Court File and Parties
CITATION: Gillespie v. Ontario (Transportation), 2007 ONCA 441
DATE: 2007-06-15
DOCKET: C45874
COURT OF APPEAL FOR ONTARIO
SHARPE, JURIANSZ JJ.A. and CHAPNIK J. (ad hoc)
BETWEEN:
PHYLLIS L. GILLESPIE by her Litigation Guardian, DIANE NELSON
Claimant (Respondent in Appeal)
- and -
MINISTER OF TRANSPORTATION
Respondent (Appellant in Appeal)
Counsel: Lee A. Pinelli and Julie Wilson for the appellant Robert G. Ackerman for the respondent
Heard: June 4, 2007
On appeal from the order dated January 26, 2006, with reasons reported at (2006), 207 O.A.C. 91, of the Divisional Court (Senior Justice David Aston, Justice Susan E. Greer and Justice Katherine E. Swinton.)
Reasons for Decision
BY THE COURT:
[1] This appeal concerns the compensation to be paid by the appellant Minister of Transportation ("Minister") for the expropriation of a portion of the respondent's lands. The respondent owned a 39 acre commercial and industrial property in the Town of Innisfill. The Minister expropriated approximately 7.4 acres of land, leaving the respondent with 31.6 acre parcel. The land was expropriated to construct a GO commuter parking lot. A service road was built on the expropriated property to provide access and services to the expropriated property. The service road also provides access and services to the remaining 31.6 acre parcel that would otherwise have been landlocked.
[2] Both parties called appraisers to provide evidence as to the market value of the expropriated land and both appraisers used a "before and after" approach to determine market value. This approach calculates the market value of the expropriated property by first determining the market value of the original 39-acre parcel, and then deducting from that value the market value of the remaining 31.6 acres.
[3] For the purposes of this appeal, both parties accept the findings of the Ontario Municipal Board ("OMB"), based upon the appraisers' evidence, as to the raw valuations for the various elements used to calculate the market value of the expropriated property.
[4] The initial "before" value is approximately $2.5 million. That value, however, assumes appropriate service road and watermain access. The estimated cost for development and delay damages attributable to building the service road and watermain access is $631,744, leaving a net before value of $1.9 million.
[5] The sole issue before us relates to the calculation of the "after" value of the remaining 31.6 acres. More precisely, the issue is the appropriate treatment of the development costs of $631,744 in relation to the remaining 31.6 acres.
[6] It is common ground that the initial "after" value of the remaining 31.6 acres is $1,828,873. The service road and watermain access, which was assumed to exist in the "before" scenario, was constructed by the Ministry after expropriation and contributes to the "after" value of the remaining lands.
[7] The Expropriation Act, R.S.O. 1990, c. E.26, provides, in ss. 14(4)(b) and s. 23:
14 (4) In determining the market value of land, no account shall be taken of,
(b) any increase or decrease in the value of the land resulting from the development or the imminence of the development in respect of which the expropriation is made or from any expropriation or imminent prospect of expropriation
- The value of any advantage to the land or remaining land of an owner derived from any work for which the land was expropriated or by which land was injuriously affected shall be set off only against the amount of the damages for injurious affection to the owner's land or remaining lands.
[8] Section 14(4)(b) excludes from consideration in the determination of the value of the land taken the benefit of the road and watermain access constructed by the Ministry. There was no injurious affection and therefore, pursuant to s. 23, the Minister is entitled to no credit for the value of the advantage to the remaining land derived from the access road and watermain. Accordingly the betterment attributable to the remaining 31.6 acres by reason of the existence of the improvements must be deducted from the initial "after" value. The value of the betterment attributable to the remaining 31.6 acres is $406,873.
[9] This brings us to the precise issue raised by this appeal, namely, are there other development and delay costs to be deducted from the "after" value?
[10] The Divisional Court agreed with the OMB that it was appropriate to deduct the full development and delay costs of $631,744 as well as the betterment of $406,873. This produced a net "after" value of $789,656, which, when deducted from the "before" value of $1.9 million, resulted in $1,110,344 as the appropriate compensation.
[11] The Minister submits that the Divisional Court and the OMB erred by, in effect"double-counting" the $631,744. The Minister submits that the only evidence as to development and delay costs to be deducted at this stage came from its expert, who testified that the appropriate figure was $145,121, calculated as the estimated cost of extending the watermain along the new frontage and a time delay of some three months. This would produce a net "after" value of $1,276,879, resulting in $623,121 as the appropriate compensation.
[12] As the value added or betterment to the remaining 31.6 acres attributable to the road and watermain access has already been factored into the "after" value, we can see no justification for deducting the full cost of achieving that betterment. We agree that this would amount to double-counting and that only the added costs directly attributable to extending the access to the remaining lands should be deducted.
[13] The respondent submits that although the "before and after" approach had been used by both parties, it is possible to derive from the evidence an independent value of $150,000 per acre for the expropriated lands. This would result in a market value more or less corresponding to that found by the OMB and upheld by the Divisional Court. We disagree with that submission. It is clear to us that the evidence and the finding of the OMB that the market value of the expropriated lands is $150,000 per acre is premised on the assumption that the lands are properly serviced. It follows that to derive an independent market value it is necessary to deduct from the figure of $150,000 per acre the cost of providing the required services.
[14] In our view, to the extent that it is possible to derive from the evidence an independent value for the expropriated lands without following the "before and after" approach, such a value supports the Minister's position and not that of the respondent. By awarding the respondent the equivalent of $150,000 per acre for the expropriated lands, the OMB and the Divisional Court effectively arrived at a market value that ignores the development costs necessary to bring the expropriated property up to that market value.
[15] Both parties agree that the appropriate standard of review is correctness: see Toronto Transit Operating Authority v. Dell Holdings Ltd., 1997 400 (SCC), [1997] 1 S.C.R. 32.
[16] Accordingly we allow the appeal and reduce the compensation payable to the respondent to $623,121. The appellant is entitled to its costs before the Divisional Court and before this court, including the application for leave to appeal. We fix these costs in the amount of $40,000 inclusive of disbursements and GST.
"Robert J. Sharpe J.A."
"R. Juriansz J.A."
"Sandra Chapnik J. (ad hoc)"
RELEASED: June 15, 2007