a part of the common areas of the Plaza improving the Subject Property, and it is the position of the Claimant that it had an interest in the Expropriated Lands by virtue of the terms of its commercial lease with the owner of the Subject Property.

4The Subject Property is large, having six road entrances. Smith Bros. was in a standalone building built on a pad that fronted onto Warden, about 100 metres north of Eglinton. The entrance nearest to it was from Warden.

5It is not in dispute that following the Expropriation, the ensuing construction activities by the Respondent and those acting on its behalf caused traffic disruptions, disturbance, and delays throughout the general area where the Subject Property was located. The Claimant alleges that the construction severely disrupted traffic patterns around the Subject Property, making the Eglinton and Warden area extremely difficult for the travelling public to navigate and Smith Bros. extremely difficult for its customers to access. The Claimant alleges that this discouraged its customers from patronizing Smith Bros., which in turn, ultimately had a devastating effect on the business of Smith Bros. In this regard, the Claimant’s evidence was that following the Expropriation and the commencement of the construction of the Works, the revenues and customer counts at Smith Bros. declined sharply. The Claimant alleges that by early 2019, the area around the Subject Property was plagued by constant construction and associated road and lane closures. As a result, the customer counts and revenues at Smith Bros. continued to steadily fall, and in consequence, the Claimant’s business losses steadily mounted.

6In March 2020, the declaration of the COVID-19 pandemic ushered in strict public health guidelines that shut down restaurants across Ontario for all but take-out services. The three Tucker’s restaurants, being full buffet-style restaurants, were closed entirely due to the public health restrictions, which closure ultimately became permanent. The Claimant alleges that Smith Bros., being a full-service restaurant, was in a different situation than the Tucker’s restaurants, and that were it not for the accumulated business losses caused by the construction of the Works, Smith Bros. would have been able to reopen and resume operations once the pandemic-related restrictions on restaurants were relaxed and eventually lifted. Prior to the lifting of the restrictions, however, seeing no end in sight to the ongoing construction of the Works affecting Smith Bros. as the Respondent had announced that completion of the Works would be delayed until at least 2022, the Claimant’s principal made the decision to wind down Smith Bros. Its assets were accordingly liquidated in March 2021 and were acquired by its sole Secured Creditor, who was also the Claimant’s principal, Nolan Grubert.

7In this Proceeding, the Claimant seeks an Order for the payment of compensation by the Respondent in the sum of $1,885,458. Counsel for the Claimant submits that the Respondent is liable to pay the amount claimed as disturbance damages for its business losses that are the natural and reasonable consequence of the Expropriation, pursuant to Section 18(2) of the Expropriations Act, RSO 1990, c. E-26 (the “Act”), or in the alternative, as damages for injurious affection, in the form of personal and business damages, which were the result of the construction of the Works pursuant to Section 1(1)(a)(ii) and Section 21 of the Act. The Claimant also seeks payment of the sum of $50,000 for lost executive time, statutory interest, and its costs pursuant to the Act.

8The Respondent denies the Claimant’s allegations and claims. The Respondent alleges that Smith Bros. was never a profitable business, as it had lost money in every year of its operation since it opened in 2012. The Respondent alleges that the Claimant funded the losses of Smith Bros. with income earned by its three profitable Tucker’s restaurants and that by the time the construction of the Works began, the accumulated losses of Smith Bros. totaled approximately $1,000,000. When the COVID-19 pandemic began in March 2020, all of the Claimant’s restaurants closed, including Smith Bros., and soon after, the Claimant filed for bankruptcy.

9The Respondent further submits that the Claimant was not an “owner” within the definition of the Act as its lease did not grant it an interest in the Expropriated Lands. The Respondent further submits that the Claimant cannot maintain a claim damages for injurious affection under the “no lands taken” provisions of the Act, being Section 1(1)(b)(ii), because the Claimant cannot demonstrate that it meets the threshold test to make such a claim as set out by the Supreme Court of Canada in Antrim Truck Centre Ltd v Ontario (Minister of Transportation), 2013 SCC 13 (“Antrim“).

10The Respondent submits that the balancing of public and private interests mandated by the Supreme Court in Antrim weighs in its favour and that the evidence before the Tribunal shows that it was very careful to minimize the disruptions that the construction of the Works caused, and that the Claimant has not demonstrated that Smith Bros. suffered any impact caused by the construction of the Works beyond that which any party located in a commercial urban environment can expect to bear from the construction of public infrastructure. The Respondent also submits that the construction was a considerable distance from Smith Bros. and never once interrupted access to the Subject Property from either Eglinton or Warden.

11The Respondent submits that the Claimant’s losses and the closure of Smith Bros. were not caused by the construction of the Works but were the result of prolonged mismanagement, the failure to adapt to changing customer needs, and the unavoidable impact of the COVID-19 pandemic.

THE ISSUES

12The issues before the Tribunal therefore are:

a. Whether the Claimant was an Owner of the Expropriated Lands within the meaning of the definition contained in Section 1 of the Act.

b. If the Claimant is found not to be an Owner, whether the Claimant has satisfied the requirements of Section 1(1)(b) of the Act and the threshold test in Antrim.

c. If the Claimant is found to be an Owner, or if it is not but has satisfied the threshold test described in Antrim, whether the Claimant suffered compensable business losses as a result of the Expropriation and/or the construction of the Works.

d. The quantum of the Claimant’s damages?

e. Whether the Claimant took appropriate steps to mitigate its losses.

f. Whether the Claimant proved its claim for executive time.

SUMMARY OF FINDINGS

13For the reasons set out below, the Tribunal makes the following findings respecting the issues above:

a. The Tribunal finds that the Claimant was an Owner as defined in Section 1(1) of the Act and is entitled to claim damages related to the Expropriation and the construction of the Works (as hereinafter defined) as provided for by the Act;

b. Unnecessary to address in view of the finding that the Claimant was an Owner;

c. The Tribunal finds that as a direct result of the construction of the Works, the Claimant suffered damages for injurious affection within the meaning of Section 1(1)(a)(ii) of the Act, on account of its business losses suffered during the period October 2017 to March 2020;

d. The Tribunal finds that the net amount of the Claimant’s personal and business damages for the period October 2017 to March 2020 is the sum of $571,891. The Tribunal finds the loss of value of Smith Bros. resulting from its permanent closure was not attributable to the Expropriation or to the construction of the Works;

e. The Tribunal finds that the Claimant took the appropriate and reasonable steps necessary to attempt to mitigate its personal and business damages; and

f. The Tribunal finds that the Claimant failed to prove its claim for lost executive time, and therefore this claim is dismissed.

THE HEARING

14The five-day hearing of this claim was scheduled and heard by the Tribunal by Video Conference from March 24 to March 28, 2023. Final Argument was submitted by Written Submissions and was completed on May 25, 2023.

THE EVIDENCE

15The Tribunal heard evidence from the following Witnesses on behalf of the Claimant and Respondent:

For the Claimant:

• Nolan Grubert – Principal of the Claimant;

• Ephraim Stulberg – Certified Business Valuator, who testified as an expert witness.

For the Respondent:

• Richard Piliounis – Senior Project Manager, Metrolinx;

• Viviana Sanchez – Traffic Contract Supervisor, WSP, seconded to Metrolinx;

• Phil Rodriques – Manager of Community Engagement, Metrolinx;

• Jeff Dover – Restaurant industry consultant who testified as an expert witness;

• Glenn Tautrims - Certified Business Valuator, who testified as an expert witness.

16The following documents were filed as Exhibits by the Parties and with respect to their Written Submissions:

• Exhibit 1 -- Joint Document Book, dated April 18, 2023 (4 vols.);

• Exhibit 2 – Respondent’s Request to Admit;

• Exhibit 3 – Evidence Act Notice;

• Exhibit 4 – Witness Statement of Nolan Grubert;

• Exhibit 5 – Expert Report of E. Stulberg, dated September 14, 2021;

• Exhibit 6 – Witness Statement of Richard Piliounis;

• Exhibit 7 – Witness Statement of Vivian Sanchez;

• Exhibit 8 – Witness Statement of Phil Rodriques;

• Exhibit 9 - Expert Report of J. Dover, dated, February 23, 2023;

• Exhibit 10 – Expert Report of Glenn Tautrims, dated July 28, 2021;

• Exhibit 11 – Reply Witness Statement of Nolan Grubert;

• Exhibit 12 – Reply Expert Report of E. Stulberg;

• Exhibit 13 – Reply Expert Report of Jeff Dover, dated March 27, 2023;

• Exhibit 14 – Reply Expert Report of Glenn Tautrims;

• Exhibit 15 – Expert Report Addendum of Glenn Tautrims, dated April 12, 2023;

• Exhibit 16: Pleadings Brief of the Respondent, dated April 19, 2023;

• Exhibit 17 – Respondent’s Brief of Expert’s Reports;

• Exhibit 18 -- Claimant’s Response to Request to Admit;

• Exhibit 19 – Visual Evidence Brief of the Respondent, April 11, 2023;

• Exhibit 20 – Supplementary Visual Evidence Brief of the Respondent dated April 19, 2023;

• Exhibit 21 – Discharge from Bankruptcy Order;

• Exhibit 22 -- Revised Schedule 2 Re: E. Stulberg Report; (Sched. 4.1-monthly customer counts);

• Exhibit 23 – Curriculum Vitae – Jeff Dover;

• Exhibit 24 -- Read-In Brief of the Claimant, dated April 23, 2023;

• Exhibit 25 -- Cross-Examination Brief of the Claimant, dated April 28, 2023;

• Exhibit 26 -- Smith Bros. Google Reviews;

• Exhibit 27 -- Affy’s Google Review;

• Exhibit 28 – Read-in Brief of the Respondent;

• Full draft Transcripts of the Evidence (5 vols.)

• Closing Argument Brief of the Claimant, May 12, 2023;

• Closing Argument Brief of the Respondent, May 19, 2023;

• Reply Argument of the Claimant, May 25, 2023;

• Brief of Authorities of the Claimant (3 vols.), May 12, 2023;

• Brief of Authorities of the Respondent (3 vols.), May 19, 2023;

• Responding Brief of Authorities of the Claimant, May 25, 2023;

ANALYSIS AND FINDINGS

WHETHER THE CLAIMANT IS AN OWNER AS DEFINED IN THE EXPROPRIATIONS ACT

17The definition of “Owner” is found in Section 1(1) of the Act and provides for an extended definition of the term Owner. The Tribunal observes that the Act is a remedial statute and, as such, is to be read in a broad and purposeful manner and strictly construed in favour of those whose rights have been affected, as directed by the Supreme Court in Dell Holdings Ltd. V. TTC, 1997 CanLII 400 (SCC), [1997] 1 SCR 32 at paras. 20-21 (“Dell Holdings”). The Tribunal views the definition of Owner under the Act through this lens and considers it to be expansive:

“owner” includes a mortgagee, tenant, execution creditor, a person entitled to a limited estate or interest in land, a guardian of property, and a guardian, executor, administrator or trustee in whom land is vested. (emphasis added)

18Counsel for the Respondent submits that the Claimant, as the holder of a non-exclusive license over the Expropriated Lands, and notwithstanding the broad definition of Owner in the Act and the directive of the Supreme Court in Dell Holdings, could not be considered an Owner within the definition of the Act.

19The evidence was that the Claimant was a tenant at the Plaza, which improved the Subject Property and was the subject of a partial taking by the Respondent. The Claimant’s Lease was registered on title to the Subject Property, and the Claimant had accordingly been served by the Respondent with the various prescribed statutory notices and documents respecting the Expropriation. These included the Notice of Application for Approval to Expropriate Land, the Notice of Expropriation, the Notice of Possession, the Notice of Election of the effective date for determination of the compensation, the Plan of Expropriation, and the Formal Offer of Compensation under Section 25 of the Act. The foregoing documents were produced at Tabs 1-4 of the Joint Document Brief (Volume 1 of Exhibit 1).

20The area of the Subject Property that was expropriated lay along the frontage of the Subject Property onto Eglinton, was a part of the common area of the Plaza and included a portion of an entrance to the Plaza. The Claimant’s Lease and its renewals were produced in Volume 4 of Exhibit 1 at Tab 152. The Lease provides in Section 4.1 for the lease of the “Premises” to the Claimant as shown on Schedule “B,” which are indicated to be the stand-alone building from which the Claimant operated Smith Bros. The Lease also provides in Section 4.3 for the grant to the Claimant of a non-exclusive licence for the use of “such portions of the Common Facilities as are reasonably required for the use and occupancy of the Premises.” In Section 2.8 of the Lease, the Common Facilities are broadly defined as including the entirety of the Subject Property and its improvements, excluding only the premises and areas leased exclusively to others. The Common Facilities include, inter alia, the entrances to the Subject Property from Eglinton and Warden, the parking areas, and the landscaped areas. The Claimant, along with the other tenants of the Plaza, paid the owner of the Plaza annual fees for the repair, maintenance, and operation of the Plaza, which included the Common Facilities. As stated above, the Expropriated Lands comprised a portion of the Common Facilities.

21Counsel for the Respondent submits that the Claimant had no beneficial interest in the Common Facilities or in the Expropriated Lands, and therefore cannot be considered to have been an Owner within the meaning of the Act. Counsel for the Claimant submits otherwise and has referred the Tribunal to the Decision of the Superior Court in Mississauga Hardware Centre Inc. v. Prombank Investment Limited, 2023 ONSC 3034, as authority for the proposition that rights to Common Facilities under a commercial lease give rise to a tenant’s substantive rights to the Common Facilities.

22The Tribunal observes that Section 1 of the Act also contains an expansive definition of “land” and interests therein, which includes “any estate, term, easement, right, or interest in, over or affecting land.” In the Tribunal’s view, the Common Facilities, and in particular the parking and landscaped areas and the Plaza entrances, facilitated and accommodated and were necessary to the Claimant’s use and enjoyment of the premises from which it operated Smith Bros., and as such, the grant to the Claimant of a non-exclusive license for the use of the Common Facilities together with the other tenants of the Plaza created an interest in land in favor of the Claimant within the meaning of the Act.

23The Tribunal therefore finds that the Claimant was an Owner of the Subject Property within the meaning of the Act. It is therefore unnecessary for the Tribunal to consider Issue b above and the no land taken provisions of the Act and of the law.

WHETHER THE CLAIMANT SUFFERED COMPENSABLE DAMAGES AS A RESULT OF THE EXPROPRIATION AND THE CONSTRUCTION OF THE WORKS

THE CONSTRUCTION OF THE EGLINTON LRT WORKS

24The Works are described as a multi-billion-dollar light rail transit project. The completed Works will travel along Eglinton for 19 km from the Mount Dennis GO Station, which is located at Black Creek Drive and Eglinton in Weston, to the Kennedy GO Station at Kennedy Road and Eglinton in Scarborough. Some portions of the Works are built underground, but in the area of the Subject Project, the Works are built at grade and travel along the middle of Eglinton in what were previously the eastbound and westbound centre lanes of Eglinton. The construction of the Works permanently reduced Eglinton from six lanes to four lanes for traffic and eliminated the prior HOV lanes altogether.

25It is not in dispute that Eglinton is a major east-west thoroughfare in the City of Toronto and that the stretch of Eglinton within which the Subject Property is located is a commercial area known as the Golden Mile. The Tribunal heard evidence from witnesses for both Parties that traffic on Eglinton in the vicinity of the Subject Property was already heavy prior to the commencement of the construction of the Works. The Tribunal also heard evidence from witnesses for both Parties that traffic on Eglinton in the vicinity of the Subject Property became much worse once construction of the Works began in 2017. As at the Hearing of this claim in March 2023, construction was continuing but nearing completion.

26The purpose of the Expropriation was to facilitate the widening of Eglinton at the Warden intersection as required for the construction of an at-grade transit stop to be known as the Golden Mile Stop. Accordingly, there was an increased level of construction activity in the area of Eglinton and Warden, as compared to areas where there would not be a stop.

27The portion of the Eglinton LRT line within which the Subject Property was located was referred to as Segment 3, which was within a larger portion of the Eglinton LRT line referred to as Section 5. The construction of the Segment 3 at-grade works proceeded in several phases, beginning with the relocation of utilities and lighting between August 2016 and May 2017. The construction of the Works within Segment 3 involved the replacement of traffic signals with temporary traffic signals, the removal of medians along Eglinton, the widening of Eglinton and modification of its existing boulevard, the removal of the centre lanes along Eglinton to create a centre right-of-way, the laying of the LRT tracks within the centre right-of-way and the construction of the Golden Mile Stop itself at the intersection of Warden and Eglinton.

28Nolan Grubert, the principal, and owner of the Claimant testified that he attended at Smith Bros. two or more times per week and that he witnessed the progress of the construction of the Works firsthand. He stated that he would regularly drive along Eglinton from Brentcliffe Road, which is well west of the Don Valley Parkway, to Kennedy Road, which is east of Warden and Eglinton. He testified respecting his observations of the progress of the construction during his drives along Eglinton, as well as his observations regarding the progress of the construction in the area of the Subject Property. A series of photographs taken by Mr. Grubert were produced and filed as Tab 188 in Volume 2 of Exhibit 1. The photographs were taken by Mr. Grubert on various dates while he was driving both eastbound and westbound on Eglinton and depicted various construction activities and construction equipment, various land reductions, and significant traffic congestion. Mr. Grubert stated that driving on Eglinton during the construction of the Works was a nightmare, and that he tried to avoid Eglinton entirely when it came to his personal travels to and from his home.

29Richard Piliounis is a Professional Engineer and testified as a fact witness on behalf of the Respondent. He stated that he is employed by the Respondent, and that he has worked on the Eglinton LRT Project as a Project Engineer for approximately ten years, and that he is the Senior Project Manager for the at-grade portions of the Works. He confirmed that from June 2017 to October 2017, preparatory roadworks started in the immediate area of the Subject Property, which included the removal of “street furniture” and the installation of temporary traffic signals at the Eglinton Warden intersection. He testified as to the history of the Works, the stages of construction, and he stated that the Respondent acknowledged that the construction of the Works would cause significant traffic disruption and he testified as to the methods employed by the Respondent to mitigate traffic impacts from the Works. He stated that construction sequencing was utilized in order to “minimize impacts to the travelling public.” In this regard, Mr. Piliounis testified that the Project was divided into two parts consisting of an underground section and an at-grade section. The construction commenced at the western end of the Eglinton LRT line, and the Subject Property was located towards the eastern end of the 16-kilometre line. He testified that construction in the vicinity of the Subject Property started much later than the underground work to the west. Under cross-examination, however, Mr. Piliounis acknowledged that in the case of Section 5, construction commenced and proceeded on both the western and eastern segments simultaneously. He stated that this was necessary to meet construction scheduling requirements.

30Mr. Piliounis testified that in January 2018, the utility relocation work began within Section 5. This work was carried out daily during “off peak” hours, meaning outside the hours of 10 a.m. to 4 p.m., to minimize the impacts on businesses that had traditional operating hours. However, Mr. Grubert testified that this was particularly disruptive to the business of Smith Bros., as the bulk of its business was done outside traditional 9 a.m. to 5 p.m. hours. Mr. Grubert stated that the impacts of the construction activities were particularly disruptive for about 80% of Smith Bros. customers, whom he referred to as the “dinner crowd,” and who would have traveled to the Subject Property during the “off peak” evening hours, when construction activities were the heaviest.

31Mr. Piliounis testified that in February 2018, Hydro One and other utilities resumed relocation of sewers, telecommunications, and other utilities, and that this work continued until early 2019. He stated that telecommunication relocation alone required eight months, during which work proceeded between 7 a.m. and 11 p.m. seven days a week and involved additional intermittent lane closures of Eglinton in the vicinity of the Subject Property.

32Mr. Piliounis admitted in cross-examination that, beginning in May 2018, there were full-time lane closures along Eglinton at Warden that blocked all westbound lanes but one. It was Mr. Grubert’s evidence that these lane closures caused immediate traffic impacts, which had a severe impact on the business of Smith Bros.

33Mr. Piliounis testified that from May 2018 to March 2019, two westbound lanes, and one eastbound lane to the east and west of the Subject Property were closed, as stated in a Lane Closure Report produced at Tab 112 of Volume 2 of Exhibit 1. Also in March 2019, concrete jersey barriers were placed in the centre lanes along Eglinton east of Warden and then west of Warden in July 2019. The placement of the jersey barriers permanently eliminated an eastbound driver’s ability to turn left into the Subject Property’s access from Eglinton. He testified that these accesses were never formally closed. However, Mr. Grubert testified, that while these accesses were never formally closed, construction vehicles were often moving in and out of the available lanes along Eglinton, which caused significant delays and difficulties in accessing the Subject Property.

34Mr. Piliounis testified that one eastbound and one westbound lane of Eglinton were closed from Warden east to Thermos Road (“Thermos”) for a full year from March 2019 to March 2020. He also testified that one eastbound and one westbound lane of Eglinton were closed from Warden west to Lebovic Avenue and Hakimi Avenue (“Lebovic” and “Hakimi”) for a period of seven months from June 2019 to January 2020.

35In cross-examination, Mr. Piliounis was referred to the various lane closures listed in the Lane Closure Chart produced at Tab 112 of Volume 2 of Exhibit 1. He confirmed that on May 22, 2018, two westbound lanes for traffic between Birchmount Road (“Birchmount”) and Warden, one eastbound lane between Birchmount and Warden, and one eastbound land for traffic between Hakimi and Warden on Eglinton were closed for construction of the Works. The westbound and eastbound lanes between Birchmount and Warden remained closed for approximately ten months, reopening on March 16, 2019. The lane closure between Hakimi and Warden was stated to be “ongoing” as at the date of the Lane Closure Chart.

36Mr. Piliounis was also referred to a Lane Closure Report for November 2019, which was produced at Tab 137 of Volume 3 of Exhibit 1. He confirmed that two lanes, one eastbound and one westbound, were closed for construction between Warden and Thermos from March 16, 2019 to November 30, 2019, that two lanes of Eglinton, one eastbound and one westbound, were closed between Warden and Hakimi from June 24, 2019, to November 30, 2019, and that two northbound lanes on Warden south of Eglinton were closed from August 1, 2019, to November 30, 2019. The Tribunal observes that the Lane Closure Report indicates that there were 13 additional lane closures on Eglinton extending both east and west from Warden during the month of November 2019.

37Mr. Piliounis was also referred to a Lane Closure Report for December 2019, which was produced at Tab 140 of Volume 3 of Exhibit 1. He confirmed that the closure of the two lanes between Warden and Thermos and the two lanes of Eglinton between Warden and Hakimi continued until December 31, 2019. In addition, that one northbound lane on Warden south of Eglinton was closed from December 1, 2019 to December 31, 2019.

38Mr. Piliounis was also referred to the Lane Closure Reports for January, February, and March 2020, which were produced at Tabs 143, 146, and 149 of Volume 3 of Exhibit 1. He confirmed that the closure of one eastbound and one westbound lane for construction between Warden and Thermos and one eastbound and one westbound lane between Warden and Hakimi continued until March 31, 2020.

39Mr. Piliounis confirmed that the intersection of Warden and Eglinton was fully closed from 7 a.m. on Friday, July 19, to Monday, July 22, 2019, and again from Friday, July 26, to Monday, July 29, 2019, for rail work, as stated in the Respondent’s Construction Notice produced at Tab 15 of Volume 1 of Exhibit 1. In addition, Mr. Piliounis confirmed the closure of Warden at Eglinton commencing on August 4, 2019, and continuing for six weeks as stated in a Construction Update: Change of Dates, produced at Tab 208 of Volume 4 of Exhibit 1.

40Mr. Piliounis agreed that the lane closures on Eglinton caused traffic impacts on other roadways in the area and on side streets, that the construction activities at the location of transit Stops such as the Golden Mile Stop were more intensive, and that the duration of the construction was much longer where a Stop was being constructed.

41Mr. Piliounis testified that the concrete jersey barriers remained in place on Eglinton east of Warden only until September 2020 and until February 2021 west of Warden. Mr. Grubert testified that this was not accurate and referred to photographs he had taken on April 21, 2021, and produced at Tab 193(G) of Volume 4 of Exhibit 1, which show the presence of concrete jersey barriers and traffic cones in place at those locations channelizing traffic down to one lane in each direction along Eglinton. He testified that the final “shave and pave,” representing the completion of the roadwork, did not occur until during or about August 2021.

42Under cross-examination, Mr. Piliounis was referred to further notations contained in the series of Lane Closure Reports produced at Tabs 137, 140, 143, 146, and 149 of Volume 3 of Exhibit 1, and he confirmed that Hakimi Avenue had been closed at Eglinton for approximately two months and that Warden was similarly closed in the Summer of 2019 at the intersection of Eglinton. The Witness also confirmed that by mid-2019, most of Eglinton in the area around the Subject Property was reduced to one lane in each direction.

43Viviana Sanchez is a Professional Engineer who testified on behalf of the Respondent as a fact witness. She testified that she is an employee of the engineering firm WSP, that she is a transit specialist, and that she has been seconded to the Respondent for many years as a consultant. She testified that she has worked on the Eglinton LRT Project since 2013 and is currently in the position of Traffic Contract Supervisor and that her responsibilities include traffic management in the vicinity of the Subject Property.

44Ms. Sanchez identified that the portion of the Eglinton LRT which traverses the Eglinton Warden intersection is referred to as Segment 3. She stated that the Project is divided into five Sections, which are sub-divided into five Segments each and that the Eglinton Warden intersection is within Segment 3 of Section 5. Under cross-examination, she confirmed that by October 2017, there were full-day, ongoing lane closures on Eglinton in Section 5. Ms. Sanchez also confirmed that by January 2018, there were lane closures on Eglinton both to the east and to the west of the Subject Property and that utility relocation work throughout Section 5 was underway. She confirmed that this work was done almost every day during “off peak” hours, as the Respondent wished to minimize the inconvenience caused to businesses that operate on a 9 a.m. to 5 p.m. basis. Mr. Grubert had testified that this was extremely disruptive to the business of Smith Bros. because, as a full-service restaurant which caters to the “dinner crowd,” its off-peak hours were 9 a.m. to 5 p.m. and its peak hours were after 5 p.m. He testified that it was particularly disruptive for the customers of Smith Bros. as they would have had to travel to the restaurant during the times when construction activities were heaviest.

45Ms. Sanchez testified that “significant traffic management planning” was undertaken by the Respondent and its contractor throughout the Project. She stated that under the terms of the Project Agreement, the contractor was required to prepare and submit a Traffic Management Plan at the commencement of the Project for each Section of the “at-grade portions” which “identified impacts to traffic, transit, businesses and private properties from a high-level perspective.” The contractor was further required by the Project Agreement to prepare Traffic Control Plans, which are specific to particular locations, and provide for items such as signage, lane closures, and turning restrictions. Traffic Management Plans and Traffic Control Plans were prepared in consultation with the Respondent and “various stakeholders,” such as the Toronto Transit Commission (“TTC”) and required the approval of the City of Toronto Transportation Services. The Tribunal observes, significantly, that property and business owners were not mentioned as being included in the consultation leading to the formulation of the Traffic Management Plans and Traffic Control Plans.

46Ms. Sanchez further explained to the Tribunal that she was responsible for monitoring the activities of the contractor to ensure that lane closures and other traffic impacts did not deviate from the approved Traffic Control Plans and road cut permits. Ms. Sanchez testified that she was never alerted to a situation in which the contractor had exceeded the requirements set out in its Traffic Control Plans in and around the Subject Property.

47Ms. Sanchez testified that in June 2018, the medians and HOV lanes along Eglinton in the vicinity of the Subject Property were removed. Excavation of the Eglinton roadway commenced in July 2018. The work included the installation of concrete jersey barriers along Eglinton and TC-54 traffic channelizers to divert traffic around the construction zones in the middle of Eglinton.

48As the Golden Mile Stop was to be constructed at the intersection of Eglinton and Warden, the widening of the roadway was required to accommodate the stop in what had been the centre of the Eglinton roadway. This required an extended period of construction relative to that in areas where there was no stop and therefore no road widening. The road widening work commenced in September 2018.

49Ms. Sanchez testified that prior to construction of the Works, Eglinton at Warden had three westbound lanes and three eastbound lanes. One lane in either direction was designated as a high-occupancy vehicle (“HOV”) lane, which was reserved specifically for buses during rush hour. The construction of the Works required the removal of the HOV lanes to accommodate the placement of the LRT tracks in what had been the centre of the roadway, thereby reducing Eglinton from a six-lane road to a four-lane road. In cross-examination, she agreed that that this had the effect of moving the Eglinton bus traffic into two of the remaining four lanes for traffic.

50After the removal of the HOV lanes, buses that previously would have used the dedicated HOV lane were forced to mingle alongside regular traffic. Ms. Sanchez testified that, in an effort to minimize delays on public transit due to the construction, the TTC added additional buses to run along the Eglinton corridor. Mr. Grubert testified that the combination of the elimination of the Eglinton HOV lanes, lane closures for construction, and the additional transit buses making frequent stops in live lanes for traffic greatly exacerbated the traffic disruptions in the vicinity of the Subject Property.

51Phil Rodriques also testified on behalf of the Respondent. He stated that he was the Respondent’s Manager of Community Engagement. He testified concerning the methods by which the Respondent communicated with the public. He testified that the Project Agreement specified a regime for communications and public engagement, which included the distribution of construction notices to certain distribution areas as well as posting the notices online for the general public. He testified that draft construction notices were prepared by the contractor, which were then reviewed by Respondent’s communications team and project team to ensure accuracy. He stated that the notices provided information concerning matters such as lane closures and turning restrictions. He stated that wherever possible, the Respondent endeavored to provide the public with notice of construction works over and above the minimum notice period required by the Project Agreement. He acknowledged that the reduction of full access to right-in, right-out access would have a significant impact on businesses. The Tribunal observes that the publication of such construction notices may well have dissuaded members of the public in general, and the customers of the Claimant in particular from traveling to the affected area during the duration of the period of time referred to in the Notice.

52In addition to the lane closures along Eglinton, Mr. Piliounis and Ms. Sanchez testified that the entirety of Section 5 experienced on-and-off closures of north-south intersecting streets for periods of approximately six weeks. These were scheduled in a staggered manner between April 2019 and May 2020. The closures were organized so that there were overlapping closures in an attempt to mitigate the traffic impacts. This meant that every third north-south road was closed at the same time (i.e., Pharmacy Road and Thermos/Sinnott were closed at the same time; Hakimi/Lebovic and Birchmount were closed at the same time; and Victoria Park, Warden, and Rosemount were closed at the same time). In cross-examination, Ms. Sanchez agreed that this also meant that there were always intersection closures both east and west of Smith Bros. during the six-month period from April to November 2019.

53In October 2019, the Respondent undertook overnight work for one week that prevented left turns from Eglinton onto Warden. This forbade left turns during the hours of 7 p.m. and 5 a.m. These hours would have particularly affected the Claimant’s Restaurant business during its busiest time of operation.

54From November 2019 until spring 2020, Segment 3 underwent stop construction and track installation. Photos taken by Mr. Grubert in January 2020 (Tab 188 of Volume 3 of Exhibit 1) show that most of Segment 3 of the Eglinton LRT route was reduced to one lane in either direction because of the combination of concrete jersey barriers and TC-54 traffic channelizers. The photographs also show extensive traffic congestion. Photos taken by Mr. Grubert in April 2021 appear to show that the state of construction and the level of traffic disruption was continuing. Mr. Grubert testified that while the at-grade construction was largely completed as at the date of this Hearing, the Eglinton LRT was not yet operating and that transit buses therefore continued to be necessary, and that the buses and other vehicles were required to share two lanes for traffic in each direction.

IMPACT OF THE CONSTRUCTION OF THE GOLDEN MILE STOP AND OF THE CONSTRUCTION OF THE WORKS ON THE SMITH BROS. RESTAURANT

55Mr. Grubert testified that by the fall of 2017, Smith Bros. was increasing its revenues and customer counts and decreasing its annual losses. He testified that it was close to cash break-even. While the Restaurant had started to see a diminution in lunch guest counts during the early phase of construction, this was not particularly concerning given the low percentage of its business that was attributable to lunch and the fact that overall customer counts continued to increase.

56Mr. Grubert testified that by early 2018, he observed that guest counts at Smith Bros. were beginning to erode. Both dinner and lunch customer counts fell significantly for the first time in fiscal years 2018 and 2019 (the Claimant had an August 31 fiscal year end). This negative trend continued with an increasing decline from fall 2019 to March 2020.

57Consistent with the falling customer counts, by mid-2018, Mr. Grubert stated that he and other members of the restaurant’s staff and management were hearing frequent complaints and expressions of frustration from restaurant customers concerning traffic delays caused by the construction of the Works. In addition, employees and customers began to consistently arrive late due to traffic delays attributed to the construction.

58Mr. Grubert testified that the combination of reduced lanes for traffic, shifting lane closures, concrete jersey barriers, moveable TC-54 traffic channelizers, and uneven road surfaces all created very uncomfortable driving conditions along Eglinton to both the east and the west of Smith Bros. As the construction activities intensified over time, the severity of these impacts increased correspondingly. By early 2019, he testified, Smith Bros. was suffering both a reduction in the frequency with which its regular customers patronized it, and a general reduction in visits from all customers.

59In March 2019, Mr. Grubert testified, the Claimant was forced to limit opening for lunch due to the dramatic decline in lunch guests coming to the restaurant. Mr. Grubert testified that he and staff had been told by many of the restaurant’s regular lunch guests that they could no longer come for lunch as a result of the traffic delays they experienced while trying to do so, given the limited time they had for their lunch break. Smith Bros. had previously been open for lunch Monday to Friday, but reduced lunch openings to Thursdays and Fridays only.

60Throughout the Claimant’s fiscal year 2020, which began in September 2019, the rate of decreasing revenues and guest counts accelerated. Mr. Grubert testified that the first half of fiscal year 2020, which was interrupted by the COVID-19 pandemic, saw a 16.9% average decline in sales.

61Mr. Grubert testified that in an effort to mitigate these losses, during the autumn of 2019, he renegotiated the Smith Bros. lease for a significant reduction in rent to begin in March 2020. Mr. Grubert testified that in consideration for the reduction, the Claimant entered into a lease extension agreement with the landlord. He stated that in the negotiations, he had advised the landlord’s representative that the Claimant was prepared to leave the Plaza due to the construction of the Works and that the landlord acknowledged that it would be difficult to re-lease the restaurant’s space due to the ongoing construction of the Works.

62Mr. Grubert stated that when he heard the announcement in February 2020 that the completion of the construction of the Works would be delayed by at least a year beyond the scheduled completion date of September 2021, he was dismayed. He stated that had he known about the delay prior to entering into the Lease Extension, the Claimant would likely not have continued to operate Smith Bros. at the Plaza beyond the expiration of the then current lease term. Unfortunately, just as the Claimant was about to benefit from the reduced rent, it was forced to close Smith Bros. on March 16, 2020, as a result of the declaration of the COVID-19 pandemic. The Claimant’s three Tucker’s restaurants, being all buffet-style restaurants, were also closed. None of the Claimant’s restaurants had ever offered takeout, and they did not transition to this method.

63Mr. Grubert testified that it soon became apparent to him that buffet-style restaurants, such as the Claimant’s three Tucker’s restaurants, were not going to be sustainable in the foreseeable future due to the COVID-19 related restrictions. As a result, he decided that the Claimant should file for bankruptcy, which was done about three months after the declaration of the pandemic, on June 25, 2020.

64Mr. Grubert testified that the operational future of Smith Bros. was different than that of the three Tucker’s restaurants because it was a full-service restaurant as opposed to a buffet-style restaurant. As a steakhouse without buffet-style offerings, he stated that transitioning to the “new normal” of pandemic safety measures for reopening would have been much easier. He testified that despite the bankruptcy, the Claimant intended to re-open Smith Bros., and that he had remained in contact with the landlord of the Subject Property during this time, who had agreed that the Claimant could leave the Smith Bros. assets in place in anticipation of its reopening.

65However, by the winter of 2021, the landlord of the Subject Property demanded certainty regarding the re-opening of Smith Bros. and that Mr. Grubert provide a commitment to a reopening date. Mr. Grubert testified that he concluded that it would not be advisable to commit to the reopening of Smith Bros. as a significant delay in the completion of the construction of the Works had been announced. He therefore decided to wind up Smith Bros. and its assets were sold at auction in March 2021. Mr. Grubert stated his opinion that, in the face of COVID alone, it was probable that Smith Bros. could have reopened in a sustainable manner. However, he had determined that it was not likely that Smith Bros. could earn sufficient revenues to continue operations in light of the losses suffered as a result of the construction of the Works. Mr. Grubert was given leave by the trustee in bankruptcy to continue these proceedings on the Claimant’s behalf.

WHETHER THE CLAIMANT SUFFERED BUSINESS LOSSES WHICH WERE THE RESULT OF THE EXPROPRIATION AND THE CONSTRUCTION OF THE WORKS

66Mr. Grubert testified that he was the Claimant’s president. He testified that he had the primary responsibility for operating the company since its founding in 1996. He spoke about his lifetime of experience in the restaurant industry. He testified that his family had started in the restaurant industry in late 1956, when his father, who was a lawyer, opened a restaurant in Winnipeg. His father subsequently met with Colonel Harland Sanders and was granted a Kentucky Fried Chicken (“KFC”) Restaurant franchise, which was one of the first in world. By 1958, Mr. Grubert’s father had secured the exclusive right to operate KFC Restaurants in Manitoba, and by the early 1960s was operating 20 KFC Restaurants in the Province. Mr. Grubert’s father had incorporated Champs Food Systems Ltd. (“Champs”) to operate the KFC franchises, and through the 1960s and 1970s, experimented with other types of restaurants. These were typically full-service restaurants, of which a number were opened in the Winnipeg area. In 1975, Champs opened a restaurant named Mother Tucker’s Food Experience (“Mother Tuckers”) in downtown Winnipeg, which was to become Champs’ flagship brand. Mother Tucker’s was extraordinarily successful, which led to the opening of Mother Tucker’s locations across Canada. Mother Tucker’s was the primary vehicle for the growth of Champs through the 1980’s and into the 1990s. Champs continued to operate its KFC restaurants until the mid-1990s, when PepsiCo acquired KFC.

67Mr. Grubert testified regarding the depth and breadth of his experience in the restaurant industry. He stated that he began helping out in the Champs KFC restaurants when he was five or six years old, was cooking by the time he was twelve years old and worked in his family’s restaurants throughout his teenage years. Once he was old enough to serve alcohol, he worked in the family’s full-service restaurants. After he graduated from University with an MBA, he returned to his family’s restaurant business and assumed responsibility for Mother Tucker’s operations as Director of Operations in the late 1980s. He testified that he decided that the focus of Mother Tucker’s should be on the Ontario restaurant market, and he and his family relocated from Winnipeg to Toronto. Mr. Grubert testified that in 1986 he accordingly constituted the Claimant corporation, which assumed control of seven Mother Tuckers Restaurants from Champs. By the mid-1990s, the number of Mother Tucker’s locations operated by the Claimant stood at eight, with seven Ontario locations and one in Quebec.

68In 1994, Champs rebranded its restaurants and began converting Mother Tucker’s to Tucker’s Marketplace restaurants. Mr. Grubert testified that the change rejuvenated Mother Tucker’s as it entered its twentieth year and responded to the changing business landscape caused by the introduction of the Federal Goods and Services Tax (“GST”) in 1991. Part of the change was that Tucker’s Marketplace restaurants would now be full-fledged buffet restaurants. The concept received an immediate positive response, and by 1998/1999 all Ontario Mother Tucker’s restaurants had become Tucker’s Marketplace.

69As part of its portfolio, Champs, and later the Claimant, had operated a restaurant at the Subject Property. Champs had done so since November 1979, and the restaurant was the first Mother Tucker’s restaurant in Ontario. This location ultimately became Smith Bros.

70In his evidence, Mr. Grubert described Smith Bros’ increase in revenues and customer counts in the period leading up to the construction of the Works, as well as the trend’s reversal and sharp decline during the period of construction.

71Mr. Grubert described how the Claimant and its landlord, Eglinton Warden Developments Limited, worked well together and developed a strong relationship over the decades. In the early part of the 2000’s, the landlord requested that the Claimant relocate Tucker’s to another building within the Plaza to permit the redevelopment of the building in which the restaurant had previously operated.

72Mr. Grubert, on behalf of the Claimant, consented and worked cooperatively to prepare the new building for operation. The transition was completed in March 2005, and the Claimant reopened Tucker’s in the new location. However, Mr. Grubert soon discovered that the new building, which comprised about 8,500 square feet, was too small for Tucker’s due to the space requirements of a full buffet-style restaurant. Mr. Grubert therefore decided to develop a new restaurant concept that would function better in the smaller space, and in the fall of 2012, the Claimant opened Smith Bros. which, as previously noted, was a full-service steakhouse restaurant.

73Mr. Grubert described that the business at Smith Bros. began slowly in the fall of 2012, but then went through a period of “explosive growth” in revenues and customer counts, and by fiscal year 2015 was beginning to “hit its stride”. Mr. Grubert described Smith Bros. as primarily a dinner restaurant, with approximately 80 to 85% of its customers and revenue coming from dinner sales and only about 15 to 20% of its customers and revenues coming from lunch sales. He testified that Smith Bros. developed a large number of repeat customers.

74Mr. Grubert testified that on a year-over-year basis, the customer counts at Smith Bros. were increasing. By fiscal year 2017, which was the last year prior to the commencement of the construction of the Works, customer growth was leveling off, and Mr. Grubert testified that Smith Bros. was close to achieving profitability as it was approaching the cash break-even point. Mr. Grubert testified that the start of the construction of the Works changed the prospects for Smith Bros. After the Respondent expropriated a portion of the Subject Property and construction of the Works began in the area of the Subject Property, Smith Bros. began to experience a decline in its customer counts and revenues, which became a sharp decline and ultimately caused the failure of the restaurant.

75Jeff Dover was qualified, on consent, as an expert in food service management and operations. He produced a Report, which was filed and marked as Exhibit 9, and Reply Report, which was filed and marked as Exhibit 13.

76Mr. Dover testified that it was his opinion that the cause of the Claimant’s business losses at Smith Bros. was not the Expropriation and the construction of the Works. Rather, the losses were the product of various failures by Mr. Grubert and his management to comply with best practices and restaurant industry standards. Examples given by Mr. Dover of failures to comply with best practices included:

a. That menu prices had not increased to keep pace with the costs of sales and wage costs;

b. Labour expenses were greater than benchmarked averages;

c. Marketing activities were inconsistent;

d. The Claimant should have spent more money on upgrading the interior and décor of the Restaurant;

e. The radio advertising scripts during the construction period were overly negative;

f. Smith Bros. operated in a highly competitive environment; and

g. Two steakhouses in the vicinity of the Subject Property were direct competitors. These were Affy’s Premium Grill and Steakhouse and Baran’s Turkish Cuisine & Bar, both of which opened in 2017, and both of which were halal steakhouses.

77Mr. Dover admitted, under cross-examination, that his expertise and understanding of the restaurant industry was gained primarily from his work consulting for food service operators in the public sector. While his evidence in chief and his Report had left the impression that he had substantial experience working in the restaurant industry, he admitted that his experience actually working in restaurants consisted of working at three restaurants. One of Mr. Dover’s employment experiences in a restaurant was working in a hotel that contained a restaurant, where he worked for five years. Mr. Dover admitted that most of his experience has come from his work as a management consultant, which he has done since 2009. He testified that his clients usually contact him for his consulting services when there is a concern regarding the performance of the client’s restaurant business.

78When questioned on cross-examination regarding what he considers to be industry standards, Mr. Dover admitted that the reports he relied on to develop his industry averages or benchmarks were based on small samples of restaurants that had responded to two surveys by restaurant industry organizations and consultancies. The data underlying those reports was admitted by Mr. Dover to not comprise a huge database, which he stated was unfortunate. Counsel for the Claimant drew Mr. Dover’s attention to limitations contained the reports warning that the reports were not intended to be used to set operational or performance standards for the industry and its participants. Mr. Dover admitted that he used the data in the reports to develop his guidelines for comparable performance analysis. He did not mention the limitations in his Report or Reply Report.

79Mr. Dover was critical of the Claimant’s marketing efforts and lack of media spending, and stated his opinion that this was likely another reason for the Claimant’s losses. However, in cross-examination, Mr. Dover admitted that his opinion was based only on information he received concerning the Smith Bros’ radio advertisements (which will be described below) and that he had no information and did not request information concerning Smith Bros.’ social media presence. Mr. Dover had acknowledged in his evidence that social media presence is “an important part of managing restaurants.”

80Under cross-examination, Mr. Dover admitted that he had not investigated whether Affy’s Premium Grill or Baran’s Turkish Cuisine were actual competitors of Smith Bros. and could provide no information or data as to whether customers of the two Halal steakhouses were likely or unlikely to visit Smith Bros., which was a non-Halal restaurant. He admitted that he had not visited either Affy’s or Baran’s and had not spoken to their owners to determine whether their customer counts and revenues were also down during the period from October 2017 to March 2020.

81The Tribunal observes that Mr. Grubert is a lifetime restauranteur who has spent his entire working life in the restaurant industry. He has developed and managed multiple successful restaurants. The Tribunal finds that Mr. Grubert testified in an honest, forthright, and comprehensive manner, and he has firsthand knowledge of the Smith Bros’ restaurant business. The Tribunal finds that Mr. Grubert’s testimony demonstrated that he has extensive experience and knowledge about the restaurant industry in general and the Smith Bros. restaurant in particular. He was also the only witness with experience concerning the Claimant’s overall businesses, Smith Bros., and the construction of the Works. Although he testified as a fact witness, the Tribunal prefers the evidence of Mr. Grubert to that of Mr. Dover and finds that the Claimant’s business losses were not the result of mismanagement.

QUANTUM OF THE CLAIMANT’S BUSINESS LOSSES

82Ephraim Stulberg was called to testify by the Claimant and qualified by the Tribunal on consent to provide opinion evidence concerning the valuation of business losses in general, and with respect to the issues in this Proceeding in particular. Mr. Stulberg had produced a Business Loss Report dated September 14, 2021, which was produced and marked as Exhibit 5, and a Reply Report which was produced and marked as Exhibit 12.

83Mr. Stulberg’s methodology utilized the monthly entrée sales results and monthly customer counts for Smith Bros. prior to the commencement of the construction of the Works. He used the historic sales results and customer counts to calculate a projected customer count and the average sale amount per customer for the period leading up to the commencement of the construction of the Works. For the period beginning in October 2017, Mr. Stulberg deducted the actual customer counts and sales recorded from the projected customer count and average sale per customer to calculate the customer and sales shortfalls. The amount of the sales shortfall was then credited with the amount of the saved variable costs and the saved fixed costs, which resulted in the amount of the business loss.

84Mr. Stulberg testified that it was his opinion that Smith Bros. would have maintained its financial performance, but for the construction of the Works. He testified that this was a reasonable conclusion as Smith Bros.’ financial statements had showed an increase in revenue year over year up until the commencement of construction. He stated his opinion that it is reasonable to assume that this trend would have continued, but for the construction of the Works.

85Mr. Stulberg’s valuation of the Claimant’s business losses was divided into three periods. The first period was from the commencement of the construction of the Works to the COVID-19 pandemic related shutdown of Smith Bros. This period was October 2017 to March 2020, and Mr. Stulberg calculated revenue losses in the sum of $1,246,000. He valued saved variable costs in the sum of $522,087, saved wages in the sum of $146,984, and saved rent in the sum of $11,457. Mr. Stulberg deducted the foregoing amounts from the revenue losses of $1,246,000 and concluded that Smith Bros. suffered a net business loss of $571,891 for the period October 2017 to March 2020.

86Mr. Stulberg’s second period concerned the period following the March 2020 pandemic related shutdown of Smith Bros. He calculated that the Claimant had saved operating expenses during the early period of the COVID-19 pandemic due to the fact that it did not have to pay rent and did not have to provide the upgrades required to comply with provincial health protocols. Mr. Stulberg valued these savings at $75,433.

87In the third period, Mr. Stulberg estimated the loss of business value, which he calculated as at August 2021. He applied an assumption that the Works did not occur, but that COVID-19 did occur. He concluded that the Claimant’s business loss as at August 1, 2021 was in the amount of $1,359,000.

88In conclusion, it was Mr. Stulberg’s opinion that the Claimant suffered total losses in the sum of $1,844,458, comprised of the loss of profits in the sum of $571,891, plus the loss of the value of the business of $1,359,000, less the saved operating expenses of $75,433.

89Glenn Tautrims was called by the Respondent and qualified on consent to provide opinion evidence concerning the valuation of business losses in general, and with respect to the issues in the Proceeding in particular. Mr. Tautrims provided a Report which was marked as Exhibit 10, and a Reply Report, which was marked as Exhibit 14.

90Mr. Tautrims opinion of the Claimant’s business losses and their valuation differed from those of Mr. Stulberg. He concluded that lost sales totalled $959,573, saved direct variable expenses totalled $363,200, saved indirect variable expenses totalled $386,854, and saved rent was $0. He concluded that Smith Bros. suffered a business loss of $209,519.

91It was Mr. Tautrims opinion that there were no business losses after March 2020, as in his opinion, the Restaurant would not have been able to reopen. Mr. Tautrims concluded that the total business loss to the Claimant was the sum of $209,519.

92The Tribunal observes that the difference in the opinions of the business loss experts concerning the Claimant’s loss of profits up to March 2020 is attributable to the differing methodologies employed by these experts. Mr. Stulberg used customer counts based upon the Claimant’s actual entrée sales counts for the year preceding the commencement of construction. Mr. Tautrims’, on the other hand, employed a methodology, which relied on historical industry averages, obtained from data published by Statistics Canada in the Monthly Survey of Food Services and Drinking Places, Full-Service Restaurant Business Counts in Ontario, and the Consumer Price Index for All Items – Ontario.

93Mr. Grubert and Mr. Stulberg testified that calculating customer counts based upon entrée sales is not a perfect metric, as it does not count customers who do not order an entrée and does not count customers who, for example order drinks or appetizers only. But the Tribunal also heard evidence from both witnesses that this method of calculating customer counts is an industry standard due to the fact that restaurants cannot track with specificity every customer that comes through the door and that restauranteurs must therefore rely on reasonable proxies. The metric of counting entrée sales was appropriate in the opinion of Mr. Stulberg, and the Tribunal notes that Mr. Dover did not object to its use or propose an alternative metric for estimating customer counts. The Tribunal prefers the historical data regarding the sales and trends of Smith Bros. over the industry average metric and prefers the evidence of Mr. Stulberg concerning the Claimant’s business losses for the period October 2017 to March 2020 to that of Mr. Tautrims.

94The Claimant submits that the magnitude of the negative impacts felt by Smith Bros. and its consequent business losses stem from the nature of its business, its location in the middle of the construction zone, and the duration of the period of construction. The Tribunal concurs and observes that by its very nature, a restaurant business such as Smith Bros. is a more sensitive commercial use than other types of businesses located within areas impacted by the construction of the Works. While an evening and overnight construction schedule would undoubtedly be of benefit to businesses that operate on a 9 a.m. to 5 p.m. schedule, it would greatly impact the operations of a restaurant whose principal source of business is the dinner crowd.

95The Claimant seeks compensation for its business losses as either damages for injurious affection or disturbance damages. Loss or damage for injurious affection must result from the construction or the use of the Works. As in this case, the Works are not yet in use, the loss or damage must be attributable to the construction of the Works. (Section 1(1) “injurious affection” and Section 21 of the Act).

96Causation in a claim for a tenant’s business losses based on disturbance damages is determined on a standard of the tenant’s proportionate share of compensation for the “natural and reasonable consequences” of the Expropriation. (Windsor (City) v. Sleiman, 2002 CarswellOnt 5228 at para 226). In this case, the Claimant submits that its appropriate share of the costs that are the “reasonable and natural consequences” of the Expropriation are its business losses as set out in this claim.

97The test for compensable damages in both instances of injurious affection and disturbance damages is causation. (Dell Holdings at paras. 28, 38, 40). To satisfy the causation test in the case of a disturbance damage claim, the Claimant must establish, on a balance of probabilities, that its business losses were caused by the Expropriation, which is defined broadly and as a continuing process. (Dell Holdings at paras 37-38; E-Z Air Inc and E-Z Air Helicopter Training Inc v. Edmonton (City), 2018 ABLCB 7; 1353837 Ontario Incorporated v. Stratford (City), 2021 CanLII 101820 (OLT).

98The Tribunal is required to assess whether, on a balance of probabilities standard, the loss would not have occurred but for the Respondent’s Works, and the Respondent’s work need not be the only cause of the injury. (Dell Holdings at para 37; Clements v. Clements, 2012 SCC 32 at para 13.)

99Unlike the situation involving claims founded in negligence, a Claimant under the Act is not required to prove that the Respondent was negligent in its conduct. (Partridge v. Nova Scotia (Attorney General), 2021 NSCA 60).

100The Claimant submits that its business losses suffered between October 2017 and March 2020 and its loss of the value of the Restaurant business from the closure of Smith Bros. were both caused by the construction of the Works. The Claimant argues that, but for the construction of the Works, Smith Bros. would have reopened when indoor dining was again permitted post-pandemic, and that the Restaurant would have enjoyed greater revenues and profits than it had prior to the construction of the Works.

101The Tribunal finds that construction of the Works in the area of the Subject Property began in the fall of 2017 and continued until the end of 2021. The Tribunal finds that the construction of the Works in the vicinity of the Subject Property consisted of the replacement of the traffic signals at Warden and Eglinton with temporary traffic signals, the removal of the medians along Eglinton, the widening of Eglinton and modification of the existing boulevard to facilitate the Golden Mile Stop, the removal of the centre lanes along Eglinton to create a centre right-of-way, the permanent closure of the Eglinton HOV lanes and the permanent reduction of Eglinton from a six land roadway to a four lane roadway, the laying of the LRT tracks along the centre right-of-way, and the construction of the Golden Mile Stop.

102The Tribunal finds that Smith Bros. was located in the midst of a construction zone for the at-grade portion of the Eglinton LRT line. The Tribunal finds that construction was underway simultaneously both to the east and to the west of the Subject Property. The Tribunal finds that the impacts of the construction of the Works upon customer counts and sales at Smith Bros. began in October 2017 and continued until the forced closure of Smith Bros. when the COVID-19 pandemic was declared in March 2020. The Tribunal finds that in March 2019, construction intensified with full-time permanent lane closures at the intersection of Eglinton and Warden, and closures both east and west of the Subject Property along Eglinton, and that at times there was only one lane in each direction open for traffic. The Tribunal finds that such lane closures remained in place until at least the spring of 2021. The Tribunal finds that from April 2019 to May 2020, there were additional closures of the north and southbound roadways, which intersected with Eglinton both to the east and to the west of the Subject Property. The Tribunal finds that the construction of the Works and lane closures on Eglinton had an extremely significant, far reaching, and detrimental impact on the movement of vehicular traffic on both Eglinton and on adjoining roadways not located in the actual construction zone. The Tribunal finds that the at-grade portion of the Eglinton LRT was completed roughly at the end of 2021.

103The Tribunal finds that the customer counts and sales at the Smith Bros. were increasing prior to the commencement of the construction of the Works. The Tribunal finds that the customer counts and sales at Smith Bros. began to decline once the impact of the construction of the Works commenced in October 2017 and that the sales at the Restaurant entered into a steep decline coincident with the intensification of construction, which began in April 2019 and continued until October 2019.

104The Tribunal finds that beginning in April 2019 and continuing through October 2019, the north-south streets in the vicinity of the Smith Bros. Restaurant were closed at Eglinton for six-week increments at a time. The Tribunal observes that Schedule 8 of Mr. Tautrims’ Report (Exhibit 10) shows that this period represented a particularly steep decline in sales at the Smith Bros. Restaurant. The Tribunal finds that compared to the same months from the previous year, sales at Smith Bros. in May 2019 declined by 16.8%, in June 2019 by 20.3%, in July 2019 by 17.5%, in August 2019 by 17%, in September 2019 by 20.1%, and in October 2019 by 21.9%.

105The Tribunal finds, on a balance of probabilities, that the cumulative effect of the various aspects of the construction of the Works described above caused the customers of Smith Bros. to avoid the area of Eglinton and Warden, and hence the Plaza and Smith Bros., altogether. The fact that the entrances to the Plaza remained open during the period of construction is irrelevant if the construction of the Works has the effect of dissuading customers of Smith Bros. from venturing into the Eglinton and Warden area.

106The Tribunal therefore finds that the declining sales at Smith Bros. referred to above are not coincidental, and that the losses are the direct result of the construction of the Works. As such, the losses constitute damages for injurious affection. That the Respondent is a Statutory Authority and that the Expropriation and construction of the Works were undertaken under the authority of a statute are not in dispute, and the Tribunal so finds.

CONCLUSION

BUSINESS LOSSES FOR PERIOD OCTOBER 2017 TO MARCH 2020

107After careful evaluation of the competing written and oral evidence tendered by the Parties and consideration of the final arguments contained in the Written Submissions filed by Counsel, the Tribunal accepts and relies on the factual evidence of Mr. Grubert and the opinion evidence of Mr. Stulberg in strong preference to that of Mr. Tautrims and Mr. Dover. Therefore, the Tribunal finds, on a balance of probabilities, that the sales revenues of Smith Bros. were increasing prior to the commencement of construction of the Works, that the sales revenues declined once construction of the Works began in Section 5 in October 2017, and that the declining revenues, and hence the business losses of Smith Bros. incurred between October 2017 and March 2020, were the natural and reasonable consequence of the construction of the Works. The Tribunal rejects the argument of the Respondent that the losses were caused by Mr. Grubert’s mismanagement or by an increase in competition. The Respondent presented evidence through Mr. Dover that new steakhouse restaurants had opened in the vicinity of the Subject Property, but Mr. Dover had no evidence regarding the levels of business done by the new restaurants. Significantly, in the Tribunal’s view, the new restaurants are both Halal restaurants, which distinguishes them from Smith Bros. The Respondent presented no evidence that customers of a Halal restaurant are likely to attend a non-Halal restaurant such as Smith Bros. No persuasive evidence to support this contention was presented.

108The Tribunal therefore finds that the Claimant has suffered damages for injurious affection on account of its business losses during the period October 2017 to March 2020, within the meaning of Section 1(1)(a)(ii) of the Act. The Tribunal finds that the Claimant’s business losses for the period October 2017 to March 2020, totaled the net sum of $571,891.

LOSS OF THE VALUE OF THE SMITH BROS. RESTAURANT

109The Claimant submits that the Smith Bros. Restaurant would have re-opened when the pandemic related restrictions on restaurants were relaxed after August 2021, had it not been for the disruption of its business and its losses attributable to the construction of the Works. The relaxation of the restrictions permitted very limited re-openings. The Tribunal has evaluated and has given full consideration to all of the evidence of the witnesses and arguments contained in the Written Submissions filed by Counsel. The Tribunal observes the evidence of Mr. Tautrims and admission by Mr. Grubert that Smith Bros. operated at a loss in every year of its operation, and that these losses were funded by the profits earned by the Claimant from its very profitable Tucker’s Marketplace restaurants. Under cross-examination, Mr. Grubert was referred to the consolidated Income Statement for Smith Bros. for the period August 2013 to August 2019. He acknowledged that the Restaurant had lost money in every year of its operation, beginning with a loss of $228,626 for the Fiscal Year ended August 31, 2013, and declining to a loss of $58,215 for the Fiscal Year ending August 31, 2017. Mr. Gruber stated that the losses were consistently diminishing year over year and that in 2017, he believed that Smith Bros. was at the point where it would have turned a profit had it not been for the impacts of the construction of the Works. He admitted that the Restaurant’s losses were funded by “intercompany advances”, and that it was the profitability of the Tucker’s restaurants that had allowed Smith Bros. to continue to operate since 2012.

110However, as all three of the Tucker’s restaurants were full-buffet-style restaurants, they were forced to close entirely by the pandemic related restrictions imposed on March 16, 2020, which resulted in the Claimant filing for bankruptcy three months later, in May 2020. None of the Tucker’s restaurants, being located in Burlington, Etobicoke, and Ottawa, were impacted by the construction of the Works, and the undisputed evidence was that their closure was the direct result of the pandemic related restrictions. The Tribunal therefore finds that, without the benefit of the profits from the Tucker’s restaurants to fund its losses, and the fact that pandemic related restrictions on restaurants were not eased to permit limited restaurant re-openings until August 2021, Smith Bros. would not have been financially capable of reopening after the permanent closure of the Tucker’s restaurants on March 16, 2020. The Tribunal therefore finds that the Claimant’s loss of the value of Smith Bros. is not a loss attributable to the Expropriation or to the construction of the Works and that the amount of the loss is not compensable under the Act.

111As the Tribunal finds that Smith Bros. would not have reopened after its closure in March 2020, it is not necessary to consider the saved operating expenses during the period March 2020 to July 2021.

WHETHER TO CLAIMANT FAILED TO MITIGATE IS LOSSES

112Mr. Grubert testified concerning the Claimant’s efforts to mitigate its losses:

a. Mr. Grubert testified that, because of repeated complaints from customers regarding the difficulties and delays they experienced travelling to the Restaurant, the Claimant arranged for two commercials to run on a prominent Toronto radio station. The radio commercials made specific reference to the challenges the Restaurant was facing due to the construction of the Works and to the Claimant’s understanding and appreciation of the difficulties that its customers experienced while traveling to the Restaurant. The scripts for the commercials were produced at Tabs 191 and 192 of Exhibit 1 and are reproduced below with the references to the construction of the Works underlined:

SMITH BROS – “FROM ALL OF US” – RADIO ADVERTISEMENT

CHRIS: Hey, I’m Chris.

ADAM: And I’m Adam.

CHRIS and ADAM: We’re the Smith Brothers!

CHRIS: You know, from Smith Brothers Steakhouse Tavern.

ADAM: Listen, construction of the Eglinton LRT is really messing with our business, and literally hundreds of neighbourhood businesses along Eglinton.

CHRIS: We get that Toronto needs better transit.

ADAM: But the traffic and parking disruptions are seriously hurting us all.

CHRIS: So, we’re asking you to please make that extra special effort to support Eglinton’s merchants.

ADAM: They’ve been there for you for years.

CHRIS: Please be there for all of us now.

CHRIS and ADAM: Thank you!

ADAM: Chosen one of Toronto’s top ten steakhouses.

CHRIS: Smith Brothers is located on –

ADAM: Surprise!

CHRIS: Eglinton at Warden.

SMITH BROS – “WE’RE GOING TO SMITH BROTHERS” – RADIO ADVERTISEMENT

CHRIS: Hey, I’m Chris.

ADAM: And I’m Adam.

CHRIS and ADAM: We’re the Smith Brothers!

CHRIS: You know, from Smith Brothers Steakhouse Tavern.

ADAM: Listen, construction of the Eglinton LRT is really messing with our business.

CHRIS: So we’ve come up with an incentive plan. Kind of like a reward for enduring the pain of crossing Eglinton to get here.

ADAM: You’re going to love this.

CHRIS: Yeah, visit Smith Brothers for dinner, and we’ll give you twenty bucks off your next visit.

ADAM: Yes, you heard that right. But hurry, this offer will end in 2021.

CHRIS: Or ’22.

ADAM: Or ’23.

CHRIS: Whenever they finish this thing. Smith Brothers is located on –

ADAM: Surprise!

CHRIS: Eglinton, at Warden.

ADAM: Minimum purchase required. Details in store.

CHRIS: This offer is amazing!

ADAM: You sure we can afford this?

CHRIS: Not really!

The invoices from the radio station were produced at Tabs 189 and 190 of Exhibit 1. The invoices show that the radio ads ran from January 21, 2019, to April 6, 2019, for a total of 204 spots, at a cost of $23,513.04. This amount was included in Mr. Stulberg’s calculation of the Claimant’s lost profits. Mr. Grubert testified that there was no increase in business at the Smith Bros. attributable to the radio commercials and that the guest counts continued to decline.

b. Mr. Grubert testified that the Claimant offered Discount Certificates to customers who came into the Smith Bros. to incentivize them to return. The Discount Certificates also made specific reference to the challenges Smith Bros. was facing due to the construction and to the Claimant’s understanding and appreciation of the difficulties which its customers experienced while traveling to the Restaurant. One of the Certificates was produced at page 12 of Exhibit 5. The Certificates reads:

Persistence Has Its Rewards

Thanks for stopping in for dinner tonight. We know that construction has made getting to us a little more difficult. We really appreciate you making the extra effort to get here.

Neither Sleet, nor Snow, nor Lane Closures Will Keep you Away…

As a token of our appreciation for enduring the pain of Crossing Eglinton to get here, we’re giving you $20 off your next dinner visit.

Mr. Grubert testified that once again, there was no increase in business at Smith Bros. attributable to the Discount Certificates and that guest counts continued to decline.

c. Mr. Grubert testified that in March 2019, the Claimant decided to reduce lunch availability at the Restaurant from five days to two days per week. He stated that the reason for this was that the guest counts for lunch had declined to as few as five customers per day, and reducing lunch openings would eliminate the costs and resulting losses of opening the Restaurant for lunch on three days per week. Mr. Grubert stated that he hoped that this would push lunch business that would otherwise have come to the Restaurant on Monday to Wednesday to attend instead on Thursday or Friday, thereby at least covering the costs of opening on Thursday and Friday. Mr. Grubert testified that there was no increase in customer counts at lunch on Thursday and Friday.

d. Mr. Gruber described the steps taken to reduce the Restaurant’s operating costs. Some of the usual staff responsibilities were assumed by management. For instance, managers were required to assume kitchen duties. When a manager retired after thirty years of service, he was not replaced, and his duties were assumed by another manager.

e. Mr. Grubert testified that he negotiated a rent reduction from an annual rent of $360,000 to $225, 000, or from $30,000 per month to $18,750, and reduced the fixed costs of the Restaurant from $20,000 per month to $12,000 per month.

113The Respondent has submitted that the Claimant failed to mitigate its damages as it did not raise its concerns about the impact of the construction of the Works on Smith Bros. directly with the Respondent’s employees. The Tribunal notes that there has been no evidence presented as to how the Respondent’s employees would have responded to the Claimant’s complaint in such a manner that would have reduced the Claimant’s business losses. Under cross-examination, Ms. Sanchez testified that had a complaint been received, and “if something is not the way it should be, or there is something else that can be done particularly for that business,” she would discuss the matter with the contractor. However, her evidence was that the construction schedule in Section 5 was chosen specifically to minimize the impacts on businesses that operate on a 9 a.m. to 5 p.m. basis. There is no evidence before the Tribunal that, if the Claimant had raised its concerns, the Respondent could have changed its contractors’ construction schedule to benefit the Claimant. The Tribunal accordingly finds that the Claimant took all reasonable and appropriate measures to mitigate its business losses during the period from October 2017 to March 2020.

CLAIM FOR MR. GRUBERT’S EXECUTIVE TIME

114The Claimant made an assignment in bankruptcy in May 2020. Mr. Grubert testified that this was the result of the complete closure of the Claimant’s three Tucker’s Marketplace restaurants due to pandemic-related restrictions on buffet-style restaurants. Mr. Grubert testified that he is the assignee of the Claimant’s right, title, and interest in these Proceedings, the Assignment having been granted by the Trustee in Bankruptcy as a result of the fact that Mr. Grubert was the Claimant’s sole secured creditor. As the Notice of Arbitration and Statement of Claim were delivered on July 22, 2020, after Mr. Grubert had taken his Assignment from the Trustee, the Tribunal finds that the time he has expended on these Proceedings has been for his own account and not for that of the Claimant. Accordingly, the claim for lost executive time is disallowed.

ORDER

115The Tribunal orders that:

a. The Respondent pay to the Claimant the sum of $571,891 as damages for injurious affection pursuant to Section 21 of the Act;

b. The claim for the loss of the value of the business of the Smith Bros. Steakhouse Tavern is dismissed;

c. The claim for lost executive time is dismissed;

d. The Parties are to file Written Submissions respecting the claim for statutory interest pursuant to Section 33 of the Act within 30 days of the release of this Decision;

e. The Claimant is to file its Bill of Costs and Written Submissions respecting costs pursuant to Section 32 of the Act within forty-five days of the release of this Decision;

f. The Respondent is to file its Written Reply Submissions respecting costs within 60 days of the Release of this Decision; and

g. The Claimant may file its Reply Submissions respecting costs, if any, within 67 days of the release of this Decision.

116This Member remains seized and is available to assist the Parties should such assistance be required.

117So Orders the Tribunal.

“Robert G. Ackerman”

ROBERT G. ACKERMAN

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.