COURT OF APPEAL FOR ONTARIO

CITATION: SEP Holdings Limited v. Cambridge (City), 2014 ONCA 907

DATE: 20141218

DOCKET: C57263

Weiler, Feldman and Benotto JJ.A.

BETWEEN

SEP Holdings Limited

Appellant (Plaintiff)

and

The Corporation of the City of Cambridge

Respondent (Defendant)

Eric K. Gillespie and Graham Andrews, for the appellant

James H. Bennett and Ross Weber (student-at-law), for the respondent

Heard: December 11, 2014

On appeal from the judgment of Justice Patrick J. Flynn of the Superior Court of Justice, dated May 17, 2013.

ENDORSEMENT

[1] The issues on this appeal are whether the trial judge erred in dismissing the appellant’s claim for damages and in awarding the amount of costs he did.

[2] SEP Holdings owned a piece of land in Cambridge, Ontario on which it had a strip mall. In 2000, SEP applied to the City for approval to construct a further development on an unused portion of the land at the back. SEP’s neighbour was a facility in which the City of Cambridge stored winter road salt. Testing of the groundwater under the proposed development revealed that the road salt had contaminated the groundwater. Construction was delayed because of the contamination. The City admitted liability for reasonable damages flowing from the contamination. The quantum of damages was the sole issue at the trial.

[3] The City’s Site Specific Risk Assessment (SSRA) found no significant impacts were anticipated on account of the elevated levels of sodium chloride in the groundwater because the groundwater was not to be used for drinking purposes. The SSRA was accepted by the Ministry of the Environment in June of 2003 and SEP could have gone ahead with the development it had proposed at that time. It did not do so. In 2004, SEP issued a statement of claim for damages.

[4] At trial, SEP argued it intended to build a lucrative, four-storey medical office building on its land, complete with underground garage. It could not do so after June 2003 because the City would not give it a satisfactory indemnification in the event that the groundwater of downstream owners was contaminated by the digging necessary to build the underground garage.

[5] In 2006, another developer built a medical office building nearby and the market for this development no longer existed. The evidence at trial was that it is not customary to build underground parking in the City of Cambridge. The newly built medical office building was no exception.

[6] At trial, Mr. McCash, SEP’s property manager, testified that SEP never intended to build the development originally proposed to the City and always wanted to build the medical office building with underground parking. He testified, however, that in 2009, SEP had made a decision not to proceed with developing the property as a medical office building and that it was now considering a mixed-use condominium development that was either eight stories or 16 stories high. This proposed change in use had not been disclosed on discovery or prior to Mr. McCash’s testimony at trial. The trial judge further found that Mr. McCash’s evidence respecting the condominium project was contradicted by the evidence of another witness for the appellant, Mr. Tadros, who had prepared conceptual schematics only for a seven-storey condominium.

[7] The trial judge totally rejected Mr. McCash’s evidence with one exception, his evidence that SEP was no longer interested in developing the property as a medical office building. The appellant submitted in oral argument that the trial judge was not entitled to treat this aspect of Mr. McCash’s evidence differently and that he ought to have rejected it as well. We disagree. A trial judge is entitled to accept some, all or none of the evidence of a witness. That is what the trial judge did here. The trial judge’s findings respecting Mr. McCash’s credibility were open to him on the evidence.

[8] The appellant also submits that the trial judge erred in excluding SEP’s proposed expert evidence. The trial judge conducted a voir dire with respect to the evidence of one of the experts, Mr. Uba, whose credentials were unchallenged. He observed that Mr. Uba was not going to testify as to the highest and best use of the land nor as to its unimpaired fair market value as opposed to its impaired value. Mr. Uba’s proposed evidence was with respect to the value of a four-storey medical office building with two levels of underground parking. His evidence, like that of the other experts SEP proposed to call, was based on information from Mr. McCash that SEP had actually intended to build such a building.

[9] Since all of the expert opinion evidence of Mr. Uba was based on information provided by Mr. McCash, which the trial judge rejected, the trial judge was entitled to exercise his discretion not to hear the expert opinion evidence. Nor did he err in excluding the opinion evidence of Mr. Dybvig because it, too, had no accepted factual foundation. In these circumstances, the trial judge’s exercise of discretion to exclude the expert evidence discloses no error in principle.

[10] The appellant’s entire theory of damages was based on its alleged actual loss of the opportunity to construct the four-storey medical office building with underground parking. The trial judge was entitled to conclude, as he did, that SEP did not prove on the balance of probabilities that it was ever going to build such a building or that there existed “any real plan to build anything with underground parking that would penetrate the water table.”

[11] The trial judge observed that while it was reasonable to assume that SEP actually incurred some damages as a result of the salt contamination, SEP had chosen not to attempt to prove any conventional damages for environmental impairment.

[12] Having rejected the theory as to damages put forward by the appellant, namely, that it was going to construct a development that would have penetrated the water table, the trial judge held he had no evidence before him on which he could award damages. He commented that it was open to SEP to call evidence to establish a loss due to the delay in being able to proceed with the development of the property. It could have also called evidence to show that the value of the excess lands had been reduced by the salt contamination or based on stigma. It chose not to do so and the trial judge was not prepared to speculate as to what such damages might have been.

[13] In oral argument the appellant did not dispute the finding that no alternate theory of damages had been advanced. Instead, the appellant submitted that the trial judge should have assessed damages for the medical office building and heard the expert evidence as to what such damages amounted to. For the reasons given above, we have rejected the appellant’s submission. We also note that the trial judge further found that the plaintiff took no steps to mitigate its damages.

[14] In the particular circumstances of this case, the trial judge did not err in coming to the conclusion he did and in dismissing the action.

[15] Although the appellant also appealed the trial judge’s award respecting costs on the basis that the amount was unreasonable and that the trial judge did not take into consideration factors such as the fact that the City had served a notice of expropriation, we see no error in principle on the part of the trial judge. Before the trial judge, the appellant did not contest the hours claimed by the City nor the disbursements which totaled $231,000. The trial judge gave effect to the offers of settlement that were made by awarding partial indemnity costs to the date of the offer and substantial indemnity costs thereafter. We see no error in principle in his doing so. The appeal as to costs is dismissed.

[16] The costs of the appeal are payable to the respondent. Counsel have agreed that those costs should be fixed at $18,000 inclusive of disbursements and all applicable taxes.

“K.M. Weiler J.A.”

“K. Feldman J.A.”

“M.L. Benotto J.A.”