Ontario Land Tribunal
Issue Date: September 24, 2024 Case No(s).: OLT-22-003177
Proceeding commenced under subsection 26(b) 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 (1940 Eglinton Ave 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: In Writing
Appearances
| Parties | Counsel |
|---|---|
| Newgen Restaurant Services Inc. ("Claimant") | Connor Harris, Leah Cummings |
| Metrolinx ("Respondent") | Christel Higgs, Jessica Karban |
Decision Delivered by Robert G. Ackerman and Order of the Tribunal
Background
1By Decision dated on March 22, 2024, pursuant to s. 21 of the Expropriations Act, R.S.O. 1990, c. E.26 (the "Act"), the Tribunal ordered that the Respondent pay to the Claimant the sum of $571,891.00, as damages for injurious affection suffered on account of lost profits from the operation of the Claimant's restaurant business during the period from October 2017 to March 2020. The Tribunal also ordered the Parties to file written submissions respecting statutory interest under s.33 of the Act and with respect to compensation for costs under s. 32 of the Act. Counsel has advised the Tribunal that the issue of the Claimant's compensation for costs has been resolved, but that the issue of statutory interest remains outstanding.
2The Tribunal has received the following filings from Counsel for the Parties:
a. Submissions of the Claimant on Statutory Interest; b. Claimant's Book of Authorities – Statutory Interest Submissions; c. Interest Submissions of the Respondent Metrolinx; d. Brief of Authorities – Metrolinx.
Position of the Claimant
3Counsel for the Claimant submits that, pursuant to s. 33(1) of the Act, the Claimant is entitled to be paid interest on compensation for "the portion of the market value of the owner's interest in the land and on the portion of any allowance for injurious affection to which the owner is entitled". Both conditions of s.33(1) are satisfied as the Tribunal has found that the Claimant was an owner of the lands expropriated, and the Claimant was awarded compensation for injurious affection.
4The Claimant submits that the quantum of interest should be calculated at the statutory rate of six percent per annum from the date of registration of the Plan of Expropriation, and that interest so calculated totals $297,351.98 to April 19, 2024, plus interest at a per diem amount thereafter.
5The Claimant submits in the alternative, that interest should be calculated from the commencement of the loss period in October 2017 as found by the Tribunal. Calculated in this fashion, interest totals $224,870.67 to April 19, 2024.
6The Claimant submits in the further alternative, that interest should be calculated from the beginning of each of the loss periods referred to in the evidence of the Claimant's business loss expert, Mr. Stulberg. Interest calculated on this basis totals $190,170.52 to April 19, 2024.
7The per diem amount in each of the three alternatives is $94.01 per day and will accrue until payment is satisfied.
Position of the Respondent
8Counsel for the Respondent submits that the Claimant is not entitled to interest under s. 33(1) of the Act because no interest is payable on amounts found by the Tribunal as damages for injurious affection on account of personal and business damages under s. 21 of the Act.
9In the alternative, Counsel for the Respondent submits that if an award of interest is made, the commencement date should not be prior to March 2020, because the finding of the Tribunal was that the Claimant incurred ongoing, cumulative business losses, and calculating interest from an earlier date would allow interest on business losses before the losses had actually been incurred. Counsel for the Respondent submits that, if interest is to be allowed by the Tribunal, it should begin to accrue in March 2020, which was the point in time as found by the Tribunal, at which the Claimant's losses had been fully incurred.
Analysis and Findings
10Section 33(1) of the Act is the statutory interest provision. The Section is set out below with the provisions relevant to this Proceeding underlined:
Interest
33 (1) Subject to subsection 25 (4), the owner of lands expropriated is entitled to be paid interest on the portion of the market value of the owner's interest in the land and on the portion of any allowance for injurious affection to which the owner is entitled, outstanding from time to time, at the rate of 6 per cent a year calculated from the date the owner ceases to reside on or make productive use of the lands. R.S.O. 1990, c. E.26, s. 33 (1).
(emphasis added)
11Injurious Affection, where land is taken, is defined in s. 1(1)(a) of the Act. The Section is set out below with the provisions relevant to this Proceeding underlined:
"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.
(emphasis added)
12Counsel for the Respondent submits that the Legislature expressly intended to exclude "business disturbance" from the entitlement to interest under s. 33(1) of the Act. The reference to business disturbance is cited by Counsel for the Respondent from the Report of the McRuer Commission (Report of the Law Reform Commission on the Basis for Compensation on Expropriation, 1967, Chapt. 6, at p. 51) (the "McRuer Report"). Counsel for the Respondent submits that business losses are a form of disturbance damages, on which no interest is payable under the Act, and that business losses should not be carved out from this prohibition by relying on the definition of injurious affection. Counsel further submits that it is illogical that the same loss should, if characterized as a disturbance damage, attract no interest, but if characterized as injurious affection, attracts interest. Counsel for the Respondent continues that it is the clear intention of the Act to exclude business losses from the entitlement to interest, and that to allow interest on business losses would undermine the clear intentions of the Legislature to exclude disturbance damages from the entitlement to interest under s. 33(1) of the Act and the fundamental distinction between disturbance damages, including business losses, and market value.
13Counsel for the Respondent cites the Decision of the former Land Compensation Board ("LCB") in Simpson v. Ontario Hydro (1977) 1977 CarswellOnt 1817 (L.C.B.); affirmed 1979 CarswellOnt 1583 (Ont. Div. Ct.) ("Simpson"), as authority for the proposition that, for interest to be payable on awards for injurious affection, the claim must relate to market value. Counsel for the Respondent submits that in Simpson, the LCB refused to allow interest on a claim for personal and business damages, claimed as injurious affection, on the basis that interest is payable on damages for injurious affection if, and only if, the claim relates to market value. The expropriating authority unsuccessfully appealed the decision to Divisional Court, but the Claimant did not appeal the refusal to award interest.
14The Tribunal notes that the claims advanced in Simpson dealt, inter alia, with the costs of relocating the Claimants' dwelling away from a hydro transmission tower. The costs of moving the home were allowed by the LCB as personal damages constituting damages for injurious affection. The Tribunal determines that Simpson is distinguished from the instant case on its facts, as the Simpsons' home had not yet been moved at the time of the Hearing before the LCB and the costs of doing so had not yet been incurred. The LCB in its Decision in Simpson, disallowed interest on losses constituting injurious affection which were yet to be incurred by the Claimants. That is very different from the situation in this Proceeding, where the Claimant suffered on-going business losses which accrued over a period of more than two years, and which constituted damages for injurious affection.
15The Tribunal disagrees with the Respondent's submission that the distinction between disturbance damages and market value precludes the payment of statutory interest on business losses, and with the Respondent's submission that business loses are a category of disturbance damages. The relevant provisions of the Act make it clear that claims for damages for disturbance and claims for business losses are separate and distinct claims.
16Section 18 of the Act provides for the payment of an "Allowance for Disturbance". Section 18(1) of the Act provides for compensation for disturbance for owners other than tenants and is therefore not engaged in the instant case where the Claimant was a commercial tenant. Section 18(2) provides for compensation for a residential or commercial tenant's relocation costs where the tenant occupies the expropriated lands. Read in its entirety, the types of disturbance for which compensation is provided by s. 18(2) concerns the need for residential and commercial tenants to relocate from lands which have been expropriated. The section makes no reference to business losses from the operation of the business, such as the on-going, accruing losses found by the Tribunal to have been endured by the Claimant in this case:
Allowance for disturbance
Owner other than tenant
18 (1) The expropriating authority shall pay to an owner other than a tenant, in respect of disturbance, such reasonable costs as are the natural and reasonable consequences of the expropriation, including,
(a) where the premises taken include the owner's residence,
(i) an allowance to compensate for inconvenience and the cost of finding another residence of 5 per cent of the compensation payable in respect of the market value of that part of the land expropriated that is used by the owner for residential purposes, provided that such part was not being offered for sale on the date of the expropriation, and
(ii) an allowance for improvements the value of which is not reflected in the market value of the land;
(b) where the premises taken do not include the owner's residence, the owner's costs of finding premises to replace those expropriated, provided that the lands were not being offered for sale on the date of expropriation; and
(c) relocation costs, including,
(i) the moving costs, and
(ii) the legal and survey costs and other non-recoverable expenditures incurred in acquiring other premises. R.S.O. 1990, c. E.26, s. 18 (1).
Tenant
(2) The expropriating authority shall pay to a tenant occupying expropriated land in respect of disturbance so much of the cost referred to in subsection (1) as is appropriate having regard to,
(a) the length of the term;
(b) the portion of the term remaining;
(c) any rights to renew the tenancy or the reasonable prospects of renewal;
(d) in the case of a business, the nature of the business; and
(e) the extent of the tenant's investment in the land. R.S.O. 1990, c. E.26, s. 18 (2).
17While the definition of Disturbance Allowance in s.18 makes no reference to business losses, compensation for business losses arising from the need to relocate are specifically provided for in s.19 of the Act, which makes no reference to damages or an allowance for disturbance:
Business on expropriated land
Business loss
19 (1) Where a business is located on the land expropriated, the expropriating authority shall pay compensation for business loss resulting from the relocation of the business made necessary by the expropriation and, unless the owner and the expropriating authority otherwise agree, the business losses shall not be determined until the business has moved and been in operation for six months or until a three-year period has elapsed, whichever occurs first. R.S.O. 1990, c. E.26, s. 19 (1).
Good will
(2) The Tribunal may, in determining compensation on the application of the expropriating authority or an owner, include an amount not exceeding the value of the good will of a business where the land is valued on the basis of its existing use and, in the opinion of the Tribunal, it is not feasible for the owner to relocate. 2017, c. 23, Sched. 5, s. 32.
Section Amendments with date in force (d/m/y)
2017, c. 23, Sched. 5, s. 32 - 03/04/2018
18Notwithstanding the view expressed in the McRuer Report, the Tribunal rejects the Respondent's argument that it was the "clear intention of the legislature" that business losses should not attract statutory interest, and finds that the intent of the legislature is indeed clear from the wording of s.33(1), that being if business losses constitute damages for injurious affection within the meaning of s. 1(1)(a)(ii), including ongoing, accruing losses, statutory interest will be payable at the statutory rate. The applicable provisions read together simply state that:
… the owner of lands expropriated is entitled to be paid interest … on the portion of any allowance for injurious affection to which the owner is entitled, outstanding from time to time.
19The Tribunal agrees with the submission of Counsel for the Respondent, consistent with the LCB Decision in Simpson, that to award interest on the business losses before they were actually incurred, would result in the overcompensation of the Claimant. In this case, overcompensation would be the result if interest was to run from the date that the Plan of Expropriation was registered.
20The alternative submission of Counsel for the Respondent is that if interest is to be allowed, it should only begin to run at the end of the loss period in March 2020. In the Tribunal's view, this is not reasonable given that the Claimant's business losses began to accrue in October 2017, were ongoing, and continued to accrue until March 2020. The Tribunal prefers the second alternative submission of Counsel for the Claimant that interest be calculated from the beginning of each of the loss periods referred to in the evidence of the Claimant's business loss expert, Mr. Stulberg, and the Tribunal so finds.
Conclusion
21The Tribunal finds that read together, ss.33(1) and 1(1)(a)(ii) provide that business losses 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, constitute damages for injurious affection, and that statutory interest is to be paid on the portion of any allowance for injurious affection, outstanding from time to time, calculated from the date when such damages were incurred. It follows that statutory interest is to be paid on damages for injurious affection comprised of business losses, and the Tribunal so finds.
22The Tribunal finds that statutory interest is to be calculated on the amount of the Claimant's business loss outstanding at the end of each of the loss periods, minus the saved costs, as described in the evidence of Mr. Stulberg given at the Hearing on the Merits, as summarized in the table below:
| Period | Dated | Business Loss less Saved Costs |
|---|---|---|
| Loss Period #1 | October 2017 – February 2019 | $216,992.00 |
| Loss Period #2 | March 2019 – July 2019 | $173,244.00 |
| Loss Period #3 | August 2019 – March 16, 2020 | $181,656.00 |
| Total | October 2017 – March 16, 2020 | $571,891.00 |
23The Tribunal finds that statutory interest calculated at the rate of six percent per annum totals $190,170.52 to April 19, 2024, and that statutory interest continues to accrue on a per diem basis in the amount of $94.01 from April 20, 2024, to the date of payment.
Order
24THE TRIBUNAL ORDERS THAT:
a. The Respondent pay to the Claimant the sum of $190,170.52 for interest pursuant to Section 33(1) of the Expropriations Act, plus a sum of $94.01 per diem calculated from April 20, 2024, to the date of payment.
25So 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.