747926 Ontario Limited et al. v. Upper Grand District School Board (formerly known as the Wellington County Board of Education) [Indexed as: 747926 Ontario Ltd. v. Upper Grand District School Board]
51 O.R. (3d) 25
[2000] O.J. No. 3933
Court File No. 835/99
Ontario Superior Court of Justice
Divisional Court
MacFarland, Lang and Ground JJ.
October 5, 2000
Expropriation -- Compensation -- Disturbance damages -- Developer's loss of profit recoverable as disturbance damages -- Disturbance damages not limited to damages to the expropriated lands -- Expropriations Act, R.S.O. 1990, c. E.26.
An award for damages for disturbance as a result of an expropriation under the Expropriations Act is not limited to damages to the expropriated lands and may include compensation for the loss of a developer's profit with respect to adjoining lands.
APPEAL from a decision of the Ontario Municipal Board.
Cases referred to Bersenas v. Ontario (Minister of Transportation and Communications) (1984), 31 L.C.R. 97, 6 O.A.C. 102 (Div. Ct.); LaFleche v. Ontario (Minister of Transportation and Communications) (1975), 8 L.C.R. 77 (Ont. Div. Ct.); Toronto Area Transit Operating Authority v. Dell Holdings Ltd., 1997 400 (SCC), [1997] 1 S.C.R. 32, 60 L.C.R. 81, 142 D.L.R. (4th) 206, 206 N.R. 321, 7 R.P.R. (3d) 1, 36 M.P.L.R. (2d) 163, 31 O.R. (3d) 576n Statutes referred to Expropriations Act, R.S.O. 1990, c. E.26
Marc J. Somerville and John S. Doherty, for appellants. D. Bryan Holub and F. McCrae, for respondent.
The judgment of the court was delivered by
[1] MACFARLAND J.: (Orally) -- This is an appeal from a decision of the Ontario Municipal Board and its refusal to award the appellants disturbance damages. The appellants are owners and land developers of a residential subdivision known as the Southcreek Subdivision in the City of Guelph.
[2] Southcreek registered its Plan of Subdivision on June 6, 1996, and on July 31, 1996, the Upper Grand District School Board acquired a 7.86-acre parcel in the subdivision, identified as Block 22, for the construction of a public school.
[3] The evidence before the Board disclosed that the developer wished that if a school was to be located on the subdivision lands, that it be located elsewhere than Block 22. It had been the developer's intention to market lots which would be located in Block 22 in the first phase of the development. The School Board could not be persuaded to locate the school elsewhere and eventually the developer abandoned its resistance and agreed to the School Board's selected location at Block 22.
[4] The Board and the developer agreed that the value of the school site, if not agreed upon, would be the subject of an arbitration for quantum under the Expropriations Act, R.S.O. 1990, c. E.26. It is from that proceeding that the within appeal and cross-appeal are taken.
[5] The developer sought "lost developer's profit" as disturbance damage, and the Board refused to award it. The parties are agreed that in the event the appellant developers are successful in the appeal and the cross-appeal is dismissed, the quantum to which the appellant is entitled is $437,000.
[6] In our view, the issue in this appeal is resolved by applying the principles enunciated by the Supreme Court of Canada in Toronto Area Transit Operating Authority v. Dell Holdings Ltd., 1997 400 (SCC), [1997] 1 S.C.R. 32, 60 L.C.R. 81. In Dell, Cory J., writing for the majority, at p. 88 [pp. 44-45 S.C.R.], said:
The expropriation of property is one of the ultimate exercises of governmental authority. To take all or part of a person's property constitutes a severe loss and a very significant interference with a citizen's private property rights. It follows that the power of an expropriating authority should be strictly construed in favour of those whose rights have been affected.
[7] Further, at p. 89 [p. 45 S.C.R.]:
Further, since the Expropriations Act is a remedial statute, it must be given a broad and liberal interpretation consistent with its purpose. Substance, not form, is the governing factor.
[8] Further, on that same page [p. 46 S.C.R.]:
It follows that the Expropriations Act should be read in a broad and purposive manner in order to comply with the aim of the Act and to fully compensate a land-owner whose property has been taken.
[9] At p. 90 [p. 47 S.C.R.]:
Indeed, the overriding objective of the entire Act is to provide fair and proper indemnity for the owner of the expropriated land.
[10] Further, down the same page [pp. 47-48 S.C.R.]:
The words of the section should be given their natural and ordinary meaning in the context of the clear purpose of the legislation to provide fair indemnity to the expropriated owner for losses suffered as a result of the expropriation. In Laidlaw, supra, Spence J., on behalf of the Court, attached particular importance to three factors; first, the legislative intent to provide indemnity for losses suffered; second, that the right to disturbance damages is conferred in broad, inclusive language and, third, that the legislature chose to illustrate, but not to define the term "disturbance [damages]".
[11] Further, at the same p. 91 [p. 48 S.C.R.]:
Thus it is clear that the Act should be interpreted in a broad, liberal and flexible manner in considering the damages flowing from expropriations.
[12] At p. 92 [pp. 49-50 S.C.R.]:
The Authority contended that disturbances damages are only available if they arise in relation to the expropriated land itself and not to any adjoining land which the owner retained after the expropriation. I cannot accept that position. There is nothing in the words of the section to indicate that there should be such a restriction imposed on those disturbance damages which can accurately be described as the natural and reasonable consequences of an expropriation. If it is a reasonable and natural consequence of the expropriation that the owner experiences losses with regard to the remaining land then this, just as much as losses relating solely to the expropriated land, must come within the definition of disturbance damages. If it had wished to do so, the legislature could have limited disturbance damages to the expropriated land. However it chose to enact an open-ended and flexible definition. This was appropriate in legislation whose aim was to provide reasonable compensation for the losses flowing from the act of expropriation.
[13] We note that the court cited, with approval, the decision of Donnelly J. in LaFleche v. Ontario (Minister of Transportation and Communications) (1975), 8 L.C.R. 77 (Ont. Div. Ct.), where disturbance damages were awarded on the basis of a loss of profits. In this case, the land development of the expropriated parcel was at the time of the expropriation on July 31, 1996, virtually complete. The parcel was ready to be sold to a builder or builders for the construction of residential housing. Indeed, the appraiser, retained by the School Board, described this state of readiness in his report in the following language:
The lands are at a stage of imminent development.
[14] The evidence before the Board disclosed that there was a strong market for subdivision lots in this area. A sell-out of the lots was virtually guaranteed and as such the appellant was almost certain to recover its profit. All profit had been deducted by both appraisers in their approach, the cost of development approach, to valuing the land.
[15] In order to fully and fairly compensate the owner on the facts of this case, the profit, which was a virtual certainty, had to be brought back into the equation as disturbance damages. To do otherwise would be to unfairly deprive the land developer of the money he would have had but for the expropriation.
[16] The three cases relied on by the respondent precede the Dell Holdings case and in any event are distinguishable on their facts. Specifically, the land in those cases was nowhere near the completed stage of the land which is in issue before us today.
[17] In our view, the Board erred in law in denying the claim for loss of developer's profit.
[18] This disturbance damages and their finding in this respect must be set aside.
Cross-Appeal
[19] The only legal issue raised by counsel for the School Board was estoppel and, in our view, he has failed to establish any representation, promise or assurance and the argument cannot succeed. All of the other grounds for the cross-appeal are founded in challenges to the Board's findings on factual and evidentiary matters. In our view, counsel has failed to establish that any of such findings constituted manifest error or any misapprehension of the evidence. In this respect, see Bersanas v. Ontario (Minister of Transportation and Communications) (1984), 31 L.C.R. 97 at p. 101, 6 O.A.C. 102 (Div. Ct.). In all other respects, in our view, the decision of the Board is correct.
[20] The endorsement on the Appeal Book is as follows:
For reasons given this day, the appeal is allowed. The decision of the Board wherein it refused to award the Appellant disturbance damages is set aside and in its place, disturbance damages are awarded in the sum of $437,000.00 -- the figure to which counsel have agreed. The Appellant is entitled to interest on the sum at the rate of 6 per cent per annum from July 31, 1996. The Appellant is entitled to its costs of the appeal on a solicitor and client scale to be assessed.
[21] On the Cross-Appeal Book, which is now named as such:
The Cross-Appeal is dismissed.
For reasons given the Cross-Appeal is dismissed. The Respondent by Cross-Appeal is entitled to its costs on a solicitor and client scale to be assessed.
Order accordingly.