Ontario Superior Court of Justice Divisional Court

Court File No. 17/05

Date: 2006-01-26

Aston S.J., Greer and Swinton JJ.

Counsel:

Lee A. Pinelli and Amanda Jackson, for appellant, Minister of Transportation.

Robert G. Ackerman, for respondent, Phyllis L. Gillespie by her litigation guardian, Diane Nelson.

[1] By the Court:—The Minister of Transportation for the Province of Ontario (the "Minister") appeals from the Decision of the Ontario Municipal Board (the "Board") issued the 15th day of December 2004 [86 L.C.R. 113]. In that Decision, the Board determined that the Claimant, Phyllis Gillespie (the "Claimant"), was entitled to a payment of $1,110,348 as a result of the Minister having expropriated approximately 7.3977 acres of the Claimant's land located on the north side of Innisfil Beach Road, east of Highway 400, near Barrie, Ontario.

[2] The issue raised by the Minister, on this Appeal, is very focused and discrete. Did the Board err in deducting certain development costs of $518,383 and delay costs of $113,961 from the "after value" of the Claimant's remaining land after the expropriation took place, to come up with a net "after value" of $789,652. In practical terms, the Minister is simply appealing the quantum of compensation awarded to the Claimant, arguing that she should be awarded only $623,121.00.

Some background facts

[3] The Claimant's land consisted of approximately 39 acres and was rectangular in shape. It abutted a former C.N.R. rail spur line at the northerly limit and fronted on the Innisfil Beach road at the southerly limit of the land for approximately 1,000 feet, when the expropriation took place. The expropriated land was taken from the southerly 300 feet of that part of the acreage to construct a parking lot and service road known as the Industrial Park Road.

[4] The land remaining, after the expropriation, is approximately 31.023 acres, and it no longer abuts the Innisfil Beach Road. Thus, the most valuable, or "highest use", part of the Claimant's land was expropriated by the Minister. It was the only part to have access to a roadway. The Board recognizes this in its Decision.

[5] The Claimant, in her original application before the Board, had sought $1,262,678 for the taking of the land plus $115.22 per day for the temporary working easement. The Minister, on the other hand, only estimated the total loss in property value at $200,000. The parties were therefore always extremely far apart in how each determined the expropriated land should be valued.

[6] The hearing before the Board took four and one-half days, with evidence being given by engineers, land use planners and appraisers for each of the parties. Under the Town of Innisfil's Official Plan, the lands were designated as Light Industrial/Commercial use. The land taken was also the land which had the "greatest exposure to Highway No. 400", the Board found. It therefore required the highest level of development control.

[7] The Board gave a detailed and comprehensive analysis in how it came to its Decision. It found, on p. 4 of the Decision [p. 116 L.C.R.], that the area of the taking "...should be valued as commercial land with visual exposure to an arterial road and Highway 400 but restricted to vehicular access being provided at the most easterly edge of the subject property opposite the existing Commercial Park Drive to the south". The Board further noted that each party's appraiser employed a "before and after" approach in determining the market value resulting from the taking. The Minister's appraiser valued the lands before the taking at $1,900,000 and the Claimant's appraiser at $1,927,934. The Board found that there was no injurious affection to the Claimant's remaining lands. Therefore, it attributed no value to any advantage to the remaining land derived from the development scheme, in accordance with s. 23 of the Expropriations Act, R.S.O. 1990, c. E.26 (the "Act").

[8] The Board then held that the estimated market value of the commercial frontage lands taken by the Minister amounted $150,000 per acre before considering development costs and delay costs. However, the Board also took into account the development costs estimated to facilitate the development of the commercial frontage lands, in reaching the conclusion that the fair market value of the lands before the taking was $1,900,000.

[9] The Board found the estimated market value of the remaining 31.6 acres should be $1,422,000 (based on $45,000 per acre) before considering development and delay costs.. At p. 8 of its Decision the Board says [p. 120 L.C.R.]:

Ignoring the scheme, the Board finds that the same "before the taking" development costs of $518,383 and time delay for construction would apply resulting in an estimated "as is" market value of $24,989 per acre or $789,652 ($1,422,000 less $518,383 for development costs and less $113,961 for delay) for the total remaining lands.

The Board then found that the difference between the market value before the taking at $1,900,000 and the market value after the taking at $789,652 equals $1,110,346.

The Minister's Position

[10] The Minister now concedes that the taken land is worth more than the value it originally submitted before the Board. In the Order the Minister is asking this Court to make, on the Appeal, it says that the amount of $623,121 is the appropriate compensation. The calculation is set out in Scenario #2 in Schedule D of the Appellant's Factum.

The Standard of Review

[11] Both parties agree that the standard of review applicable to decisions of the Board is one of correctness. In Dell Holdings Limited v. Toronto Area Transit Operating Authority, 1997 400 (SCC), [1997] 1 S.C.R. 32, 142 D.L.R. (4th) 206, 60 L.C.R. 81, Cory J. set out at p. 60, that the standard of review is correctness, in that the Board must be correct when it reaches its decision. He adopted the wording used by the Court previously in Pezim v. British Columbia (Superintendent of Brokers), 1994 103 (SCC), [1994] 2 S.C.R. 557 at pp. 589-90, 114 D.L.R. (4th) 385, as follows:

The central question in ascertaining the standard of review is to determine the legislative intent in conferring jurisdiction on the administrative tribunal. In answering this question, the courts have looked at various factors. Included in the analysis is an examination of the tribunal's role or function. Also crucial is whether or not the question goes to the jurisdiction of the tribunal involved.

[12] In Dell, supra, the Court notes that under the Act, there is an appeal as of right to the Divisional Court on questions of law or fact or both. The Court may refer the matter back to the Board for a rehearing or it may make any decision or order that the Board has the power to make. Further, the Court says that since there is no privative clause applicable to decisions of the Board and since there is a wide power of appeal, and no particular expertise involved in the decision, no particular deference should be accorded to the decision of the Board. Therefore, the decision of the Board must be correct.

[13] In Dell, supra, the issue before the Court was also expropriation of land. There the Court noted that the Act is a remedial statute, and must be given a broad and liberal interpretation. There, the issue was a pure question of law. In other cases under the Act, the courts have held that the expertise of the Board in the Market Valuation process merits deference, provided the decision is reasonable (See: 747926 Ontario Ltd. v. Wellington (County) Board of Education (2001), 2001 24126 (ON CA), 74 L.C.R. 241 at p. 249, 206 D.L.R. (4th) 528 (Ont. C.A.)).

[14] In this case, we agree with counsel that the standard is correctness.

The applicable statutory provisions

[15] The Board, in its Decision, carefully examined the appropriate provisions of the Act, in reaching the conclusion that it did on the quantum the Minister was to pay to the Claimant. In accordance with Section 13 of the Act, when land is expropriated, the expropriating authority shall pay the owner, "...such compensation as is determined in accordance with this Act." The amount so payable under the Act, is determined under section 13(2), and is based upon the following factors, namely, the market value of the land, the damages attributable to disturbance, damages for injurious affection and any special difficulties in relocation. Under Section 14(1) of the Act, the market value is the amount the seller might be expected to realize if the land were sold on the open market by a willing seller to a willing buyer. This means that the expropriating authority is expected to pay fair market value, as if the lands were purchased on the open market.

[16] Section 14(4) states that in determining the market value of the land, "no account shall be taken of...", the following three factors:

(a) the special use to which the expropriating authority will put the land;

(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; or

(c) any increase in the value of the land resulting from the land being put to a use that could be restrained by any court or is contrary to law or is detrimental to the health of the occupants of the land or to the public health.

[17] Section 23 of the Act is very important when examining what happens when injurious affection occurs when land is expropriated. It reads:

23. The value of any advantage to the land or remaining land of an owner derived from any work for which 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.

The Board correctly held that "betterment" did not come into play, as it found there was no injurious affection to the remaining land.

[18] [18] Since not all of the Claimant's land was taken, the Board took into account what the value of the remaining land would be, after the taking. However, the Board says on pp. 7 and 8 of its Decision, that the development scheme must be ignored in determining market value since betterments can only be offset against injurious affection in section 23, and since no injurious affection took place, no advantage can be set off.

[19] [19] Market value was determined by the Board using a before and after approach. In this particular case the lands taken had a market value independent from the remaining lands. Given that fact, and the conclusion that there was no injurious affection, the "before and after" valuation method was not required. Both sides to the dispute, however, invited the Board to employ the "before and after method". We cannot say the Board was wrong in acceding to their request.

[20] [20] The Minister first submitted that the Board improperly ignored the increased value of $55,000 per acre to the 7.3977 acres of land that newly fronted on the Industrial Park Road in the "after" scenario. Industrial Park Road effectively transforms some of the back acreage formerly worth $45,000 per acre, into more valuable property, now worth $100,000 per acre.

[21] [21] The Minister contends that subsection 14(4)(b) applies only to the market value of the lands expropriated. The Claimant disagrees with this interpretation. Counsel for the Appellant conceded before this Court the "betterment" of $55,000 per acre should be ignored in assessing the "after value" — that it is only relevant with respect to injurious affection compensation. However, he maintained the development costs of $518,383 and delay costs of $113,361 should not have been deducted from the "after" value. He submits that if the remaining land is notionally back acreage, worth only $45,000 per acre notwithstanding its frontage on Industrial Park Road, it is illogical to deduct notional developments costs without assuming development potential.

[22] [22] The Board sets out on p. 8 how it comes to the conclusion that the Claimant should be paid $1,110,348 for the expropriation of the land. The Board states that the statute clearly removes from the calculation the advantage that the Claimant received from not having to pay for the road as built. It then finds that [p. 120 L.C.R.]:

The same holds true for the benefit of the higher value afforded to lands once internal to the subject property but now exposed to the new road frontage as a result of the scheme.

The Board also finds that no blending or diluting of the lost market value resulted. It says the subject parcel is to be considered as one parcel with the same zoning and ownership both before and after the taking. We find the Board to be correct in this determination.

Analysis

[23] The Appellant's appraiser concluded that in the "after" scenario the commercial frontage lands had effectively "shifted" to occupy an equivalent 7.3977 acres on the north side of the new Industrial Park Road. The betterment of the remaining lands is only relevant if the compensation for the lands taken included a component for injurious affection. It does not. The betterment does nothing more than shield the expropriating authority from a claim for injurious affection.

[24] The Claimant is entitled to the same compensation whether or not there is a new access road in the development scheme. That is what is mandated by the combination of Section 14(4)(b) and 23 of the Act. Had the development scheme been the creation of a 7.3977 acre parking lot the Claimant would have had a claim for injurious affection in addition to a claim for the market value of the lands taken.

[25] The Appellant relies on the reasons as set out in Re Salvation Army, Canada East and Minister of Government Services (1986), 53 O.R. (2d) 704, 34 L.C.R. 193 (C.A.), and in particular, pp. 714 and 715 thereof for the proposition that advantages to the land from the scheme are to be ignored only in considering the "before" value. This case deals with injurious affection, not determination of market value. The Board, however, in the case before us, noted that there was no injurious affection to the Claimant's lands. At the bottom of p. 7 of the Decision and at the top of p. 8, thereof, the Board correctly stated [p. 120 L.C.R.]:

The scheme [under s. 23] must continue to be ignored regardless of the approach taken in determining the market value related to the expropriation as clearly set out in Subsection 14(4) of the Expropriations Act.

For the same reason, we find that the decision in Parks v. Ontario (Ministry of Transportation) (1995), 56 L.C.R. 166 (Ont. M.B.); affirmed (1997), 109 O.A.C. 1, 62 L.C.R. 252 (Ont. Div. Ct.), does not apply. That case dealt with injurious affection, as there were business losses caused by works for which the land was taken. In that case, there was also an issue because part of the land remaining was isolated from the other part of the land.

[26] It is the position of the Claimant that the Board's decision is correct and that no error was made by the Board in its calculations.

[27] The Claimant relies on the reasoning of the Alberta Court of Appeal in Kerr v. Minister of Transportation (1981), 1981 ABCA 9, 22 L.C.R. 179, 119 D.L.R. (3d) 386 (Alta. C.A.) at pp. 183 and 184, where the Court held that if a parcel of land is composed of homogeneous acreage and a strip is taken for a roadway, the only method in arriving at fair market value is to take the market value of the whole parcel and then attribute the per acre value to the acreage taken. The land in question was partly valued as highway commercial use and partly as a less valuable use. The strip expropriated was the more valuable highway commercial land, and given that this is the case, the Claimant says that she is entitled to compensation on the basis of its value as highway commercial land, notwithstanding that, after the taking, the land, which was formerly of less value then now abuts the new roadway built by the Ministry, has been converted into highway commercial land as a result of the taking.

[28] The Claimant says that Section 13 of the Act is a complete code, in that fair market value for the expropriated land must be paid. We agree with the Claimant that this case is not about injurious affection. It is a case of the proper compensation the Claimant should be paid for the lands taken.

[29] After we reserved on this Appeal, the Claimant's counsel wrote to the Court about a further case, which had come to his attention, and which he wished to put before the Court. The Board's counsel said that since the case dates back to 1973, it could have been put to the Court when the Appeal was heard. He further notes that it was not a "before and after" case and therefore would not assist the Court in reaching a decision.

[30] We agreed that counsel should be given the opportunity to put the case to us. He filed both a Supplementary Factum and a Supplementary Casebook, which included the 1973 case, Myway Investments Ltd. et al. v. Town of Burlington (1973), 4 L.C.R. 3, a decision of the Land Compensation Board, Ontario. In that case, the land was expropriated for a proposed street. The Board set out on p. 5 of its Decision, how s. 14(4), of the then Act (which subsection (a) is the same as the present Act and subsection (b) the same in substance, with a few words added) should be applied. There, the Board disregarded the existence of the new street in assessing the market value of the land taken. With respect to subsection (b), the Board said no account is to be taken of the construction of the street in determining the market value of the land expropriated, as is the case before us.

[31] The Minister says that Myway, supra, should not be applied in the case before us as it is a case where the valuing of the lands expropriated was the Direct Comparison Approach to Value, as opposed to the "before and after" approach. Notwithstanding this, the principles as applied by the Board under Section 14 of the Act, remain the same.

[32] Counsel for the Claimant also included a recent decision of the Board, Shypka Estate v. Ontario (Management Board of Cabinet) (2005), 87 L.C.R. 56. In that Decision, the Board at p. 70 sets out the general principles of compensation to be applied under the Act, noting that the Act should be read in, "...a broad and purposive way." We agree, in the case before us, that the Board did just that, and correctly applied the "before and after" approach in determining value. It did not err in deducting development costs and delay costs from the "after value".

Conclusion

[33] We find that the Decision of the Board is correct, for the reasons as noted herein. The Board in no way erred in reaching that Decision. The Appeal is therefore dismissed.

[34] There is, however, the issue of Costs both before the Board and the Costs on the Appeal. The Claimant is entitled to both sets of Costs. Those of the appearance before the Board must be looked at in light of Section 32 of the Act. The Claimant's award by the Board by far exceeded the Ministry's Offer of $200,000. Those Costs should be sent back to the Board to determine.

[35] As for the Costs of the Appeal before us, if the parties cannot otherwise agree on Costs, they shall make brief written submission to us within 30 days of these Reasons, the Claimant to have her submissions in within 20 days, the Appellant within 10 days thereafter, and if the Claimant wishes to make any Reply, within 5 days after that.

[36] Appeal dismissed.