CITATION: 1520658 Ontario Inc. v. Her Majesty The Queen, 2017 ONSC 4141
COURT FILE NO.: 07-CU-330088PD3
DATE: 20170705
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1520658 ONTARIO INC.
Plaintiff
– and –
HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF ONTARIO represented by the Minister of Transportation for the Province of Ontario
Defendant
Neal J. Smitheman and Tracy A. Pratt, for the Plaintiff
Ronald Carr, William MacLarkey, and Dominic Pollaj, for the Defendant
HEARD: May 24, 25, 26, 27, 30, 31, June 1, 2, 3, 6, 7, 8, 9, 10, 13, 14, November 28, 29, 30, 31, 2016
R.F. GOLDSTEIN J.
REASONS FOR JUDGMENT
I. INTRODUCTION...................................................................................................................... 3
II. FACTS....................................................................................................................................... 3
(a) Background.............................................................................................................................. 3
(b) The Chronology – Critical Dates and Events........................................................................... 6
(c) The Litigation Over the Validity of the Mining Claims........................................................... 9
(d) The Geology and the Location............................................................................................... 10
(e) The Neighbours....................................................................................................................... 11
III. ISSUES................................................................................................................................... 12
IV. ANALYSIS............................................................................................................................ 13
(a) Were The Mining Claims Expropriated?................................................................................ 13
i. The Plaintiff’s Argument: A Mining Claim is “Land”:....................................................... 13
ii. Analysis: A Mining Claim Is Not Land............................................................................. 17
iii. Conclusion: There Was No Expropriation and No Injurious Affection............................ 21
(b) Could A Permit Have Been Obtained Under the ARA?....................................................... 22
i. The Plaintiff Stakes Mining Claims..................................................................................... 22
ii. The MTO Commences Construction Through The Property.............................................. 24
iii. The Plaintiff Applies for Aggregate Permits..................................................................... 25
iv. The Plaintiff’s Purpose was to Obtain Compensation....................................................... 26
(c) No Permit Could Have Been Obtained Under the ARA....................................................... 31
i. Plaintiff’s Expert Regulatory Opinion................................................................................ 31
ii. Evidence of Tim Ruthenberg............................................................................................. 33
iii. Analysis: No Permit Could Have Been Obtained............................................................. 35
(d) Was The Property Downzoned?............................................................................................ 37
i. The Plaintiff’s Argument..................................................................................................... 37
ii. Analysis: The Downzoning Principle Does Not Apply...................................................... 39
(e) If there had been an Expropriation, What Was the Value of the Land?................................ 43
i. The Plaintiff’s Expert Valuation Opinion........................................................................... 44
Location and Access........................................................................................................... 44
Geology and Resource Estimate......................................................................................... 45
Markets, Prices, Demand.................................................................................................... 45
Valuation............................................................................................................................ 45
Conclusions by the Plaintiff’s Valuation Expert................................................................. 48
ii. The Defendant’s Expert Geological Opinion..................................................................... 49
iii. The Defendant’s Expert Valuation Opinion..................................................................... 50
iv. The Defendant’s Critique of the Plaintiff’s Valuation Expert.......................................... 51
v. The Defendant’s Critique of the Plaintiff’s Experts.......................................................... 54
vi. Analysis of Valuation........................................................................................................ 55
The Amount of Aggregate on the Property......................................................................... 55
The Regulatory Issues......................................................................................................... 56
Comparable Transactions................................................................................................... 56
Double Counting................................................................................................................ 57
Market Demand.................................................................................................................. 57
The Discount Rate.............................................................................................................. 58
Quality of the Resource...................................................................................................... 58
Conclusion Regarding the Plaintiff’s Expert Valuation Opinion......................................... 59
V.DISPOSITION......................................................................................................................... 60
VI. COSTS.................................................................................................................................... 60
I. INTRODUCTION
[1] There is potentially a lot of money to be made in rock. Aggregate, otherwise known to most people as Canadian Shield bedrock, is used to pave roads and highways. Good quality bedrock to make good quality asphalt can be valuable.
[2] In April 2003, representatives of the Plaintiff staked three mining claims on Crown land about 15 kilometers south of Sudbury, Ontario. The Defendant government, through the Ministry of Transportation, had other ideas for the land on which the claims were staked.[^1] (I will refer to those lands as “the Property” for the sake of clarity.) The provincial government, through the MTO, planned to build a 400-series highway through the Property. The lands were withdrawn from staking. Years later the Ministry of Natural Resources (which I will refer to as “MNR”) issued permits to the Plaintiff. The permits permitted the Plaintiff to mine aggregate from the Property. Because of the presence of the highway, however, the amount of aggregate that could be profitably mined was small.
[3] The Plaintiff brought an action against the Defendant. The Plaintiff claims that the Defendant essentially expropriated the Property. The Plaintiff claims that it suffered significant damages as a result.
[4] The claims were not patented. In my respectful view, the Expropriations Act does not apply to an unpatented mining claim where no permits have been issued.[^2] Given that finding, it follows that the Plaintiff cannot succeed. At the end of the day, the Plaintiffs are asking this Court for a windfall. For the reasons that follow, the action is dismissed.
II. FACTS
(a) Background
[5] Highway 69 is the southern route of the Trans-Canada Highway. Highway 69 runs north from Parry Sound. In the 1990’s, the MTO began the process of converting Highway 69 into a four-lane 400-series highway. The original route of Highway 69 ran to the west of the Property. In 1999, the MTO proposed a new alignment for the highway. An environmental assessment was conducted. The new route would have crossed the Property at the south-west tip. The MTO staked that route in 2001. On March 23, 2001, however, the MTO abandoned the route. A new route was eventually selected.
[6] In March and April 2001, a prospector named Gerald Hicks staked claims on the Property. Claims expire where no further assessment work is done. The Hicks claims expired on March 2, 2003.
[7] In February 2003, the MTO sent out a contractor to conduct survey work on the new alignment. The surveyors cut brush, drilled boreholes, and drilled survey stakes into the ground. Vegetation was cut along what would become the centre line of the new alignment. About six meters of brush was removed. Shortly after that, in April 2003, Peter Bull and Harold Cheley went out to the Property to stake new claims. That was about a month after the expiry of the Hicks claims.
[8] In 2003, the MTO began working on a new route for the highway. That new route would eventually take the four-lane highway right through the middle of the Property. In 2005, actual construction began on the new route. It was completed in 2009. The new Highway 469 is now a 4-lane highway and crosses the length of the Property roughly from the north-west to the south-east.[^3]
[9] In April 2005, the Plaintiff submitted applications for permits to mine aggregate from the property. The applications sought permission to mine aggregate from the entirety of the Property, notwithstanding the presence of the realigned Highway 69. The MNR is the issuing authority under the Aggregate Resources Act.[^4] As part of the evaluation process, the Plaintiff was required to consult with stakeholders. The MNR was also required to solicit comments both internally and from other government agencies, including the MTO.[^5] The MTO objected to the issuance of the permits for the entirety of the Property. Permits were not issued until January 2013. Between 2003 and 2013 are the critical events that form the factual background of this trial.
[10] This map was filed as an exhibit:[^6]
[11] The map formed part of the valuation report that the Plaintiff relies on. It is a geological map of the Property. The map originally came from Jorma Hanilla, a geologist. The Plaintiff hired Mr. Hanilla early in the process to do geological work on the Property. Don Hains of RPA, the Plaintiff’s valuation expert, included this map in his report.[^7] The map shows the route that the re-aligned Highway 69 took through the Property. It indicates the mining claims, and the areas where the Plaintiff eventually obtained permits to mine aggregate. It is a useful general illustration of the main features of the Property.
(b) The Chronology – Critical Dates and Events
[12] The following critical dates and events are a summary. I take them from the evidence, the litigation, and the Agreed Statement of Facts:
January 2003:
The MTO completes survey work on the Property. It cuts a centre line swath, places stakes every 25 meters, and stakes the outer boundaries of the realigned Highway 69.[^8]
February – March 2003:
The MTO uses heavy machinery on the Property for the purpose of digging bore holes in order to conduct geotechnical testing. The bore holes are dug for the purpose of determining whether the ground will bear the weight of pavement. The ground is for the placement of structures and foundations.[^9]
April 9-14, 2003:
Mr. bull and Mr. Cheley stake mining claims s-3016181, s-3016187, and s-3016188 respectively (collectively referred to as the “mining claims”) on behalf of the Plaintiff.
April 15, 2003:
The mining claims are recorded with the Ministry of Northern Development and Mines.
June 23, 2003:
Lands including the Property are withdrawn from staking the surface and mineral rights pursuant to Withdrawal Order W-SO-25-03.
April 7, 2004:
Mr. Cheley creates the first Site Plan in contemplation of an application for an Aggregate Permit.[^10]
July 20, 2004:
Crown Land Survey Plans P-3066-66 and P-3066-68 are deposited with the Minister of Natural Resources.
August 9, 2004:
Crown Land Survey Plans P-3066-66 and P-3066-68 are registered in the Sudbury Land Registry Office.[^11]
December 3, 2004:
The MTO asks for tenders for construction of the Highway 69 realignment.
May, 2005:
Construction of the realigned Highway 69 reaches the northernmost limit of the Property.
May 19, 2005:
The Plaintiff submits two applications for aggregate permits to the Minister of Natural Resources. One application is for the west side of the Property and one is for the East.[^12]
October 18, 2005:
Crown Land Survey Plan P-3066-73 is deposited with the Minister of Natural Resources.
October 31, 2005:
Crown Land Survey Plan P-3066-73 is registered in the Sudbury Land Registry Office.
July 16, 2006:
The MTO applies to the Superior Court for a declaration that the Plaintiff’s mining claims were invalid. The Plaintiff filed a cross-application. In January 2007, the applications were transferred to the Mining and Lands Commissioner (referred to as the “Commissioner”) for determination of the question.
March 26, 2007:
The Plaintiff issues a Statement of Claim.
October 14, 2008:
The Commissioner finds that the mining claims are valid.
October 16, 2009:
The Divisional Court dismisses the appeal from the Commissioner.
May 13, 2011:
The Ontario Court of Appeal dismisses the appeal from the Divisional Court.[^13]
January 7, 2013:
The MNR issues Aggregate Permit 625044 and Aggregate Permit 62045 to mine aggregate from portions of the Property.[^14]
(c) The Litigation Over the Validity of the Mining Claims
[13] Prior to this trial, the parties litigated the validity of the Plaintiff’s mining claims. The claims were upheld as valid.
[14] The genesis of the litigation is set out in paragraphs 12-14 of the Divisional Court’s decision:
On July 16, 2006, the MTO applied to the Superior Court of Justice for a declaration that the Company's mining claims were invalid; that the claims were staked on land that is in the actual use and occupation of the Crown pursuant to ss. 1(1) and 27(a) of the Act; and that if the Company's claims are valid, the Company is a tenant at will of the Crown and that the Crown can terminate the tenancy upon notice under s. 50 of the Act.
The Company cross-applied for dismissal of the application of the MTO; a declaration that the mining claims are validly staked; a declaration that the Company has a prior right to the use of the surface rights on the mining claims under s. 51(1) of the Act; a declaration that the MTO failed to comply with s. 51(6) of the Act before acquiring surface rights to the area encompassing the mining claims; and an order for compensation for damage caused by the MTO.
On January 22, 2007, Justice Low of the Superior Court of Justice, on consent of both parties, ordered a transfer of the proceedings to the Mining and Lands Commissioner.[^15]
[15] The Commissioner issued its decision on October 14, 2008. Whether the claims were valid depended on whether the Property was in the “actual use or occupation of the Crown”.[^16] The MTO argued that, pursuant to the Mining Act, Crown Lands in actual use or occupation of the Crown are not open for staking. The Commissioner determined that the MTO failed to meet its evidentiary burden. It was unable to show that the lands were in actual use or occupation because the final route of the realigned Highway 69 was not fully settled. The MTO was not yet ready to withdraw the lands for staking, although it did so shortly after the claims were staked. The subsequent withdrawal order did not affect the pre-existing mining claim.
[16] The Divisional Court reviewed the legislative scheme for staking mining claims. The Court also reviewed the meaning of the phrase “actual use or occupation of the Crown”. The Divisional Court found that the Commissioner was an expert tribunal. As long as its interpretation of its “home” statute was reasonable, there was no basis to interfere. In looking at the evidence and the interpretation of the Mining Act, the Commissioner’s interpretation and conclusions fell within an acceptable range of outcomes. The Court of Appeal upheld the Divisional Court’s decision.
(d) The Geology and the Location
[17] The geology of the Property – including the location, the type and quality of the rock, and the extractability – is critical. That is because all of those characteristics factor into the valuation of the aggregate resource (which I will deal with in more detail later in these Reasons). The location matters because the costs of moving rock are obviously very high. The type and of the rock matter because those characteristics dictate what it can be used for. The extractability is also important: how difficult is it to get to? How difficult is it to get out? Is there a legal route in and out or does one need to be built?
[18] The general location of the Property is undoubtedly attractive for an aggregate mine. It is located in the Township of Dill. Dill Township is in the Sudbury Mining District. The Property is located about 25 km south of the city of Sudbury. The Property is surrounded by other properties that have existing mining permits or licences. The Property is typical Canadian Shield: trees, water, and rocks.
[19] The Property is undulating. There are prominent ridges on either side of a water feature running north-east to south-west. Although there are some differences of opinion about the nature of the bedrock, it is generally made up of gneiss diorite to metagabbro with variable gneiss. What that means is that it is suitable to be used as aggregate for asphalt and other construction uses.
[20] Mr. Hannila, the Plaintiff’s geologist, prepared a geological report on the Property. He was on site from October 25 to December 15, 2004. He drilled holes at five locations on the property. He then blasted shallow pits at each of the five locations. Each of those locations provided test material. Mr. Bull was on site for part of that time.
[21] Mr. Hannila described the Property as having two major geological units: gneisses and mafic intrusives. The gneisses are made of fine to medium grained clastic sedimentary rocks. The mafic intrusives are made up of gneissic metagabbro on the west side of the property and gneissic diorite and gabbro on the east side of the property. There is no magnetic rock and no sulphites were noted. Mr. Hannila concluded that the rock on the Property had untested potential for crushed stone or aggregate production. He determined that samples needed to be tested to confirm the suitability of the rock.
[22] Trow Associates is a laboratory that tests rock samples. Mr. Hannila submitted two samples that he extracted to Trow for testing. Trow crushed the rock to 19mm in order to determine suitability for asphalt and other uses. Trow determined that, at that coarseness, the rock on the Property would meet the MTO guidelines with the exception of hot mix and superpave. Hot mix and superpave are high quality varieties of asphalt. Trow stated that additional blending and screening of the material would be required in order to meet the tolerances for that type of asphalt.
[23] Golder Associates was retained by the Defendant. Golder conducted a geological evaluation of the Property. According to Golder, the findings indicate, in layman’s terms, that the Property is made up of bedrock that is typically available in Ontario. As noted below, I accept that fact.
(e) The Neighbours
[24] There are several other mining properties in the area.[^17] The ownership, nature, and characteristics of these properties is significant because it bears on the valuation of the Property. The location and characteristics of these properties, especially the proximity to the Sudbury market, also bears on the valuation of the property. Some of these properties had licences, leases, or permits to operate mining operations. Some of them were expropriated as a result of the new highway.
[25] Various witnesses testified about their knowledge of these properties, some based on personal knowledge (Peter Bull, Harold Cheley, and Tim Ruthenberg) and some based on information received from others – primarily “bootstrapped” into evidence as a fact underlying expert evidence. Some of the information is admissible as business records. Notwithstanding that this information comes from a mix of direct and hearsay information, it was not challenged by either party – indeed both parties relied on it. The following summarizes the neighbouring properties:
• Alexander Centre Industries owns a parcel to the northwest of the Property (Property C[^18]). The southwest portion of that parcel borders the Property. It holds reserves of aggregate. There is no licence for that parcel.
• Marslen Investments (a subsidiary of Ethier Sand and Gravel Limited) owns a parcel directly north of the Property (Property H). It had a licence to extract resources but that licence was withdrawn as part of the Highway 69 expansion. Quartz and silica were mined from that parcel.
• To the north of Property H is another parcel owned by Alexander Centre Industries (Property D). That parcel is also an unlicensed aggregate reserve.
• To the east of Property D is a parcel that is also owned by Alexander Centre Industries (Property E). It has a permit to mine a maximum of 20,000 tons per year. It is primarily sand and gravel.
• To the east of Property E is another parcel owned by Alexander Centre Industries (Property F). It has a permit to mine 200,000 tons per year.
• To the direct north of Property F is a parcel owned by Ethier Sand and Gravel Limited (Property A). It has a permit to extract resource, primarily sand.
• Directly bordering Property A on the East is a parcel owned by Alexander Centre Industries Limited (Property B). It is primarily gravel with sand. It has a permit to extract 100,000 tons per year.
• Directly bordering Property B is another property owned by Marslen Investments Limited (Property G). It is also primarily gravel with sand. It has a permit to extract 100,000 tons per year.
• Property I sits directly to the east of the Property. It is an irregular and odd-shaped parcel of land. A small portion of it touches a small part of the north-east border of the Property. This parcel is the largest single parcel in the vicinity. It is owned by Alexander Centre Industries. It has a permit to mine 400,000 tons per year. It is mostly sand.
• Directly bordering Property I to the east and Property F to the east, south, and west (due to a salient) is a property owned by Alexander Industries Limited. This property is commonly known as the Dill Pit. It is mostly cobblestones and is mined out.
III. ISSUES
[26] The Plaintiff’s argument is that it is entitled to compensation because it had an interest in land that was expropriated by the MTO. By building a highway through the area of the mining claims, the MTO made it impossible for the Plaintiff to mine aggregate profitably. Since a mining claim is “land” for the purposes of the Expropriations Act, the Plaintiff is entitled to compensation. In order for this argument to succeed, the Plaintiff would need to demonstrate that:
• The Plaintiff validly staked mining claims on the Property;
• The mining claims were “land” for the purposes of the Expropriations Act; and
• The mining claims had value because a permit could have been obtained under the ARA but for the wrongful “downzoning” of the Property.
[27] The Defendant MTO counters that:
• As a matter of law, a mining claim is not “land” or an interest in “land” for the purposes of the Expropriations Act; and
• Even if the mining claims were “land”, they had no value because no permit to extract aggregate from the Property could have been obtained. The mining claims were not downzoned because it was not part of a scheme aimed at the mining claims.
[28] The Plaintiff further says that its expert evidence on valuation establishes that the value of the Property that was taken was $7.5 - $8.0 million. The Defendant, in contrast, says that the Property had no value.
[29] I frame the issues this way:
• Were the mining claims expropriated?
• Could the Plaintiff have obtained a permit under the ARA?
• Was the Property downzoned?
• If the property had value, what was it?
[30] Briefly, I find the following:
• A mining claim is not land. The mining claims were not expropriated.
• Even if the mining claims were “land”, they had no value because no permit could have been obtained under the ARA.
• The Property was not wrongfully downzoned because the action taken by the government was part of a regulatory process of general application. It was not aimed at the Property specifically.
• The value of the mining claims was $425,000, the amount paid by Bot Holdings for the permits.
[31] I turn now to the analysis of the issues.
IV. ANALYSIS
(a) Were The Mining Claims Expropriated?
i. The Plaintiff’s Argument: A Mining Claim is “Land”:
[32] Mr. Smitheman, on behalf of the Plaintiff, argues that a mining claim is “land” as defined by s. 1(1) of the Expropriations Act. Land has a very broad definition:
“land” includes any estate, term, easement, right or interest in, to, over or affecting land; (“bien-fonds”)
[33] So does “owner”:
“owner” includes a mortgagee, tenant, execution creditor, a person entitled to a limited estate or interest in land, a guardian of property, and a guardian, executor, administrator or trustee in whom land is vested
[34] Where land is expropriated, an owner is entitled to compensation pursuant to s. 13 of the Expropriations Act:
- (1) Where land is expropriated, the expropriating authority shall pay the owner such compensation as is determined in accordance with this Act.
(2) Where the land of an owner is expropriated, the compensation payable to the owner shall be based upon,
(a) the market value of the land;
(b) the damages attributable to disturbance;
(c) damages for injurious affection; and
(d) any special difficulties in relocation,
but, where the market value is based upon a use of the land other than the existing use, no compensation shall be paid under clause (b) for damages attributable to disturbance that would have been incurred by the owner in using the land for such other use.
[35] “Expropriate” is also a defined term in the Expropriations Act:
“expropriate” means the taking of land without the consent of the owner by an expropriating authority in the exercise of its statutory powers;
[36] Mr. Smitheman argues that the MTO is an expropriating authority for the purposes of s. 4(1) of the Expropriations Act.
[37] The mining claim remained valid despite the withdrawal of the land from staking in June 2003 and the subsequent registration of a Crown P-Plan in July 2004. That was the effect of the decision of the Commissioner, as upheld by the Divisional Court and the Court of Appeal. Thus, according to Mr. Smitheman, the Plaintiff retained rights of some kind that were entitled to compensation when they were taken.
[38] Mr. Smitheman relies on R. v. Gordon (1979), 1979 CanLII 3274 (NB QB), 27 N.B.R. (2d) 110, 60 A.P.R. 110, 1979 CarswellNB 272 (Q.B.). In that case, the defendants were prospectors. They staked mining claims under the New Brunswick Mining Act in 1970 and 1971. The Crown owned the minerals. The defendants did not apply for or obtain certificates of record, a mining license, or a mining lease. In 1971, the government of New Brunswick expropriated the land. The government brought an action for a declaration that the mining claims were not entitled to compensation. The defendants counter-claimed for a declaration. The defendants sought a declaration that the holder of a mining claim has an interest in land. As holders of an interest in land, they were entitled to compensation under the New Brunswick Expropriation Act.
[39] The New Brunswick Expropriation Act defined “land” and “owner” at the time slightly differently than the Ontario Expropriations Act does now. The question before the Court was identical to the question before this Court:[^19]
If the mining claims were "land" they were expropriated and the defendants are entitled to claim compensation. If the claims were not "land" it follows that they were not taken or affected by the expropriation and no claim for compensation lies. It is necessary to turn to the Mining Act in considering whether a mining claim comes within the scope of "land" as defined in the Expropriation Act.
[40] The Court determined that the answer lay in the provisions of the New Brunswick Mining Act. A mining claim conferred a right to apply for a licence or lease to extract the minerals. The definition of land, however, was very broad under the Expropriations Act. The Court relied on the earlier Privy Council decision in Clarkson v. Wishart, 1913 CanLII 413 (UK JCPC), [1913] A.C. 828. The issue before the Privy Council was whether a mining claim could be subject to execution under the Ontario Execution Act as it stood at the time. That, in turn, required an evaluation of the Ontario Mining Act as it stood in 1913 in order to determine the nature of a mining claim. Although the term “tenant-at-will” appeared in the Ontario Mining Act, the reality was that a mining claimant held the right (whatever that right was) against all other claimants. The mining claimant could also transfer (with conditions) the right. The rights accrued to a mining claim were “radically different” from a tenancy at will, whatever language was used. The exact nature of a mining claim was not defined in the Ontario Mining Act. It was therefore necessary to examine the concept in relation to the whole of the Act. When read in the context of the entirety of the Ontario Mining Act, the Privy Council found that a mining claim fell within the definition “lands” in the Ontario Execution Act. A mining claim could, therefore, be subject to execution by a judgment creditor.
[41] The New Brunswick Court then noted that the definition of lands under the provincial Expropriation Act was very broad. Stevenson J., the trial judge, ultimately found that the reasoning in Clarkson v. Wishart governed. He found that the defendants were entitled to compensation.
[42] Mr. Smitheman’s argument depends on how a mining claim is characterized. The scheme of the Mining Act shows that, at a minimum, a mining claim is an option to lease. He argues that an option to lease is an equitable interest in land.
[43] Section 1(1) of the Mining Act defines “mining claim” as follows:
“mining claim” means a parcel of land, including land under water, that has been staked and recorded in accordance with this Act and the regulations;
[44] A person who has staked a claim mining claimant shall make an application to record the claim. Claims on the same land are recorded in priority. A claim may be disputed. No dispute may be filed more than a year after the recording of the claim.[^20] Section 50 of the Mining Act does not set out what a mining claim is, but it sets out what a mining claim isn’t:
50. (1) The staking or the filing of an application for or the recording of a mining claim, or the acquisition of any right or interest in a mining claim by any person or all or any of such acts, does not confer upon that person,
(a) any right, title, interest or claim in or to the mining claim other than the right to proceed as is in this Act provided to perform the prescribed assessment work or to obtain a lease from the Crown and, prior to the performance, filing and approval of the first prescribed unit of assessment work, the person is merely a licensee of the Crown and after that period and until he or she obtains a lease the person is a tenant at will of the Crown in respect of the mining claim; or
(b) any right to take, remove or otherwise dispose of any minerals found in, upon or under the mining claim.
(2) The holder of a mining claim does not have any right, title or claim to the surface rights of the claim other than the right, subject to the requirements of this Act, to enter upon, use and occupy such part or parts thereof as are necessary for the purpose of prospecting and the efficient exploration, development and operation of the mines, minerals and mining rights therein.
[45] Thus, a mining claimant only acquires the right to proceed with assessment work. Prior to the “performance, filing, and approval of the first prescribed unit of assessment work”, a claimant is merely a licensee of the Crown. After that period and until the granting of a lease, the claimant is a tenant at will of the Crown. The language of s. 50 is not dissimilar to that of the Mining Act that was considered in Clarkson v. Wishart.
[46] Mr. Smitheman relies on two cases to argue that a mining claim is an interest in land. In Canadian Long Island Petroleums Ltd. v. Irving Wire Products, 1974 CanLII 190 (SCC), [1975] 2 S.C.R. 715, the Supreme Court determined that an option to purchase mining claims in Saskatchewan created an interest in land. In Uranerz Exploration & Mining Ltd. v. Blackhawk Diamond Drilling Inc. (1989), 1989 CanLII 5113 (SK QB), 63 D.L.R. (4th) 350, 80 Sask. R. 124 (Q.B.), the Court held, at para. 23, that title to a mineral claim is also an equitable interest in land. For reasons I will expand upon in the next part of these Reasons, I disagree. I find that these cases are distinguishable.
ii. Analysis: A Mining Claim Is Not Land
[47] Mr. Smitheman’s argument, skilfully presented, is not without force. Ultimately, however, I must respectfully disagree. A mining claim is not “land” under the Expropriations Act.
[48] The nature of a mining claim was explored in 2274659 Ontario Inc. v. Canada Chrome Corp., 2016 ONCA 145. Canada Chrome was a junior mining company. 2274659 Ontario Inc. (which I will simply shorten to “227”), the Applicant, was a larger mining company. Canada Chrome and 227 agreed to jointly develop a chromium mine in northern Ontario. Canada Chrome staked 200 mining claims, hoping to use the surface rights in order to build a railroad to its mine. 227 then decided to develop a different mine. It needed to build a road to its mine. The road would have had to cross 108 of Canada Chrome’s claims. 227 applied under s. 21 of the Public Lands Act to the Commissioner for a disposition of the surface rights and an easement over Crown lands in order to build the road.[^21]
[49] The Commissioner determined that the development of 227’s road over Canada Chrome’s railway would negatively affect Canada Chrome’s mining claims. It could not balance the competing interests. Accordingly, it found that Canada Chrome should not be forced to share its surface rights.
[50] The Divisional Court found that the Commissioner’s interpretation of s. 50 and s. 51 of the Mining Act was unreasonable. The Divisional Court decided the matter itself rather than sending it back to the Commissioner. The Divisional Court dispensed with Canada Chrome’s consent and left it to the Minister to decide whether 227 should be granted an easement in the public interest.
[51] The Court of Appeal upheld the Divisional Court’s decision. Strathy C.J.O., for the Court, noted that one purpose of the Mining Act was to encourage multiple uses of land where possible. He agreed with the Divisional Court (and the Mining and Lands Commissioner) that each party had an evidentiary burden to establish whether multiple uses of public land was possible. The Commissioner erred, however, by requiring 227 to lead evidence of a public interest in the proposed use. That was because the public interest in the multiple uses of public land was a given.
[52] Strathy C.J.O. further agreed with the Divisional Court that, under ss. 50(2) and 51(1) of the Mining Act, the surface rights of the holder of an unpatented mining claim are limited to that which is necessary for prospecting, exploration, and mining of the claims themselves. There are no additional surface rights. Strathy C.J.O. characterized s. 51 as giving a claim holder “a limited priority to use the surface of the claim, for the purposes set out in s. 50(2), over the subsequent rights of others to use the surface”. The legislative history was also relevant, as the Chief Justice set out at paras. 53-54:
The Divisional Court properly considered the legislative history and purpose of these provisions. Prior to 1957, the holder of a mining claim could obtain both mining rights and surface rights, simply by staking a claim and carrying out the prescribed assessment work. This gave rise to concerns that public lands could be alienated from the Crown forever. In 1957, the Mining Act was amended to permit the Crown to reserve, in a patent or lease, all surface rights necessary for any purpose other than mining, that were not essential to the development of the mines, minerals and mining rights. At the same time the predecessor to the present s. 50(2) was added to the statute: Mining Amendment Act, 1957, S.O. 1957, c. 71, ss. 5, 9. As noted in the Report of the Public Lands Investigation Committee, 1959, (published 1961) the purpose of the latter amendment was to encourage the multiple use of the surface rights on mining lands.
The limited priority conferred by s. 51 therefore protects the multiple use principle through the dispute resolution procedure contained in s. 51(4) and following [now s. 51(2) and following]. The priority is for the purpose of prospecting and exploring and developing mines, minerals and mining rights. Section 51(1) does not confer additional surface rights beyond those conferred by s. 50(2).
[53] Canada Chrome failed to establish that the proposed easement would interfere with its mining rights. The appeal to the Court of Appeal was dismissed. The Chief Justice set out Canada Chrome’s argument. In my respectful view, Canada Chrome’s argument in that case was not unlike the Plaintiff’s argument in this case:[^22]
The appellant's argument really amounted to this: although there was no evidence that its claims (which were admittedly staked to obtain access to Big Daddy) contain minerals of any value, it should nevertheless be able to exercise a veto over the use of the surface by others because it might, someday, discover minerals on its claims.
[54] Mr. Smitheman argued that the Canada Chrome case is not a complete answer to the Plaintiff’s legal arguments. I agree that it is not a complete answer. Canada Chrome does, however, assist in interpreting the rights that are and are not assigned to a mining claim. Those rights include a limited right to apply for a lease but not a lease itself. The rights conferred by a mining claim are limited to those explicitly set out in s. 50(2). Moreover, the mere staking of a mining claim confers no ability to exclude other users of the land.
[55] I do not agree that a mining claim under the Ontario legislation creates an option that is equivalent to an equitable interest of some nature in land.
[56] In the Irving case, two parties – Irving and Sadim – jointly owned the right to drill for natural gas under a Saskatchewan Crown lease. The agreement between them had a right of first refusal clause in case one decided to sell to a third company. Sadim notified Irving that it intended to sell to Long Island. Irving, by letter, exercised its right of first refusal. Sadim sold its share to Long Island anyway. Irving sued for specific performance. Sadim argued that the clause gave each party an equitable interest in land. Because of the way the clause was written, Sadim argued, it violated the rule against perpetuities and was therefore void. Martland J. for the Court found that the right of first refusal did not violate the rule against perpetuities. He did, however, hold that the right of first refusal was a restrictive covenant. As Long Island had notice of the right of first refusal, it was appropriate to grant specific performance.
[57] Irving referenced Frobisher Ltd. v. Canadian Pipelines & Petroleums Ltd., 1959 CanLII 47 (SCC), [1960] S.C.R. 126, a case not explicitly relied on by the Plaintiff. In that case prospectors discovered uranium in Saskatchewan. They did not have a prospecting licence at the time. They purported to register the claims in the name of a company not yet incorporated. They then granted an option to purchase the claims to two different parties. The second purchaser sued the first for specific performance. There were several issues in the case. One of them was the nature of the mining claim. The Court generally held that the option to purchase a mining claim created an equitable interest in land. It was not enforceable, however, because the original claim (being made by prospectors without a licence for a company not yet in existence) was not valid. In my view, what distinguishes this case is that the Saskatchewan legislation at the time gave rise to a right to a lease upon the recording of the claim and the undertaking of work to improve the property. No such right exists under the Ontario legislation. What exists is a right to apply for a lease.
[58] Thus, the Saskatchewan scheme of mining is not the same as Ontario’s scheme, at least in terms of the rights that are granted by a mining claim. That is illustrated in Uranerz Exploration & Mining Ltd. Uranerz had certain mining claims in Saskatchewan. It defaulted on payments. Blackhawk (and others) filed liens against the mining claims under Saskatchewan’s Builder’s Lien Act. The issue was whether the mining claim was an interest in land. Under the Saskatchewan Crown Minerals Act, a “Crown disposition” is defined as a right under a Crown lease or other instrument where the “Crown has granted to any person any right or privilege to explore or prospect for any Crown mineral”. Under the Saskatchewan Mineral Disposition Regulations “a recorded claim shall grant to the holder the exclusive right to explore for minerals within the claim lands, and the claim shall be deemed to be a chattel real.” The Court held at paras. 27-29 that as a matter of statutory interpretation:
… the Legislature, by deeming a mineral claim to be a chattel real, intended to clarify the status of a claim holder, as holding an interest in land.
It is conceded that personal property is subdivided into chattels real and chattels personal. As was discussed above, chattels real constitute an equitable interest in land. The classic chattel real is a leasehold. Cheshire's Modern Law of Real Property (12th Edition) at pp. 38-40 states that the term chattel real developed as a result of leaseholds. In my view leaseholds clearly constitute an interest in land.
In my opinion, the Legislature defined a Crown mineral claim in the Regulations as a chattel real recognizing that, similar to a leasehold, it was granting an estate or interest in land.
[59] Thus, for the purposes of the Saskatchewan Builder’s Lien Act, a mining claim was recognized as “land”.
[60] As Mr. Carr argues for the Defendant MTO, the nature of a mining claim is only addressed in one section of the Mining Act. Pursuant to s. 64(8) of the Mining Act, a writ of seizure and sale may be recorded. A sheriff or bailiff may “treat the interest as if it were goods and chattels subject to a writ of seizure and sale”. That clearly distinguishes it from Uranerz and the other Saskatchewan cases.
[61] Mr. Carr relies on Rock Resources Inc. v. British Columbia, 2003 BCCA 324. In 1995, legislation prevented mineral development in provincial parks. Rock Resources had pre-existing mineral claims within a park. In 1998, the province passed legislation authorizing compensation for future, but not past, park creation. It did not apply to Rock Resources’ pre-existing claim. A key issue was the nature of a mining claim under B.C.’s legislative scheme.
[62] Finch C.J.B.C. found that, prior to 1977, a holder’s interest in a mineral claim was recognized as an interest in land. In 1977, s. 21(2) of the B.C. Mineral Act was amended to read:
- (2) The interest of a holder of a mineral claim shall be deemed to be a chattel interest.
[63] He then found that s. 21(2) was sufficiently ambiguous that it could not be said to denote a legislative intent to alter the nature of a mineral claim. A “chattel interest” could refer either to a chattel real or a chattel personal. In other words, it could refer to an interest in land or in personal property. The legislature, however, had repealed references in the section to a lease or an interest equivalent to a lease. A lease had the character of a chattel real. As Chief Justice Finch noted in examining the sections:[^23]
Prior to 1977, the holder's interest in a mineral claim was recognized as an interest in land. The Mineral Act (1960), as amended by S.B.C. 1965, c. 26, s. 4 and S.B.C. 1976, c. 30, s. 8, provided:
- The interest of a person in his mineral claim shall, save as to claims held as real estate, be deemed to be a chattel interest, equivalent to a lease, other than a mineral lease or mining lease, for one year, and thence from year to year, subject to the performance and observance of all the terms and conditions of this Act.
That provision had been in force since 1896. The Mineral Act, 1896 (B.C.) c. 34 provided:
- The interest of a free miner in his mineral claim shall, save as to claims held as real estate, be deemed to be a chattel interest, equivalent to a lease, for one year, and thence from year to year, subject to the performance and observance of all the terms and conditions of this Act. [Emphasis in original]
[64] Thus, the legislature in British Columbia had recognized the nature of a mineral claim as an interest in land prior to 1977. The nature of the interest was changed by legislation.
[65] The Rock Resources case is not directly on point in this case. That is because there is no exact legislative equivalent of s. 21(2) of the B.C. Minerals Act. The case is nonetheless of assistance because it assists in the interpretation of s. 64(8) of the Mining Act. There is no equivalent in Ontario of s. 16 of the 1960 B.C. Mineral Act or s. 34 of the 1896 B.C. Mineral Act. It was the removal of the phrase “equivalent to a lease” that legislatively changed the character of a mining claim from realty to personality in the BC Mineral Act.
[66] The closest comparator in the Mining Act is ss. 50(1)(a) and 50(2). Those sections speak to a right to take a mining claim to lease – the sections do not grant a lease. The only authority that was pointed out to me interpreting the nature of a mining claim in Ontario was Clarkson v. Wishart, and its progeny, R. v. Gordon. I agree with Mr. Carr that s. 64(8) of the Mining Act amounts to a legislative reversal of Clarkson v. Wishart, supra.[^24] Recall that in that case, the Privy Council held that, under the Ontario Execution Act, a mining interest was “land” for the purpose of a writ of execution. Whatever a mining claim may be for other purposes, s. 64(8) of the Mining Act makes it clear that, for the purposes of execution, it is not land. Clarkson v. Wishart and R. v. Gordon are foundation cases for the Plaintiff’s argument that a mining claim is “land”. Those cases cannot apply in light of s. 64(8).
iii. Conclusion: There Was No Expropriation and No Injurious Affection
[67] As a result, I conclude that there was no expropriation. Since there was no expropriation, there could be no injurious affection.
[68] Injurious affection is a defined term in s. 1(1) the Expropriations Act. I set out only the relevant excerpts:
“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…
[69] Section 21 of the Expropriations Act states that “A statutory authority shall compensate the owner of land for loss or damage caused by injurious affection.” The injurious injury argument must fail for the same reason that the general claim fails: a mining claim is not land.
[70] I turn next to the question of permitting under the ARA.
(b) Could A Permit Have Been Obtained Under the ARA?
[71] Even if my interpretation of “land” in the Expropriations Act is incorrect, the Plaintiffs still may not recover. The Plaintiffs never could have obtained a permit to mine aggregate rom the whole of the Property from the MNR. Moreover, I find as a fact that it was not the Plaintiff’s intention to apply for a permit to extract aggregate. Rather, it was the Plaintiff’s intention to obtain compensation for staking mining claims. Although the Plaintiff says that its intention was always to apply for and obtain a permit under the ARA prior to taking the Property to lease, I find that this was not the case.
[72] I agree with Mr. Smitheman that the motive and intention of a person staking a mining claim is not relevant to resolution of the Expropriations Act issue.
[73] If, however, I am wrong in my legal analysis under the Expropriations Act, it becomes relevant that the Plaintiff did not intend to actually mine aggregate. It is relevant because it shows that the principals of the Plaintiff were aware that they could not obtain a permit even as they went through the process.
[74] I turn to the facts.
i. The Plaintiff Stakes Mining Claims
[75] Peter Bull testified for the Plaintiff. Mr. Bull is a measurements specialist. He had worked as an Ontario Land Surveyor for 27 years as of the time of trial. He lives in Sudbury and knows the area extremely well. He also holds a prospecting license. He testified from his own knowledge about the characteristics of the neighbouring properties.
[76] Harold Cheley has long experience in the aggregate mining industry. He is a mining consultant. He worked for the MNR for twenty years and then in the industry. He also served as an infantry soldier in the Canadian Army in the early 1960’s.
[77] On April 9, 10, and 13, 2003, Mr. Bull and Mr. Cheley, on behalf of the Plaintiff, staked the Mining Claims. A licenced prospector may stake a claim on Crown lands.[^25] Mr. Bull held a prospecting licence. The claims were recorded in the office of the Provincial Mining Recorder in Sudbury on April 15, 2003.
[78] Mr. Bull is a shareholder of the Plaintiff. He has been a shareholder since 2002. The other shareholders are Alfred Nichols, Elizabeth Ethier, Manon Giroux, and Harold Cheley.
[79] Elizabeth Ethier is the wife of Len Ethier. Mr. Ethier is now deceased. He was in many ways the driving force behind the Plaintiff’s efforts to mine the Property. According to Mr. Bull, Mr. Ethier had been in the aggregate business for 40 years. Ethier Sand and Gravel, one of the leading aggregate producers in the district, was the family business. A family falling-out led to Mr. Ethier selling his interest in Ethier Sand and Gravel. Mr. Ethier also had investments in Marslen Investments.
[80] Mr. Bull testified that the Property was very suitable for mining aggregate. It had many positive qualities. It had legal access to Highway 69, it had a very high quality of stone, and the topography was suitable for extraction. Mr. Bull noted that the water table was low, an important attribute for extraction. He further noted that there were few residents, and there were no known First Nations, environmental, or archaeological issues. It was also close to the Sudbury market. Aggregate, being rock, is heavy. Since it is heavy, transport is expensive. The proximity to the Sudbury market positively affected the profitability of the Property. The market in Sudbury was growing. Mr. Bull saw no negatives for an aggregate operation. It was also known that the Property was close to the new route of Highway 69. Aggregate would be required for construction. The aggregate, he testified, was apparently gabbro with little contamination. That made the aggregate on the Property suitable for road construction. Mining survey maps produced by the government of Ontario confirmed that the stone in the area was Nipissing Diabase, which is the equivalent of gabbro. Mr. Bull prepared a site plan survey and maps showing the property about 2-3 weeks after the claims were staked.
[81] Mr. Bull testified that, around the same time, he received a report on the geology of the Property. Jorma Hannila, a geologist, prepared the report. Mr. Hannila’s report was dated January 10, 2005. Trow Associates did the actual testing of samples extracted by Mr. Hannila from the Property. The associated laboratory report from Trow Associates was dated January 20, 2005. As far as Mr. Bull was concerned, the bottom line of the reports was that the Property contained high quality bedrock suitable for asphalt and concrete.[^26]
[82] Mr. Bull further testified that the Plaintiff needed about $3 million in capital outlays to start up the mine. He expected to put up about $1.5 million of that and Mr. Ethier to put up the other $1.5 million. He expected an 8% return on his investment.
[83] Mr. Bull testified in cross-examination that the Plaintiff did nothing to prepare a site plan or invest a significant amount of money until one year had expired and there were no competing claims. Competing claims must be disputed within one year of staking.[^27] Thus, he agreed that the delay from April 2003 to mid-May 2004 had nothing to do with anything the MTO did. He testified that most of the lands around the Property represented competitors, but there were problems – either the aggregate material was not good, or the water table was too high.
[84] Mr. Cheley testified that the Plaintiff used a geological map to determine that the property had high-grade hard stone. High-grade stone was required to meet the MTO’s specifications for asphalt. The provincial map he was using showed that the area of interest had two mining claims. He was watching to see if the claim holder was going to renew. The area was perfect – there was a large amount of stone, it was high grade, it was close to the Sudbury market, and it had access to Highway 69.
[85] Mr. Cheley had long experience in the Sudbury area. He was familiar with most of the other quarries and mines surrounding the Property. He also created the original site plan in April 2004.[^28] The site plan was required under the ARA. He described the process for creating a site plan. The process includes mapping, dealing with environmental issues, and gathering information about the “influence area”, which is 120 meters beyond the boundary of the claim. He believed that there were no cultural, social, or environmental impediments to obtaining a permit to extract aggregate. He also explained the phases by which the Plaintiff would work the Property. He described how he would have run an aggregate operation on the Property. He would have required crushers, a screening plant, a generator, scales, and loaders. He would have subcontracted the drilling and blasting but taken care of the trucking himself. He expected that the operation would run for about 40 years and there would be 40 million tons of aggregate to be mined – at about 1 million tons per year.
[86] Mr. Cheley also commented on the Hannila geological report and the associated Trow tests. Mr. Cheley felt that the reports confirmed his view that the Property had highly valuable rock.
ii. The MTO Commences Construction Through The Property
[87] In December 2004, the MTO issued its call for tenders to work on the realigned Highway 69. Mr. Bull testified that he became aware of it through Mr. Cheley, who in turn had become aware through a client. In early February 2005, he requested a search in the Land Registry records. He testified that he found that Crown Survey Plans had been registered indicating that the realigned Highway 69 would be constructed through the Property.
[88] Mr. Cheley testified that he first learned that the realigned Highway 69 would pass through the Property in December 2004. He learned about it from an employee of a construction company that was bidding on an MTO tender. He had assumed that the realignment would follow the old Highway 69 and not cross the Property.
[89] The Divisional Court made the following findings, based on the record before the Commissioner:[^29]
The selection of a route for a highway engages a multi-phase exercise and may take many years to complete. It includes an environmental assessment, assessing a proper route and a holding of pubic [sic] hearings with appropriate notice given. Counsel for the MTO acknowledged that such early preparatory steps do not constitute evidence of actual use or occupation. They are merely evidence of an intention to construct a highway.
Once the design phase is completed, there follows the work of surveyors who go on to the land and survey and lay out a proposed centre line and carry it out to a setback of 50 meters on either side. They cut a 1 meter swath along the survey line and plant survey stakes every 25 meters. The stakes are distinctive as they are topped off with red tape and have a notation "Highway 69" or "C.L." (for centre line) inscribed on them.
That work is followed by a crew who goes out on the land and does geotechnical testing. They drill bore holes along the proposed route for the purpose of determining whether the ground will bear the weight of pavement and they test the ground for the placement of structures and foundations.
With respect to the lands in question, the MTO was effectively on the site from January 2003, completing the survey work, cutting a centre line swath, placing stakes every 25 meters and staking the outer boundaries of the roadway. Heavy machinery was used on the lands in February and March of 2003 for the purpose of digging bore holes. All of this work was underway before the mining staking by the Company took place.
iii. The Plaintiff Applies for Aggregate Permits
[90] In May 2005, the Plaintiff submitted two applications to obtain aggregate permits for the Property. Mr. Bull testified that the Plaintiff was doing its best to salvage something economically. Permits were actually issued in 2013. Permit 625045 related to the west side of the new Highway 69. Permit 625044 related to the east side of the new Highway 69. The area subject to a mining permit was quite small in relation to the total amount of the Property. In the end, the Property was not really viable as an aggregate mine except as part of a neighbouring property.
[91] Part of the reason for that was access. The only way to access the property after realignment was by road through a parcel owned by Bot Holdings Ltd. Prior to the realignment of Highway 69, one of the attractions of the Property was the legal access. The main route was through Ethier Road. In October 2005, Mr. Bull met with representatives of the MTO. The purpose of the meeting was to convince the MTO to countenance a move of Ethier Road. It was, Mr. Bull testified, the only way to make an aggregate mine on the property economically viable. The MTO refused to move it. The capital costs of new roads would have exceeded the value of aggregate available under the permits that were actually granted.
[92] Mr. Bull also testified that the excavating boundaries on the application were smaller than the original proposal. That was because of new zoning requirements. The City of Sudbury required that quarries not be visible from the new Highway 69. The Property was eventually sold to Bot Holdings Ltd. for $425,000.00. Bot Holdings was the only conceivable purchaser because it had access. Bot Holdings also had the expertise, equipment, staff, and access to capital to develop the property profitably.
[93] In cross-examination, Mr. Bull was asked questions about obstacles to maximizing the amount of aggregate that could be removed from the Property. He agreed that there had to be a 30-meter setback from creeks or stream and that aggregate could not be extracted from a creek or a pond. There was also a 120-meter “influence area” where property owners had to be given notice so that they could file protests. In this case, parcels belonging to two potential competitors, Bot Holdings and Marslen Holdings, were within the “influence area”. Mr. Bull did not agree, however, that the resources mined from those parcels would be in competition with the aggregate mined from the Property. He also agreed that a Level 1 or Level 2 environmental report had to be created. Ultimately, two species-at-risk had to be accommodated.
[94] Mr. Cheley described the process of obtaining the permits. There was a challenge to the validity of the mining claims. The challenge was not resolved in the courts until 2011.[^30] There were also challenges dealing with environmental issues, First Nations concerns, and groundwater pumping.
[95] Mr. Cheley testified that the permits that the MNR eventually issued were for a limited part of the Property. This reflected the realigned highway and the required setbacks. Mr. Cheley testified that, ultimately, the Plaintiff determined that little value could be extracted from the Property.
iv. The Plaintiff’s Purpose was to Obtain Compensation
[96] I find as a fact that the MTO had decided to build the realigned Highway 69 through the Property before the Plaintiff staked its mining claims. As the Divisional Court noted, the MTO was on site at least as early as January 2003. The MTO may not have determined the precise route, but the basic contours had been decided. Whatever the exact dimensions of the realigned Highway 69, there was no doubt that it would go right through the middle of the Property.
[97] I also find that Mr. Bull and Mr. Cheley were aware that the realigned Highway 69 was being built in the area when they staked the claims on the Property. They were very experienced people in the mining industry. The realignment of the highway had been talked about for years and was a matter of great public interest. The centre line of what would ultimately be the new Highway 69 had been cut through the bush when the two men staked the mining claims on the Property in April 2003. Mr. Bull observed that cut. Both men vehemently disagreed with the suggestion that the entire project was bound up with receiving compensation rather than operating an aggregate mine. The knowledge and experience of these men strongly suggest otherwise. In their evidence they demonstrated that they were indeed knowledgeable, experienced, and well-informed about developments in the industry and the area. I say this somewhat regrettably because I found Mr. Cheley and Mr. Bull to be otherwise hardworking and decent men – but they are also businessmen who want to make money.
[98] Mr. Ruthenberg testified that the fact that Highway 69 was to be realigned had been publicly discussed for years. I accept his evidence.
[99] The Commissioner also commented on this issue:
The highway is a major thoroughfare and its proposed widening and re-routing was the subject of public information sessions held in various locations along the proposed route at different times. This is to be expected, given that the highway was going to be transformed into a series 400 highway at the end of the process. The process that has to be followed in order to widen a highway or to change its route is undoubtedly long. One only has to consider, for example, the length of time that passed before Highway 407 was actually built. Three of the public information meetings for this highway proposal were held at the Wanup Pit Centre in April of 1995. Presumably this is a community centre. All of these sessions were made public through local newspapers. The background research and environmental work was carried out by professional firms contracted to the Ministry of Transportation. The evidence presented at this hearing undoubtedly represented many hours of work and in turn would have cost many thousands of dollars to produce the reports that were submitted. Judicial notice can be taken of the fact that such preliminary work translates into millions of dollars’ worth of actual construction work. The holding of public information sessions does factor in to the Respondent witnesses’ credibility as far as their alleging they knew nothing about the Appellant’s intentions is concerned. While the testimony of the Respondent Company’s witnesses will be discussed further later, the tribunal finds it difficult to believe that such work would not be noticed by those people who work in the aggregate business. For one thing, they have lived in or near the area in question for some years. More importantly, they are in the business of aggregates and would be on the look-out for news of major road construction which would, for them, represent an opportunity to supply raw materials needed to build the highway. Indeed, one of the Ethier brothers (Marcel) even sold property to the Ministry in anticipation of road building. The evidence provided by the Appellant Ministry depicted a large stretch of roadway complete with abutments for exit and entry ramps. The use of aggregates in the construction of such structures would be of the greatest importance…
[100] Ultimately, the Commissioner did not need to make a finding on this point. That was because the issue before it was whether the Crown is in “actual use or occupation” of the Property. Whether or not Mr. Bull and Mr. Cheley knew that Highway 69 would be built through the Property was not relevant to anything the Commissioner had to decide.
[101] The Crown P-Plans were in fact registered in August 2004 in the registry office. Mr. Bull caused a title search to be done in February 2005. He says that he would have learned of the P-Plans at that time. The P-Plans showed the route of the realigned highway. It was clear at that point that the MTO would be constructing the realigned highway right through the middle of the Property. Mr. Cheley first testified that he would have known about the route of the highway from Mr. Bull, and that he would have known when Mr. Bull knew. He then backtracked until it was pointed out that Mr. Bull had the title search done in February 2005. He agreed that what that meant was that he had the survey plan for the realigned highway when he prepared the permit applications.
[102] In fact, Mr. Bull and Mr. Cheley were certainly aware of the route of the realigned Highway 69 before February 2005 when the title search was done. The Plaintiff’s law firm, Weaver Simmons LLP, wrote to the MTO on January 20, 2005 indicating that the realigned Highway 69 would impact on the mining claims. The letter demanded that the MTO cease work on the highway until the resolution of the conflict. The letter makes it clear that the Plaintiff was aware of the route for the realigned highway even before Mr. Bull caused a title search to be done in February 2005.[^31]
[103] Thus, even if Mr. Cheley and Mr. Bull were not aware of the exact route for the realigned Highway 69 in April 2003 (although I find that they knew it would be through the Property), they certainly knew it by December 2004. I find that they must have known the route either from the Crown’s P-Plan or some other source by the time Weaver Simmons LLP wrote to the MTO in January 2005. Thus, the Plaintiff’s agents knew the route for the realigned Highway 69 when they staked the claims. They knew the exact route when they submitted the first set of permit applications in May 2005.
[104] Other facts lead me to the conclusion that the Plaintiff’s intention was to obtain compensation rather than operate an aggregate mine.
[105] In cross-examination, Mr. Cheley agreed that the original site plan created in 2004 did not accommodate the realigned highway.[^32] He, at first, insisted that the site plans he created for the permit application in 2005 accommodated the realigned highway.[^33] He also testified, however, that he did not know exactly where the new realigned highway would go when he submitted the 2005 site plans. He just knew that the highway would go through. In fact, he eventually admitted, the 2005 site plans were identical to the 2004 site plan in terms of the area to be mined. The area that was eventually permitted for the extraction of aggregate was set out on the permits that were actually issued.[^34] Mr. Cheley denied that he would have known the exact location of the realigned highway when he submitted the applications. I find that he did, however.
[106] Mr. Cheley was aware that Marslen Investments had a permit for the site to the north of the Property. Marslen had not done much beyond some preliminary work and had spent about $15,000.00. Mr. Cheley had done some work for Marslen Investments. He was also aware that the realigned Highway 69 would impact the Marslen Investments site. He was aware that Marslen Investments would be able to obtain compensation.
[107] In cross-examination, it was suggested to Mr. Cheley that the Plaintiff’s purpose was to put itself on the same footing as Marslen Investments. That is why, it was suggested, the Plaintiff sought a permit for the entirety of the Property rather than just the parts left after the highway was constructed. Mr. Cheley vigorously denied that although the entirety of the evidence suggests that that is exactly what happened. Marslen Investments eventually obtained $175,000 in compensation from the MTO.[^35]
[108] Mr. Cheley also testified in cross-examination that he wanted to proceed with an application for an aggregate permit as soon as possible because he, Mr. Bull, and Mr. Ethier thought that there was an opportunity to sell aggregate to the MTO for the realigned Highway 69. He agreed that the application for a permit was incomplete as some of the fieldwork had not been done. He maintained, however, that the MNR would process the application in anticipation of that fieldwork being done. I find, however, that Mr. Cheley (and Mr. Bull) were aware that it was unlikely that an aggregate permit could be obtained for the whole Property. As was pointed out to Mr. Cheley in cross-examination, the process adopted by the Plaintiff (especially the Weaver Simmons letter) did not seem to be a bid to supply aggregate for the new highway. It was a bid to stop, or at least register, an objection to the new highway.
[109] Mr. Cheley appears to sincerely hold the view that the government wrongfully deprived the Plaintiff of something valuable. I do find that he was overly optimistic about the prospects for the Property, even leaving the realigned Highway 69 out of it. He seemed to see only opportunities and profits in the enterprise. He minimized the problems in his testimony. His admirable optimism seemed un-tempered by the genuine difficulties of getting the project off the ground. In my respectful view, Mr. Cheley appears to have convinced himself over the years that the MTO deprived him of something that genuinely belongs to him and the other shareholders. His actions at the time the application for a permit was submitted suggest the opposite.
[110] I come to a slightly different conclusion about Mr. Bull. He was more pragmatic than Mr. Cheley. It was put to Mr. Bull in cross-examination that the highway construction reached the northern limit of the Property by May 12, 2005. The applications for the aggregate permits were submitted shortly after that – on May 19, 2005. The applications were complete in the sense that Mr. Ruthenberg, the point man on aggregate for the MNR, was able to process them but everyone knew that more work would be required. It is possible that the timing was serendipitous but, given all the other evidence, I find it unlikely. I also find that Mr. Bull knew that.
[111] I also find it significant that the Plaintiff did not have to wait a year to see if other claimants came forward in order to commence the work for an aggregate permit. Mr. Bull testified that they did not want to spend money until they were sure that there were no other claims. I find that explanation unconvincing. A mining claim is not a pre-requisite to an application for an aggregate permit on Crown land. The Plaintiff could have applied for an aggregate permit even while other mining claims were still in existence. Certainly, the Plaintiff could have applied for an aggregate permit as soon as the claims were staked if the intention was to have first priority and eventually take the property to lease. Don Fudge, the Plaintiff’s own expert, testified that Mr. Cheley and Mr. Bull could have prepared an application at any time and did not need to wait a year. The problems with Mr. Fudge’s evidence notwithstanding (I will deal with those problems at a later point in these Reasons), I accept this part of his evidence. I also find Mr. Bull’s evidence unconvincing because of the small amount of money that the Plaintiff actually spent. I find it significant that the Plaintiff spent less than $100,000 (other than legal fees) to assess and develop the Property. I find especially significant that the work done by Hanilla and Trow amounted to less than $5000.[^36] There was a single geological survey. Five samples were blasted and two were tested. No further testing was done until the litigation. In fact, testing (and more extensive testing) was done while the highway was being built.
[112] I note that the Plaintiff never dug a well or drilled a borehole to determine the exact location of the water table. The water table was estimated based on mapping alone. The expert evidence on both sides indicates that the level of the water table would have had an important impact on the amount of aggregate available for extraction.
[113] The explanation that the Plaintiff wanted to wait a year in order not to incur costs in case the claims were disputed is unconvincing given the very small outlays. For example, where were the studies on upgrading the road? Where were the market studies to ensure that there actually was a market? I find it hard to accept that Mr. Bull and Mr. Cheley did not need market studies (because they knew the area and the market) but at the same time were unaware of the realigned Highway 69. Where was the negotiation of access with other property owners? Why no consultation with stakeholders and neighbours until much later in the process?
[114] Mr. Hains insisted that all the necessary exploration work had been done. I find it difficult to square that view with the fact that so little in the way of resources was expended. I prefer Mr. Schneider’s view that the Property was in the exploration stage. That was also Mr. Bender’s view as well as the view of PWC.[^37] That makes far more sense to me. Very little actual work had been done on the Property at that stage (and as I have noted very little money spent). There was no expert evidence before me to indicate what the developer of an aggregate mine with (according to Mr. Cheley) more than $40,000,000 of product would ordinarily spend on testing. That said, I still find it extremely odd that the Plaintiff would have spent such a trivial amount. It does not indicate a genuine desire to develop a mine.
(c) No Permit Could Have Been Obtained Under the ARA
[115] Even if the Plaintiff did intend to extract aggregate from the Property (which I specifically find it did not), no permit could have been obtained under the ARA in any event for the whole of the property. The objections of the MTO would have caused the MNR to refuse the permit on public interest grounds. Thus, the market value of the claims was very small under ss. 14(1) and s. 14(4) of the Expropriations Act. The market value was the amount the Plaintiff obtained when it sold the permits to Bot Holdings.
[116] I deal first with the evidence.
i. Plaintiff’s Expert Regulatory Opinion
[117] Donald Fudge gave expert evidence regarding the process for obtaining a permit under the ARA. His expertise was not challenged. He has long experience in the industry with obtaining permits and licences. He also has long experience managing aggregate sites. He was qualified to give expert evidence in compiling and processing aggregate permits and licence applications, and implementing permits and licences under the ARA. His report was filed as an exhibit.[^38]
[118] Mr. Fudge described the legislative scheme of the ARA. He noted that permits govern aggregate operations on Crown land and licences govern operations on private land.[^39] He described the difference between a pit and a quarry. A pit refers to unconsolidated sand and gravel operations. Unconsolidated means simply that nothing holds the aggregate together. A quarry refers to bedrock.
[119] Mr. Fudge was asked three questions by the Plaintiff:
• Question 1: On April 15, 2003 was there any likely impediment to the holder of the mining claims on the Property from obtaining an aggregate permit (category 9 pit permit and category 11 quarry permit) under the ARA?
• Question 2: If the answer to Question 1 is no, what would have been the likely time frame for obtaining the aggregate permit?
• Question 3: Does the answer to question 1 or question 2 change during the period between April 16, 2003 and May 16, 2005? Mr. Fudge was told not to factor in anything that related to what became the realigned Highway 69.
[120] In his report, Mr. Fudge stated that if a technically complete Category 9 and Category 11 permit application conforming to the provincial standards had been submitted to the Sudbury District office of the MNR on April 16, 2003, it was likely that a permit would have been issued. His view is that an applicant could expect to receive a permit within 65 to 70 days.
[121] Mr. Fudge answered the questions as follows:
• Question 1: There was no apparent impediment to an applicant applying for and receiving a Category 9 and Category 11 permit on the Property.
• Question 2: An applicant could reasonably expect to receive a permit within 65 to 70 days of filing the complete application.
• Question 3: There were no apparent issues that would change the outcome during the period between April 16, 2003 and May 16, 2005.
[122] In his evidence in chief, Mr. Fudge addressed many of the problems that would ordinarily impact on an application for a permit under the ARA: for example, hydrology, environmental issues and cultural issues. He concluded that none of these issues would have been an impediment to receiving a permit. Few of these issues in 2003 were complex. The area had long been used for quarries. Furthermore, the permit process moved relatively quickly in the 2003-2005 time frame. After 2006, he began to see changes in the processing times that slowed down applications.
[123] Mr. Fudge agreed in cross-examination that an applicant for a Category 9 permit is required to comply with s. 4.1.3 of the provincial standards. That section requires that an applicant circulate the application materials to various stakeholders. One of the stakeholders is the MTO. He testified that he was not aware of the objections of the MTO. He also testified in cross-examination that the fact of the realigned Highway 69 did not change his answer. He had not been asked to consider the registration of the Crown P-Plans or the construction contracts. He did not consider the fact that by May 2005, construction had reached the northern end of the Property. He agreed, as I have already noted, that the Plaintiff did not need to wait a year before applying for a permit. He called that a business decision.
[124] Mr. Fudge testified that, knowing the area as he did and having prepared many aggregate permit applications, he could not see any serious objections. Moreover, he could not see anything that would have required the permit process to take more than 65-70 days – the realigned Highway 69 aside.
ii. Evidence of Tim Ruthenberg
[125] Tim Ruthenberg testified for the Defendant. He worked for the MNR from 1978 until November 2008. He stayed with the public service until 2014, when he retired. He was an aggregate technical specialist from 1990 until November 2008. He was responsible for the administration and enforcement of the ARA in the Sudbury District. The Sudbury District included the Property. His duties included reviewing permit and licence applications and then monitoring pits and quarries.
[126] On May 16, 2005, his office received the Plaintiff’s permit applications for the Property. He testified that he was aware of the highway realignment by May 2005. He testified that it was very public. He checked the applications submitted by the Plaintiff against the provincial standards for permits under the ARA.[^40] He sent the applications to the MTO for comment. An “Environmental Assessment Decision Making Document” was circulated within the MNR for comment by various decision-makers.[^41] The purpose was to obtain comments from individuals such as the Area Biologist, the Area Forester, the Fire Manager, and the like. Mr. Ruthenberg’s main concerns were that the applications did not have the required 30-meter setback for blasting. The location of the Property also conflicted with the Highway 69 realignment. He knew that the permit applications would be circulated to the MTO for comment. The senior land technician also pointed out that the Plaintiff would be required to demonstrate a “legal right of access”. There was none.
[127] On June 17, 2005, Mr. Ruthenberg wrote to the Plaintiff.[^42] He indicated that the applications met the provincial standards under the ARA. The letter laid out the consultation process that the Plaintiff had to complete. The Plaintiff had six months to complete the process. On January 31, 2006, Mr. Ruthenberg wrote to the Plaintiff indicating that there had been no forward movement. He indicated that if there was no suitable explanation by February 15, 2006, he would deem the permit applications withdrawn. An email exchange on February 14 and 15, 2006 occurred between Mr. Bull and Mr. Ruthenberg. Mr. Bull explained that the Plaintiff was negotiating with the MTO over the permit applications. Mr. Ruthenberg agreed to hold the applications until the dispute with the MTO was complete. After two years, the MNR heard nothing from the Plaintiff. Mr. Ruthenberg wrote again to Mr. Bull indicating that, in the absence of an explanation, he would deem the permit applications withdrawn. Mr. Bull replied that the validity of the mining claims was now before the Commissioner. Mr. Ruthenberg issued a further six-month extension.[^43]
[128] On June 2, 2008, Mr. Ruthenberg sent out another letter to the Plaintiff. In it, he outlined all of the issues with the permit applications that had been raised by staff within the MNR, including issues with blasting setbacks and environmental compliance.[^44] On June 11, 2008, the MTO sent comments on the permit applications to the MNR. The MTO indicated that the permit applications included all of the realigned Highway 69. The letter also noted that MTO permits would be required for any pits or quarries within 45 meters of the MTO’s right of way. Finally, the MTO indicated that it would not permit direct access to the realigned Highway 69. It was a four-lane, limited access highway. Only access from existing and future interchanges and side roads would be permitted. Mr. Ruthenberg understood the letter to be objecting to the issuing of permits.
[129] Mr. Ruthenberg testified that he could not have recommended a permit for the entirety of the Property in his capacity as the aggregate technical specialist. That was because of the location of the realigned highway. He further testified that, in his experience, an application for an aggregate permit would take several years.
[130] In cross-examination, Mr. Ruthenberg agreed that he knew Len Ethier well and had no reason to question his integrity. There were two parallel processes: an environmental assessment process and an aggregate permit process. There is some overlap between the two processes. He agreed that the concerns set out during the course of the internal review were routine, except for the presence of the realigned Highway 69. The applications generally met the requirements under the provincial standards. He agreed that, in granting the aggregate permit, the MNR sets a maximum amount of tonnage that can be extracted. The permit holder may or may not produce the maximum. Maximum tonnage was not a major consideration for the MNR. The MNR would not reduce the maximum tonnage simply because there are competitors.
[131] Mr. Ruthenberg testified that a Crown Land Plan is a survey plan of Crown land. A P-Plan is a survey plan generated by the MTO for highways and roads. The MTO would deposit a Crown Land Plan with the MNR and register a P-Plan with a land registry office. He also testified that an MTO right of first refusal is a request by the MTO to use a particular piece of land for aggregate extraction. The MTO does not require a permit, as a government agency. When someone else, however, applies for a permit on Crown land, the MTO has the right of first refusal. There was no MTO request for a right of first refusal with respect to the Property, as far as Mr. Ruthenberg could recall.
[132] Mr. Ruthenberg further testified that, during the circulation period, it was not a relevant objection that a new permit-holder would be a competitor in the aggregate businesses. Mr. Ruthenberg was very familiar with the aggregate extractors and other businesses in the Sudbury area.
[133] In terms of the amount of time in which a permit could be granted, Mr. Ruthenberg agreed in cross-examination that if there are no concerns raised during the circulation process, then a permit could be granted quickly. He did maintain, however, that there are very few applications that have concerns that are easy to resolve. In the early 1990’s, an applicant could obtain a permit in a few weeks. It had become a slower process by 2005, and even slower by 2008. The closer that a property is to urban areas, the more likely it is that the process will be slowed.
iii. Analysis: No Permit Could Have Been Obtained
[134] I find that no permit could have been issued for the entirety of the Property. Accordingly, the fair market value for the expropriated property (if it was capable of expropriation) would have been close to nil. The $425,000 paid by Bot Holdings represents the actual fair market value.
[135] Under the scheme of the Expropriations Act, the value of expropriated land is the market value. When calculating market value, no account is to be taken of increases or decreases in value, or special uses of the land, that occur as a result of the expropriation:
- (1) The market value of land expropriated is the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer.
[136] Windsor v. Paciorka Leaseholds Ltd., 2012 ONCA 431 provides guidance for the interpretation of s. 14 of the Expropriations Act. In that case, the City of Windsor expropriated lands from landowners commencing in 2004. The expropriated lands were a protected habitat under the Provincial Policy Statements for areas of significant natural and scientific interest. Provincial Policy Statements were incorporated by reference into the provincial Planning Act. That meant that a planning authority had to have regard to the Provincial Policy Statements.[^45] The City changed its official plan so that the lands in question were designated as environmental policy areas. That limited the amount of development. The landowner appealed the official plan change to the Ontario Municipal Board and applied for compensation. The City argued before the Board that the land was never suitable for development. It had been designated as environmentally sensitive as early as 1983. The Board found that the “highest and best use” of the land was to build residential housing. It awarded the landowners more than $4.5 million.
[137] The City appealed to the Divisional Court: Windsor v. Paciorka Leaseholds Ltd., 2011 ONSC 2876. The Court upheld the Board’s decision as reasonable. Sachs J. dissented. She noted that the Board made no mention of the Provincial Policy Statements in its analysis. The Board did not consider how the Provincial Policy Statements would affect the market value of the land. The landowner’s expert did not account for the existence of the protected habitat. The Board accepted his opinion. Sachs J. said that the Board was required to consider the Provincial Policy Statements and erred in not doing so. She ultimately found, at para. 137, that the Board’s decision was a windfall for the landowners:
In the case at bar, with or without the expropriation, the claimants would have had to deal with the fact that their land contained natural features that were the subject of a PPS that limited development on land with those features. Any properly advised purchaser would know of these limitations and would have taken them into account in assessing the price that they would have paid for the land. These were the market realities that faced the claimants absent the expropriation. However, by virtue of the award in question, these realities were disregarded and the claimants were able to receive compensation for their land as if the realities never existed. This is to be contrasted with other people in the province with land that contains natural heritage features who have had to develop their land taking into account the requirements of the PPS. This is an unjustifiable and therefore, unreasonable, result.
[138] The Court of Appeal allowed the appeal substantially for the dissenting reasons of Sachs J. The Court specifically adopted para. 137 of Sachs J.’s judgment. The Court also stated, at para. 1, the following with regard to the scheme of the Expropriations Act:
When land in Ontario is expropriated, the Expropriations Act, R.S.O. 1990, c. E.26, requires the expropriating authority to pay to the owner the "market value of the land". In determining market value, no account can be taken of any increase or decrease in the value of the land attributable to the government actions that culminated in the expropriation: see Expropriations Act, s. 14(4)(b); Pointe Gourde Quarrying and Transport Company, Ltd. v. Sub-Intendent of Crown Lands, [1947] A.C. 565 (P.C.), at pp. 572-573. These government actions are collectively referred to as the "expropriation scheme". In addition to compensation for the market value of expropriated property, if the expropriating authority takes only part of the owner's land, the owner is also entitled to injurious affection damages for any reduction in the market value of his or her remaining land caused by the acquisition of part of the owner's land.
[139] In my respectful view, the Windsor case applies. The Board in that case erred by ignoring the fact that no residential construction could have taken place on the expropriated lands. It would also be an error for me to consider this issue without considering whether a permit could have issued. As I have said, it could not.
[140] There was much agreement between Mr. Fudge and Mr. Ruthenberg. Both agreed that, aside from the realigned Highway 69, the environmental, hydrological, and cultural issues raised by the permit applications on the Property were typical. Both agreed that the objections of a competitor would not be a serious problem for an applicant. Other than the highway realignment, the likelihood of the Plaintiff obtaining permits was high.\
[141] Mr. Fudge and Mr. Ruthenberg parted company on two points: the amount of time that an application would have taken, and the impact of the realigned Highway 69.
[142] I prefer Mr. Ruthenberg’s evidence to Mr. Fudge’s evidence on these points. The bottom line of his evidence was this: the MTO objected to aggregate mining on the whole of the Property. Under those circumstances, the MNR would never have issued a permit. That was a reasonable conclusion.
[143] In contrast, I do not accept Mr. Fudge’s evidence on these points. He refused to accept obvious points. The most obvious was that the MTO would object to an aggregate permit on land where it was building a highway. He maintained that position even after being shown an email where the MTO had in fact objected. He also insisted that the 65-70 day time frame for obtaining a permit was realistic even with objections factored in. He maintained that position even though the provincial standards contemplated six months for the consultation process. He also refused to concede that the more problems presented to the MNR during the consultation process, the longer it would take. Even with objections, he refused to concede that it would take longer than 2-3 days to resolve objections. Mr. Ruthenberg’s evidence – and he was the man actually responsible for processing applications – was diametrically opposed.
[144] Moreover, Mr. Fudge’s evidence was contradicted in a real way by reality. Mr. Ruthenberg continually extended the permit application process. He did so at the request of the Plaintiff. That was because the Plaintiff was dealing with the MTO over its objections. In the end, the permits that the Plaintiff did obtain took almost 8 years.
(d) Was The Property Downzoned?
i. The Plaintiff’s Argument
[145] Mr. Smitheman also argues that the Property was downzoned as a result of the building of the realigned Highway 69. He further argues that the Plaintiff suffered injurious affection from this source as well: the downzoning caused the remainder of the Property that was available for aggregate mining to lose its value.
[146] Downzoning refers to the use of a legislative scheme that has the effect of depressing the price of a property that is subject to expropriation. As Ballance J. put it in Thunderbird Entertainment Ltd. v. Greater Vancouver Transportation Authority, 2011 BCSC 636, at para. 148:
...in British Columbia v. Tener, 1985 CanLII 76 (SCC), [1985] 1 S.C.R. 533 (S.C.C.), Estey J. succinctly articulated the common law rule at p. 557: "... a taker may not, through the device of zoning, depress the value of property as a prelude to compulsory taking of the property for a public purpose".
[147] The Expropriations Act states at s. 14(4):
(4) In determining the market value of land, no account shall be taken of,
(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.
[148] An example of downzoning is found in Re Gibson and City of Toronto, [1913] O.L.R. 20 (C.A.). Gibson owned land on the north side of St. Clair Avenue. The City had passed a by-law declaring that part of St. Clair Avenue to be a residential street. The by-law prohibited building within 17 feet of the street. The City’s intention was to eventually expropriate the 17 feet for the purpose of widening St. Clair Avenue. Gibson claimed compensation from an arbitrator. The arbitrator found that he was bound by the by-law and could not award compensation based on the fact that Gibson was deprived of the ability to erect commercial buildings. The Court of Appeal held that an expropriating authority should not be permitted to use its powers to reduce the value of the land that it intended to expropriate. As Maclaren J.A. put it, at para. 15:
It would indeed be a gross abuse of the powers conferred upon the city corporation, if it should be able to use such powers to depreciate the value of the property it was about to acquire.
[149] Mr. Smitheman’s argues that downzoning requires a “but-for” test: but for the expropriation, would a permit under the ARA have been issued for the whole property? The answer is “yes”. Therefore, downzoning applies.
[150] Mr. Smitheman relies on a line of cases that, he argues, illustrate his proposition. In McKee v. Alberta, 1967 CarswellAlta 86 (Supreme Ct.), the plaintiff owned a property with two homes. The property was near the University of Alberta. One home was rented to students. She lived in part of the other home and rented out the rest of it. The government of Alberta contemplated that the University would eventually expand into the lands where the plaintiff lived. The lands at that time were un-zoned. The government passed a regulation declaring the lands public works. That effectively froze the lands for development pending eventual expropriation. The Court found that it would not be equitable to consider the artificial value placed on the property by the freeze order. The Court found, at para. 12, that:
...when land has been given an artificial depreciation in value by a public authority which intends to take it over, that then, and in such event, no Court, in fixing compensation, is bound immutably to that artificially decreased value, brought about by the authority which, in fact, is now doing the expropriation.
[151] In Transalta Utilities Corp. v. MacTaggart, 1989 ABCA 326, 1989 CarswellAlta 196, 101 A.R. 286 (C.A.) the Court explored the notion of a “link”. The landowner owned land in a Restricted Development Area. The Restricted Development Area preserved the land for transportation and utilities. The land would otherwise have been available for residential development. The Restricted Development Area downzoned the land. A utility company wanted to build a corridor for a hydro transmission line through the land. The trial judge found that there had to be a “link” between the provincial government (which imposed the restrictions) and the utility company – a private company. There had to be a link between the authority that downzoned and the taker. The trial judge did not award compensation, as if there had been no downzoning.
[152] The Court of Appeal found that that was an error. The fact that the taker was not the government itself was irrelevant. It was the downzoning that depreciated the value and the taker (the utility company) obtained the benefit. No further link was necessary. The Court noted, at para. 14, the anomaly that would otherwise be created:
...In my view, freezing "for a purpose" provides the "link". This land was frozen so that it could be used for utilities or highways, but it was not expropriated. When it was taken, it was taken for the very purpose for which it was frozen and it would be anomalous, to say the least, that if the Crown, whether through the Department or Highways or, say, Alberta Government Telephones, actually takes the property, the freeze is ignored but when a private utility company takes the property, the freeze is recognized.
[153] See also: paragraphs 142-147 of Thunderbird Entertainment.
ii. Analysis: The Downzoning Principle Does Not Apply
[154] I respectfully disagree that the downzoning principle applies here. The MTO had decided to build a highway through the Property before the Plaintiff staked the mining claims. Even if the Plaintiff was correct that the exact parameters of the realigned Highway 69 were not yet known, there is no doubt that the MTO had already decided that it was going to be driven right through the middle of the property. The MTO had already commenced work and staked the route when the Plaintiff staked its mining claims. Downzoning cannot apply here on a purely factual basis. To apply downzoning in that situation would be to hand a massive windfall to the Plaintiff. To apply it where the agents of the Plaintiff were aware that the highway was to be driven through would be to hand a windfall to the Plaintiff.
[155] Downzoning also does not apply on a legal basis. In my respectful view, the McKee case and the cases following are distinguishable on several bases. The first and most obvious is that those cases involve taking something away that a property owner already had. That is not the case here. The second is that there is no “link” as described in McKee and Transalta. Rather, the Windsor case illustrates the point. The majority of the Divisional Court in Windsor set out the Point Gourde principle, at paras. 52-54:[^46]
Section 14(4)(b) of the Expropriations Act is a codification of what is referred to as the "Pointe Gourde Rule". This Rule was articulated by the House of Lords in Pointe Gourde Quarrying & Transport Co. v. Sub-Intendent of Crown Lands, [1947] A.C. 565 (P.C.):
It is well settled that compensation for the compulsory acquisition of land cannot include an increase in value which is entirely due to the scheme underlying the acquisition.
Similarly, compensation should not include a decrease in value that is entirely due to the scheme underlying the expropriation. Thus, in determining compensation, the Board must exclude any increase or decrease in value that is due to the scheme that was the basis for the expropriation of the land.
Lord Denning discussed what was meant by "the scheme" in Wilson v. Liverpool Corporation (1971), 1 W.L.R. 302; 1 All E.R. 628 (C.A.):
A scheme is a progressive thing. It starts vague and known to few. It becomes more precise and better known as time goes by. Eventually it becomes precise and definite and known to all. Correspondingly, its impact has a progressive effect on values. At first it has little effect because it is so vague and uncertain. As it becomes more precise and better known so its impact increases until it has an important effect. It is this increase, whether big or small, which is to be disregarded at the time when the value is assessed.
[156] The Court of Appeal, at para. 27, adopted Sachs J.’s dissenting reasons, at paras. 130-132, in applying the principle (I quote key excerpts):
In West Hill Redevelopment Co. v. Ontario (1998), 64 L.C.R. 81 (O.M.B.), aff'd (1999), 67 L.C.R. 252 (Ont. Div. Ct.), the Board discusses the question of whether a "land use" instrument passed by one public authority should be taken into account in fixing market value in an expropriation affected by a different public authority. In doing so, the Board, at 147, adopts the following principles set out in Jewish Community Centre of Edmonton Trust v. The Queen (1983), 27 L.C.R. 333 (Alta. L.C.B.) rev'd on other grounds (1984), [1984] A.J. No. 302, 30 L.C.R. 97 (Alta. C.A.) at 360-61:
In the board's opinion the underlying principle established in each of those cases, which is relevant in the present case, is that there must be a causal connection between the imposition of land use restriction and the expropriation which subsequently occurs. That is to say if the "land use by-law, land use classification or analogous enactment" is made for the purpose and "with a view to the development under which the land is expropriated" then pursuant to s. 45(e) it must be ignored in the valuation process. If, on the other hand, the evidence establishes that the "land use by-law, land use classification or analogous enactment" was imposed independently and unconnected with "the development under which the land is expropriated" then such land use or classification must be considered in the valuation process.
The PPS (Provincial Policy Statement) was issued under the authority of the Planning Act to provide "policy direction on matters of provincial interest related to land use planning and development": PPS at Preamble. The PPS applies across the province and was not directed at the Expropriated Lands. It was passed independently of, and without any connection to, the specific development for which the land was expropriated…
Given the fact that the PPS was not passed with a view to the development for which the land was expropriated, it cannot be considered to be part of the "scheme" that should be disregarded for the purpose of the market value assessment. Thus, even without the scheme, the Expropriated Lands, which do contain natural heritage features, would have been subject to the PPS…
[157] I agree with Mr. Carr that the ARA is similar to the Provincial Policy Statements in the Windsor case. The process of obtaining an aggregate permit is of province-wide application. The permit process was not applied only to the Plaintiff’s mining claims. That distinguishes McKee and Transalta from this case. There is also no “link” as explored in those cases: there is no evidence that the decision by the MTO to build a highway through the Property had anything to do with the mining claims.
[158] In my view, Teubner v. Ontario (Minister of Highways), [1965] O.J. No. 132 (C.A.) is on point. In that case, the landowner had been trying to have land zoned commercially for several years. The municipality passed a zoning by-law in September 1958. The relevant minister, the Minister of Highways, refused to approve the relevant part of it (the minister’s approval being necessary at the time under the Planning Act). The Minister refused to approve it because it was likely that the land would involve the construction of a 400-series highway.
[159] At the same time, the landowner had agreed to lease part of the land to an oil company in order to construct a gas station. The Minister had to approve a permit. The lease was conditional on approval. Shortly before the by-law was passed, in August 1958, the Minister refused to approve the permit because of the proposed location for the 400-series highway. In 1961, the Minister expropriated 11.192 acres from the landowner’s 98-acre parcel of land for the construction the new highway.
[160] The landowner applied to the Ontario Municipal Board for compensation. The Board awarded compensation to the landowner based on the notion that the Minister had an untrammeled right to reject the by-law. The Court of Appeal disagreed. The rejection of the by-law deprived the landowner of the increase in value that would have come from the re-zoning to commercial. There was nothing in the Planning Act that could justify rejecting the by-law. That was downzoning.
[161] It was a different matter, however, with the refusal of the permit. The Minister was entitled to refuse the permit on the basis that a highway was going to be built there. The Court of Appeal distinguished the Gibson case. Recall that Mr. Smitheman relied on Gibson as an illustration of the downzoning principle. The Court noted that in Gibson, “the municipality had passed the restrictive by-law with a dishonest purpose”. The Court went on to say:
I agree with counsel for the respondent that there is a real difference between zoning down a property by positive action to reduce its value before expropriation (the Gibson case) and refusing to give some consent which the owner needs to increase the value and without which it has a lower value. However, in so agreeing I do not want to be taken as implying that the expropriating authority by withholding the consent or permit can contain the value of the expropriated property below that which it would have if the permit or consent were given, - it being understood, of course, that were it not for the imminent forceable taking it would have been given provided that there is no legal restraint, such as we have here on the right of the owner to receive it. The power of expropriation is an extraordinary power and a government or its agent in which that power is vested has a corresponding extraordinary obligation to exercise it with a sense of complete fairness. To withhold a permit or consent that would otherwise be given for the express purpose of containing value would not, in my opinion, be dealing fairly. I entirely agree with what Wilson J. said in that respect in the Nanaimo case.
In the instant case, however, the Minister did not withhold the permit for the express purpose of limiting or depressing the value of the expropriated lands though unquestionably that was the result. The Legislature has seen fit to impose that prohibition on all lands adjoining the King's Highway and has left to the discretion of the Minister whether or not there should be any alleviation against it. In the exercise of that discretion, it is the function of the Minister to decide in the public interest the effect on the public services under his jurisdiction of conditions and circumstances as they presently exist or may, in his opinion, later arise. If he decides that, having regard thereto, it is in the public interest that there should be no alleviation it is not only his right but his duty to refuse a permit that would grant such relief. The interest of the owner that the prohibition should be removed or modified cannot prevail over the public interest that it should not. [emphasis added].
[162] In my respectful view, the Minister refusing a permit in Teubner is analogous to the MNR refusing a permit under the ARA for the whole of the Property. The MTO did nothing to decrease the value of the mining claims. It objected to the MNR granting an aggregate permit over the whole of the property. That was an objection made in the public interest for the purpose of building a highway, not to lower the value of the mining claims. The only effect of the objection was that the mining claims did not increase in value.
[163] Thus, there was no downzoning – either on a factual or a legal basis.
(e) If there had been an Expropriation, What Was the Value of the Land?
[164] Given my conclusions that there is no legal basis for compensation, I need not deal with the actual value of the mining claims. For completeness, however, I will summarize the positions of the parties and my conclusions.
[165] The Plaintiff filed two reports on valuation (the Plaintiff’s third expert report, the Fudge report, did not deal with valuation):
• An amended report by RPA valuing the Property dated November 7, 2014 (referred to as the “Hains Report” as it was written by Donald Hains, the Plaintiff’s expert).[^47]
• A supplemental report by RPA dated April 7, 2016 dealing with the impact on the discounted cash flow assuming the Property was taken to lease (referred to as the “Hains Supplemental Report”).[^48]
[166] The Defendant MTO filed two reports on valuation:
• A geological evaluation report of the aggregate on the Property by Golder Associates dated May, 2014 (referred to as the “Golder Report”). [^49]
• A report by Altus Group valuing the Property dated September 25, 2014 (referred to as the “Bender Report” as it was written by Paul Bender, the Defendant’s expert).[^50]
[167] The Defendant MTO also filed two critique or reply reports:
• A reply by Golder Associates to the RPA Valuation Report dated September 25, 2014 (referred to as the “Golder Reply Report”).[^51]
• A limited critique report by PricewaterhouseCoopers dated September 25, 2014 (referred to as the PWC Critique Report”).[^52]
[168] Overall, I find the estimate value by the Plaintiff’s expert to be highly inflated.
i. The Plaintiff’s Expert Valuation Opinion
[169] The Plaintiff’s valuation expert was Don Hains. Mr. Hains is a geoscientist. He deals with industrial minerals in his practice. He does exploration and valuation work, and market studies. He does consultation work in geological engineering. He is a member of the Association of Professional Geoscientists of Ontario, which is a regulated profession. He has extensive experience in the valuation of mineral properties, especially the development and operation of aggregate pits and aggregate quarries.[^53] Mr. Hains authored the RPA Valuation Report and the RPA Supplemental Valuation Report.
[170] Mr. Hains was qualified as an expert in the development and assessment of operations of an aggregate project and in the valuation of mineral (including aggregate) properties. He applied the Standards and Guidelines For Valuation of Mineral Properties. These are standards set out by the Canadian Institute of Mining, Metallurgy, and Petroleum on the Valuation of Mineral Properties.[^54]
[171] Mr. Hains noted that the applications for Category 9 and Category 11 permits were filed on May 16, 2005. He noted that the 2005 permit applications took into account the presence of the realigned highway.
[172] Mr. Hains’s bottom line was that the Fair Market Value (“FMV”) of the property, without taking account of the realigned Highway 69, was $7.5 - $8.0 million.
Location and Access
[173] Mr. Hains noted that the Property is bounded by Crown land and quarry operations. Roads in the area (besides the realigned Highway 69) include Estaire Road to the west (the former Highway 69), Pagnutti Road (also known as Wanup Pit Road) at the north of the Property, and Old Wanup Pit Road to the south. Access is the major problem since the construction of the realigned Highway 69.
Geology and Resource Estimate
[174] Mr. Hains noted that there are two major geological units on the property: gneisses and mafic intrusives. The rock on the Property includes diorite-gabbro, a fine-grained rock that is the best quality. There are other types of gneissic rock that are of lesser, but still good, quality: gneissic gabbro; variable gneiss; and metagabbro, gneissic. He testified that the rock could be used for the most demanding MTO specifications, Superpave and Hotmix. He based that on the Trow testing.
[175] Mr. Hains estimated that the 2004 site plan would have resulted in 60,073,000 tons of aggregate available for mining on the Property. He estimated that the 2005 permit applications (if granted) would have resulted in 50,623,000 tons of aggregate available for mining on the Property. He estimated that the 2013 permits resulted in 20,338,000 tons of aggregate available.
[176] Mr. Hains examined the results of the blasting and sampling done in 2005. The rock was common aggregate. He noted that rock quarried from the Property was used by the MTO in constructing the realigned Highway 69. It was tested by the MTO and met the important specifications. He concluded that the aggregate would meet the MTO’s specifications for all MTO highway contracts.
Markets, Prices, Demand
[177] Mr. Hains looked at market demand as part of his valuation. Overall production of aggregate in Ontario increased (from 141 million to 148 million tons) between 1999 and 2012. Production of aggregate also increased in the Sudbury area as well. As for the future, Mr. Hains relied on one study indicating that consumption of aggregate between 2010 and 2013 would be about 13% higher on average each year. (There was an anomaly in the market beginning in 2007. Production jumped. That was because, Mr. Hains explained, the tonnage being counted included aggregate extracted from Manitoulin Island. He argued that it didn’t affect the market because it was transported by water to other markets.)
[178] Mr. Hains also looked at prices for aggregates that could be used to make Superpave and Hotmix products, the most important specialty aggregates. It was not possible to single out the Sudbury market but, based on his analysis of contracts and the overall price in Ontario, he believed that prices had been increasingly significant. Based on the quality of the rock, it was his opinion that aggregate mined from the Property could compete effectively in the regional market. He also opined that aggregate from the Property could attract prices that were similar to other contracts in the regional market.
Valuation
[179] Mr. Hains opined that the fair market value of the Property as of December 3, 2004 was in the range of $7.5-$8.0 million. The Hains report noted that the permits, as issued in 2013, were a significant reduction in resources potential compared to the original claims. Development of the Property is uneconomic as a result.
[180] Mr. Hains derived the FMV of the Property by using three approaches: the market approach, the cost approach, and the income approach. The market approach looked at comparable recent transactions. The cost approach looked at costs associated with developing the Property. The income approach (also called the discounted cash flow approach, which I refer to as the “DCF”) looked at the future estimated cash flow. Mr. Hains made that estimate and then discounted it to determine the net present value (referred to as the “NPV”). The critical factor in the DCF approach is the discount rate that is chosen.
[181] For the market approach, Mr. Hains looked at four transactions near the Property. They are summarized in this chart:
| Transaction | Size (Ha) | Product | Estimated Value ($) | Estimated Value/Ha ($/Ha) | Settlement Value/Ha ($/Ha) | Comments |
|---|---|---|---|---|---|---|
| 1. Marslen: Crown surface and mineral rights; settlement between Marslen and the MTO. | 19.6 | Quartz | $175,000 | $8,929 | $8,929 | Expropriated in 2006; permitted but exhausted. |
| 2. Marslen: Crown mineral rights; Settlement between Marslen and the MTO | 63.43 | Aggregate | $135,000[^55] | $2,129 | $2,522.66 | No permit but adjacent to licenced property; surface mining rights only. |
| 3. Marslen: Settlement between Marslen and the MTO. | 144.4 | Sand, gravel, crushed stone | $538,881 | $3,735 | $7,929 | Fee simple; permitted but not operating quarries |
| 4. Ethier: settlement between Ethier and the MTO. | 32.39 | Aggregate, sand and gravel, clay | $55,700 | $1,724 | $5,119 | Fee simple; licenced; partial takings. |
| Average: | $4,129 | $6,125 |
[182] Mr. Hains argued that Transaction 1 was the most comparable, but I find it difficult to accept his argument. That is because that property involves a different product. It is difficult to escape the conclusion that Mr. Hains chose that property as the most comparable because the settlement value per hectare was much higher than the others. Mr. Hains examined a variety of factors (including estimates of value provided by the property owners). He essentially concluded that each of the other transactions had been valued too low, based on a variety of factors, including the discount rate adopted. I find that difficult to accept as well. Each of these properties was valued on the basis of a negotiated settlement with the MTO. These were sophisticated, experienced operators. Moreover, each of these properties had either a permit or a licence or was associated with a producer that had permits and/or licences.
[183] Using the value per hectare on Transaction 1 (the most comparable), the value of the Property (based on 121.9 hectares) would be $1,088,445.00. Mr. Hains applied a 100% premium. He rounded the value up to $2.177 million.
[184] Turning next to the cost approach, Mr. Hains noted that the actual costs of development in 2003 and 2004 were $102,200.00.
[185] Mr. Hains then turned to the income approach. After going through his assumptions (which I need not repeat), he found that the appropriate discount rate starting in 2006 was 8%.
[186] DCF is a method of valuation that is used to determine the net present value of an asset. The total of all future cash flows of the asset is estimated. The cash flow is then discounted using the weighted average cost of capital (referred to as the “WACC”). The WACC represents the risk-free rate of return (usually the same return expected from long-term government bonds) and a risk premium. The risk premium represents the extra return demanded by investors to compensate for the riskiness of the asset. The riskier the asset, the higher rate of return demanded by investors. The discount rate usually represents the WACC.
[187] In his report Mr. Hains did not provide a detailed justification for the choice of an 8% discount rate. In his evidence he stated that he believed that an 8% after tax discount rate was the most appropriate. That was because, as a privately financed private sector operator, the Property in full operation would not have been subject to public stock market risk. He factored in that a minimum reasonable return on investment was 8%. He also factored in that the risk-free rate of return was 4%. He testified that the equity risk premium was 4%. The equity risk premium is the amount an investor would demand as the minimum return over and above the risk-free rate. Mr. Hains also factored in a size premium, based on the notion that the Property was so large.
[188] He therefore thought that under the circumstances 8% would be a reasonable rate since it was within the range looked at for other types of aggregate operations. He testified that he used very conservative projections for the Property’s revenue stream.
[189] Mr. Hains’s calculations yielded a NPV of $8,359,000.00, after tax. He also estimated that the lost profit was $1,857,459.00 due to rock used by the MTO in building the realigned Highway 69.
Conclusions by the Plaintiff’s Valuation Expert
[190] Mr. Hains weighted the three approaches. He assigned each approach a weight. He then added them up. He included the rock that was “sterilized” by the construction of the realigned Highway 69.
[191] The summary is set out in this table:
| Method | Value ($ million) | Weight (%) | Value component ($ million) |
|---|---|---|---|
| Market Approach | 2.177 | 20 | 0.44 |
| Cost Approach | 0.1 | 5 | 0.005 |
| Income Approach (Royalty – DCF) | 3.609-8.359 | 75 | 2.71-6.27 |
| Value of Material Consumed | 1.857 | ||
| Total Market Value | 100% | 5.01-8.57 |
[192] Mr. Hains found that, given the size and quality of the rock, the value of the Property was closer to the top end of the range.
[193] Mr. Hains also produced a Supplemental Report. The Supplemental Report addressed the impact of the DCF assuming the Property was taken to lease. He concluded that the range of market value was $5.01 million to $9.43 million.
ii. The Defendant’s Expert Geological Opinion
[194] The Defendant MTO’s experts on geology were George Schneider and Charles Mitz of Golder Associates. Only Mr. Schneider testified. He is a senior geoscientist. He has bachelor and master’s degrees in geology. Golder was retained to prepare an estimate of resources for the Property. The estimate was based on information provided by the government. He was qualified to give expert evidence on the potential aggregate resources on the Property and the potential commercial aggregate loss as a result of the realignment of Highway 69.[^56]
[195] Mr. Schneider reviewed all information relating to the Property, including mapping, rock quality data, and construction of a 3D geologic model. He generally accepted the mapping descriptions and naming by Mr. Hanilla. He examined the site plans and permit applications. He also examined the test result data provided by Trow Associates and Pioneer Construction for crushed rock.[^57]
[196] Mr. Schneider reviewed three scenarios: The potential extractable resources if no highway had been built; the potential extractable resources after the realigned Highway 69 was built; and the potential extractable resources based on the 1999 Highway 69 realignment plan. His calculations considered the actual setbacks for blasting from water sources and roadways. The following table shows his conclusions:
| No Highway | Highway as Built | 1999 Highway Plan | |
|---|---|---|---|
| Area size (ha) | 85.9 | 44.4 | 53.6 |
| Potential Extractable Volume (m3) | 17,826,000 | 10,444,000 | 10,915,000 |
| Potential Extractable Tonnage (tonnes) | 48,130,000 | 28,199,000 | 29,471,000 |
[197] Mr. Schneider found that the aggregate could meet MTO specifications for various uses but determined that further testing would be required. Ultimately, Mr. Schneider’s conclusion was that the bedrock on the Property is typical of bedrock throughout that part of Ontario. The Property was a good source of aggregate, but there was nothing especially rare or valuable about it. I am aware that Mr. Bull and Mr. Cheley both testified from their personal experience that the other properties in the area had lesser-quality rock than the Property. That may be so, but Mr. Schneider’s opinion was of wider application. I accept that aspect of his opinion.
[198] Mr. Schneider opined that no permit could have been obtained for the Property based on the fact that the MTO had already determined that a highway would be built. That was the subject of objection (and a ruling) by me. After reviewing all the evidence and the law, I conclude that it is unnecessary for me to consider Mr. Schneider’s opinion one way or the other in that regard. Ultimately, the differences between Mr. Schneider and Mr. Hains on matters of geology were significant but not enormous. Those differences related to the quality and quantity of the aggregate on the Property. At the risk of grossly simplifying Mr. Schneider’s evidence, he did not say that Mr. Hains was completely wrong about the quality – he was of the view that the quality was more variable and that more testing was required.
[199] The main difference, for the purposes of valuation, between Mr. Hains and Mr. Schneider was on the stage of development of the Property. They disagreed about whether the Property was still in the exploration stage as of the valuation date. I prefer Mr. Schneider’s view. The Property was still in the exploration stage. Little had been done beyond site visits and limited testing.
iii. The Defendant’s Expert Valuation Opinion
[200] Paul Bender testified for the Defendant MTO. Mr. Bender is a real estate appraiser. His speciality is valuation for expropriations. He values conventional properties, such as shopping centres. The majority of his work is in the field of land development. He has also valued aggregate and cement properties. He is a member of both the Canadian and American appraisal institutes as well as the Royal Institute of Chartered Surveyors, an international institute based in London. He has testified as an expert witness in about 15 trials in the Superior Court, as well as before the Ontario Municipal Board and several commercial arbitrations. He was qualified to give expert evidence in the field of property evaluation, including aggregate property evaluation.
[201] Mr. Bender noted that the best use of the property was for aggregate extraction, subject to a permit. The potential products were clear stone products, screenings, and washed chips. There was potential for higher-value products: gneiss aggregates used in “Superpave” asphalt, although Mr. Bender noted that additional testing would be required.
[202] Mr. Bender also noted the market context. He noted that demand for aggregate products was growing but that quarried aggregate is readily available in the Sudbury area. He also noted that aggregate production levels have been substantially lower than the allowable maximum annual tonnage under permit or license. Thus, a new quarry would face significant competition. In 2003, 142 properties were under license and 179 properties were under permit for aggregate production in the Sudbury District. In the immediate area around the Property, there were several other properties with aggregate permits or licences. Mr. Bender concluded that additional aggregate supply would exceed market demand. In his testimony, Mr. Hains was very critical of Mr. Bender’s analysis of the market conditions.
[203] The following map from Mr. Bender’s report indicates the various properties in the immediate area.[^58] I have already summarized them earlier in these Reasons:
[204] “L” and “K” on the map represent the Property.
[205] Mr. Bender concluded that, in 2005, when the permit applications were submitted, the property was in the early exploration stage. Only preliminary testing had been conducted regarding the quantity and quality of aggregate. No permit had been issued for aggregate extraction. The lands were not open and production was inactive. Given the well-established firms in the local area and the broader Sudbury District market conditions, a new company would face economic uncertainty and formidable challenges and risks. He found that the withdrawal of the lands had no material effect on the value of the mining claims. Therefore, the Plaintiff did not suffer a material loss beyond the costs incurred in conducting exploration.
iv. The Defendant’s Critique of the Plaintiff’s Valuation Expert
[206] John Siegel of PWC testified for the Defendant. He was the primary author of the PWC Critique Report. He was retained by Altus Group to prepare a report reviewing and replying to Mr. Hains’s report. Mr. Siegel is a business valuator. He has been qualified to give expert evidence about 500 times since 1979. He has testified before the Ontario Municipal Board, the Superior Court of Justice, the Financial Services Commission of Ontario, and some international tribunals. Mr. Siegel was qualified as an expert in business valuation.[^59]
[207] Mr. Siegel testified that he could not prepare a valuation report since he did not have an existing business, everything was hypothetical, and he did not have enough independent information. He testified that the PWC Critique Report was prepared in accordance with the standards of the Canadian Institute of Chartered Business Valuators. His mandate was to prepare a limited critique report. Mr. Siegel was not, as he put it, a “rock guy”. He testified that in matters of geology he deferred to Mr. Bender and Mr. Hains. He was not intimately familiar with the CIMVAL Standards. He reviewed the CIMVAL Standards and said that they were pretty close to the standards used by the Canadian Institute of Chartered Business Valuators. I found Mr. Siegel’s evidence to be helpful.
[208] PWC, through Mr. Siegel, made some assumptions that were different from Mr. Hains’s assumptions. PWC assumed, for example, that the proper date for valuation was June 23, 2003. That was the date that the Property was withdrawn from staking. PWC preferred that date, rather than the date that the MTO called for tenders for construction in December 2004. That was the date chosen by Mr. Hains.[^60]
[209] PWC was not critical of Mr. Hains for adopting an approach using market, cost, and income approaches. PWC was, however, critical of Mr. Hains weighting them respectively at 20%, 5%, and 75%. PWC said that was unusual and, in this case, unsupported in the report.
[210] PWC was critical of Mr. Hains’s choice of Transaction 1 as the most appropriate comparable for the market approach. Transaction 1 mined a different resource and had a permit, unlike the Property. PWC was also critical of the 100% premium applied by Mr. Hains – that was also unsupported. Mr. Hains’s commented that the cost approach is more applicable to properties at the exploration stage. PWC argued that there was no evidence to support that conclusion. PWC argued that by December 3, 2004, technical studies were not completed. The Property was in fact at the exploration stage. No permit had been obtained.
[211] PWC was most critical of the income approach applied by Mr. Hains. Some of the criticisms included:
• Mr. Hains applied a 30% tax rate for its discounted cash flow (DCF) and royalty stream methods. PWC argued that a 36% tax rate should be used. That was based on the actual combined federal/provincial corporate tax rate from 2004 to 2007. Mr. Hains countered in his evidence that the higher rate only applied to those years, and, in any event, the difference over time would be marginal. His point is valid. I agree with Mr. Hains on that point.
• Mr. Hains calculated net royalties at $1.00 per tonne. PWC argued that the royalty rates, $0.625 to $0.75 per tonne, were much lower for the comparable transactions. PWC further argued that there was no support in the material for that rate.
• PWC noted that the MTO extracted 957,493 tonnes of material from the Property for highway construction. Mr. Hains calculated that this lost material represented a loss of $1.856 million to the present value of operating cash flows or the present value of royalty cash flows. PWC argued that it was double counting to compute damages based on future production but then also add the lost profits from the material removed by the MTO.
• PWC also noted that Mr. Hains did not indicate how the Plaintiff would be able to sell an additional 500,000 tons of aggregate into the Sudbury market.
[212] PWC’s most significant criticism was of the discount rate applied by Mr. Hains. The discount rate applied in three of the four comparable transactions – 2, 3, and 4 – was respectively 19.6% as of April 11, 2006; 17.58% as of November 7, 2005; and 17.5% as of November 5, 2005. PWC did not accept Mr. Hains’s assumptions. PWC took the position that the Plaintiff was a start-up operation in the exploration stage of development. It was therefore much riskier than the established operations. The WACC should have reflected that. It did not. Mr. Hains did not, according to PWC, properly account for the risk factors. That caused him to use an unrealistic discount rate.
[213] PWC applied a discount rate of 19.4%. PWC believed that was the most appropriate rate. It was closer to the rate applied in Transaction 2, which PWC believed was the most comparable to the Property. PWC calculated the NPV based on a valuation date of June 23, 2003. PWC then calculated five possible independent valuation scenarios. They are set out in the following chart:
| Scenario | Annual Production (Tonnes) | Start Date | Discount Rate | NPV (MM) | Note |
|---|---|---|---|---|---|
| 1 (Sched 4)[^61] | 400,000 | Jan 1 2006 | 8% | $4.56 | DCF |
| 2 (Sched 5) | 300,000 | Jan 1 2006 | 8% | $2.62 | DCF |
| 3 (Sched 6) | 500,000 | Jan 1 2006 | 8% | $4.90 | DCF |
| 4 (Sched 7a) | 500,000 | Jan 1 2006 | 19.4% | $1.12 | DCF |
| 4 (Sched 7b) | 500,000 | Jan 1 2006 | 19.4% | $1.06 | Royalty |
| 5 (Sched 8a) | 400,000 | Jan 1 2006 | 19.4% | $0.49 | DCF |
| 5 (Sched 8b) | 400,000 | Jan 1 2006 | 19.4% | $0.85 | Royalty |
[214] Thus, PWC calculated that, with an appropriate discount rate, the NPV of the Property was between $490,000 and $1.12 million, depending on whether the Plaintiff decided to operate the property itself or collect royalties.
v. The Defendant’s Critique of the Plaintiff’s Experts
[215] The main conclusion of the Golder Reply Report was that the Plaintiff’s estimate of value was unsupported. That was because no permit could have been obtained for the Property.
[216] Mr. Schneider and Mr. Mitz, the authors of the Golder Reply Report, made other observations. They noted that the Plaintiff did no testing to determine the height of the water table. They noted that there were variations in the mapping of the water table from different sources. That had a potentially important effect on the amount of aggregate available.
[217] Mr. Schneider and Mr. Mitz noted that there was a difference between their estimate of the extractable aggregate with no realigned Highway 69 and Mr. Hains’s estimate (48,130,000 tons versus 60,073,000). That difference came from the failure to account for a variable water table by Mr. Hains. It also came about, Mr. Schneider and Mr. Mitz argued, because Mr. Hains did not calculate enough room for a blasting setback.
[218] Mr. Schneider and Mr. Mitz also questioned the assumptions behind the 8% discount rate used by Mr. Hains. They argued that the operating assumption of six days per week and 45 weeks per year was much higher than the actual experience of running a quarry, which meant that less aggregate could be extracted than Mr. Hains optimistically calculated. Furthermore, Mr. Schneider and Mr. Mitz were dubious that the Sudbury market could support an extra 388,000 to 500,000 tons of aggregate per year. They also believed it was unrealistically optimistic that the operation could commence in 2006. I note that this part of their opinion was outside the scope of their expertise, although Mr. Mitz and Mr. Schneider are obviously experienced in the area.
[219] Mr. Schneider and Mr. Mitz concluded as follows in the Golder Reply Report:
• It was unlikely that an addition 500,000 tonnes of crushed aggregate could be sold annually in the Sudbury market;
• A permit to extract aggregates from under the highway could never have been granted at the time the claims were staked, as the highway alignment had been finalized;
• The property was in the early stages of exploration and development for aggregates when staking was withdrawn in June 2003. No technical studies had been completed and no permit application had been made; and
• RPA’s resource estimates were affected by the water level assumptions that were derived without using reasonable hydrogeological principles. It is, however, likely that permit amendments would have allowed greater aggregate access and substantially increased the total available aggregate tonnage compared to the 2013 Permits.
[220] Mr. Schneider testified that it was likely that the Property contained high-quality rock that was suitable for aggregate mining. He agreed that an experienced geologist could get a pretty good idea of the quality of the rock for some purposes. However, he also testified that more testing was necessary.
vi. Analysis of Valuation
[221] Notwithstanding the well-organized and able argument made by Ms. Pratt in this complicated area, I find that the mining claims had no intrinsic value beyond the $425,000 that was eventually obtained for selling the permits to Bot Holdings. That is because no permit could have been obtained for the whole of the Property.
[222] Setting that aside, however, and adopting for the sake of argument that a permit could have been issued, I have serious difficulties with the value ascribed to the mining claims by Mr. Hains. Whatever the value might be if a permit were available, it was not $7.5-$8.0 million. I find it was significantly less.
[223] Mr. Hains is obviously highly knowledgeable and experienced but I do not accept his insistence that mining properties are so unique that only someone with his particular background can value them. I find it difficult to accept that only a valuator specializing in aggregate mining properties could conduct a proper valuation. At the end of the day, an aggregate mine is a business that extracts natural resources. No doubt there are features of an aggregate mine that are unique to it. No doubt that is true of all real estate properties, as Mr. Bender pointed out. No doubt it is also true of all natural resource properties.
[224] I turn to each of my key conclusions bearing on the valuation opinion.
The Amount of Aggregate on the Property
[225] There was something close to agreement between the experts that the difference of approximately 48,000,000 tonnes versus 60,000,000 tonnes was relatively marginal when valuing a resource property that could potentially yield aggregate for more than 40 years. I find that the difference is immaterial when valuing the resource in the absence of the realigned Highway 69.
The Regulatory Issues
[226] After hearing the evidence, I conclude that the single most important feature in valuing a natural resource property is actually the regulatory regime. The physical aspect of starting up an aggregate mine no doubt has technical challenges. The technical challenges might involve improving the road access or rehabilitating the property afterwards. Those challenges can be overcome by the application of resources to the problem – by spending money, in other words. The regulatory issues, however, are complicated and require balancing numerous competing issues – and an applicant for a permit or a licence must find a way to satisfy these. That was seen in the process that ultimately played out here: there were environmental reports that had to be prepared; there was consultation with First Nations; it had to be determined whether there were archaeological issues; and then there were the other government stakeholders – notably the MTO. The interplay between the Mining Act and the Aggregate Resources Act, the Provincial Standards, and all of the other aspects of the regulatory regime creates complexity and uncertainty. Mr. Hains’s – and Mr. Fudge’s – tendency to downplay the importance of the regulatory obstacles significantly undermined the weight of their opinions.
[227] This refusal played out in Mr. Hains’s insistence that the regulatory obstacles could have easily been overcome even in the absence of the realigned Highway 69. Mr. Hains’s assertion that aggregate extraction could have commenced in 2006 was extremely unrealistic. That might have been the case if the permit application had been made in 1990. That was almost certainly not the case when the permit applications were made in 2005. I accept Mr. Ruthenberg’s evidence on that point. I find that even in the absence of the MTO objections the regulatory process would have taken years, not weeks or months. Regulatory uncertainty would have been a major obstacle to the development of the Property, and Mr. Hains’s refusal to entertain that possibility undermined his opinion. Even if regulatory uncertainty did not play a role in whether or not the Plaintiff could have obtained a permit, it played an enormous role in when the Plaintiff could have obtained a permit. The “when” has enormous implications for the value assigned to the Property. The 18-month difference between June 2003 and December 2004 may not have been material to the valuation of the property. The 8-year difference between 2005 and 2013 certainly is. Delays of years can be significant.
Comparable Transactions
[228] I also find that Mr. Hains’s opinion was undermined by his evaluation of the four comparable transactions. I can see no reason why he would assign a value to the Property that was so significantly higher than the other properties – all of which were established operations with permits or (in one case) a licence. Transaction 1, the Marlsen quartz property, had a value of $8,929 per hectare. Mr. Hains applied a 100% premium to that amount. I simply do not see the justification for that premium. Mr. Hains gave several reasons for the premium, but he testified that, ultimately, it was based on the fact that the Property was much larger than the property in Transaction 1.
[229] Transaction 2 involved a property that had an aggregate permit (although only for surface rights). The negotiated value of that property was $2,128 per hectare. That was the transaction that PWC argued was most comparable to the Property. Transaction 4 involved an aggregate property with a licence for surface and underground rights. The negotiated value of that property was even lower - $1,724 per hectare. Mr. Hains’s valuation suggests that the Property was worth $17,858 per hectare on a market comparison basis. That is actually more than an 800% premium on the next most valuable aggregate property on a per hectare basis. I am aware that Mr. Bender testified that price per hectare might not be the most appropriate measure. The evidence suggests, however, that it is not insignificant. It formed part of Mr. Hains’s calculation.
[230] I certainly accept Mr. Hains’s evidence that it is difficult to do comparable transactions given the nature of mining properties. That was also the view of Mr. Siegel. I also agree that reasonable valuators may come up with different valuations. Nonetheless, in my view, Mr. Hains’s approach to these particular transactions undermines his opinion. I find that he essentially tried to shoehorn Transaction 1 into a comparable. I prefer the evidence of Mr. Siegel of PWC that Transaction 2 was actually the most comparable.
Double Counting
[231] I agree with PWC’s criticism that Mr. Hains double-counted the material taken from the Property for the construction of the realigned Highway 69. It is difficult to see the justification for double counting. Mr. Hains would not agree that it was an error. He testified that his discounted cash flow was only based on 19 million tons of rock, so the amount taken by the MTO was immaterial. He argued that it was relatively immaterial in the face of the 60 million tonnes of available aggregate on the property. I simply cannot agree with that logic. Either the amount was material or it was not.
Market Demand
[232] I found Mr. Hains’s analysis of market demand and the room for growth in the market to be overly optimistic. Although market demand was projected to grow in the long run, aggregate production in the Sudbury District had peaked in 2008 but otherwise remained relatively constant between 2005 and 2013. Between 3.9 million tons (2009) and 4.7 million tons (2011) was extracted during those years. Even if Mr. Bender’s analysis of the market was wrong, as Mr. Hains contended, there remained plenty of aggregate in reserve and under permit or license. As well, the operators in the Sudbury District extracted less than the maximum allowable tonnage each year. Mr. Bender testified that the realigned Highway 69 drove up demand during the years that it was under construction.
[233] There were many other experienced aggregate operators in the area that mined aggregate. They primarily include the various Ethier properties (including Marslen) and Alexander Centre Industries. Their yearly production did not exceed the maximum permitted tonnage under their various permits. That means that it is questionable how much room there was in the Sudbury market for another competitor, notwithstanding the growing demand. It is not necessary for me to wade into the debate between Mr. Hains and Mr. Bender on whether there was a virtual monopoly on the Sudbury market between Ethier and Alexander Centre Industries and their related industries.
The Discount Rate
[234] Mr. Hains applied a discount rate to the Property that was much lower than the comparable properties (other than Transaction 1 – and I prefer PWC’s view that it is not the most comparable transaction). I do not see any reason for it, despite Mr. Hains’s insistence that the Property merited it. I accept Golder’s opinion that there was nothing unusual about the bedrock on the Property. It was rock that was readily available throughout the area.
[235] Coming up with a discount rate involves making judgment calls about future cash flows and the riskiness of the asset. Reasonable valuators can disagree about the assumptions, the risk-free rate of return (although that is usually less controversial), and the risk premium. I am aware that Mr. Bull, who was to be an investor, testified that he expected an 8% return – similar to his other investments. That 8% matches the 8% used by Mr. Hains. I have already commented about Mr. Bull’s true expectations.
[236] The question is not whether Mr. Hains’s discount rate was correct; the question is whether it was reasonable. I find that it is simply too low and unsupported by the evidence. The discount rate was so much higher for three of the four comparable transactions that he looked at. The discount rate was also much higher for the transaction that I found to be most comparable. I also find that it is too low when other, established properties in the area had licenses or permits, had abundant reserves, and were already selling into the market. That makes the discount rate he actually adopted, 8%, unreasonable.
Quality of the Resource
[237] In terms of the quality of the rock, Mr. Hains based his opinion on the results of the Trow testing, his visual examination of the property, and the material actually used by MTO from the Property to build the highway. I accept that there was high-quality rock on the Property. I also accept, for the most part, Mr. Hains’s opinion that there was a significant volume of high-quality rock – but I think his opinion goes too far. We frankly just do not know the true volume. Mr. Hains agreed that some of the rock would have been of a more granular or sandy nature and therefore not suitable for the more stringent specifications. Furthermore, as I have indicated, I do not accept that the limited testing by Trow has wider application to the whole Property. Trow’s testing of two samples indicated that the rock would have to be further crushed in order to determine suitability for Hotmix and Superpave. Mr. Hains, however, simply assumed that all of the resources on the Property could have been used for these higher-quality aggregates.
[238] Finally, there is no evidence one way or the other whether the MTO used the material extracted from the Property for a high-quality product such as Superpave or a lower-quality product. The evidence is simply that some aggregate was removed and used. I do find, however, that there was high-quality rock on the Property that would have been suitable for the MTO. I find that aspect of Mr. Hains’s opinion is reasonable.
[239] In any event, the real question is not whether the Property had high quality aggregate. The real question is whether it was unique or more valuable than other properties in that regard. It was not.
Conclusion Regarding the Plaintiff’s Expert Valuation Opinion
[240] The critical piece of evidence for the Plaintiff on valuation is Mr. Hains’s opinion. Mr. Hains is obviously knowledgeable in the area of valuation and mining. He was clearly qualified to give expert evidence in the area. I accept some parts of his opinion, or at least find that some parts are not unreasonable. Overall, however, I found his calculations and his assumptions to be too optimistic. I do not see why his discount rate is so much lower than even the most valuable market transaction of the four he examined. I see no justification for the notion that the Property was that much more valuable than any other aggregate properties. I found his assumptions about the negotiation of blasting setbacks, market share, market growth, and start-up year to be unrealistic. In his market analysis he also appears to have been rather optimistic about the effect on price of having new supply in the market. Mr. Bender’s point that it would be hard to believe that a competitor could set up next to the Dill Pit and not be involved in a pricing war has much force.
[241] I also found Mr. Hains’s comment that the 2005 permit applications took account of the realigned highway puzzling. As I mentioned in my summary of Mr. Cheley’s evidence, I think it is fairly clear that the applications did not. Mr. Hains noted that new permit applications were filed in 2011, with considerably reduced extractable area. I ask, rhetorically, if the 2005 permit applications took account of the realigned Highway 69, then why were new applications required in 2011 with a reduced area for mining?
[242] Mr. Hains also suggested that there would still be enough extractable aggregate to support his valuation even after the highway was built. This valuation was based on having some 19,000,000 tonnes of aggregate available on the west side of the realigned Highway 69. He did not, however, account for setbacks for blasting. His position was that the setbacks were a matter of negotiation with the MTO. Mr. Carr argued that Mr. Hains was really suggesting that the Property could still be worth $7.5-$8.0 even after the construction. Mr. Carr submitted that demonstrated that Mr. Hains had become an advocate. Since he had lost his objectivity his opinion had no value: Carmen Alfano Family Trust v. Piersanti, 2012 ONCA 297 at paras. 105-108, 110-11. I did not read Mr. Hains’s evidence as going as far as to say the highway made no difference to the valuation. I also would not say that Mr. Hains completely lost his objectivity.
[243] Ultimately, I give Mr. Hains’s opinion little weight. That is because too many of the assumptions and conclusions were simply unrealistic. As I noted earlier, Mr. Hains occasionally twisted his facts to suit his theory, rather than the other way around.
[244] At the end of the day, I ask rhetorically, if the Property was the premium property with the best rock in the neighbourhood, why is there no evidence that one of the other experienced operators did anything to claim it for themselves, either to extract the aggregate or block a competitor? I note that in the absence of the realigned Highway 69 other operators not only had the equipment and facilities to extract aggregate; they also had the road access. I must not speculate about the reasons why other operators would not have tried to stake claims or apply for permits. That said, it doesn’t make any sense to me that the Property could be that much more valuable than everything else around it when nobody did anything about developing it until the MTO was about to build a road through it.
[245] In my respectful view, PWC’s valuation of the property in the range of $490,000 to $1.12 million is more realistic than the Plaintiff’s valuation.
V.DISPOSITION
[246] The action is dismissed. I wish to thank all counsel for their professional approach. This trial was notable for the very high standard of advocacy displayed by all counsel.
VI. COSTS
[247] The parties may each submit a costs outline and costs submissions of no more than five pages within 30 days of this judgment.
R.F. Goldstein J.
Released: July 5, 2017
[^1]: Throughout these reasons, I use the terms “MTO”, “the Defendant”, and “the Defendant MTO” interchangeably.
[^2]: Expropriations Act, R.S.O. 1990, c. E.26 (referred to as the “Expropriation Act”).
[^3]: Throughout these reasons, I will refer to the new highway was “the realigned Highway 69”.
[^4]: Aggregate Resources Act, R.S.O. 1990, c. A.8 (referred to as the “ARA”), s. 1(1) definition of “Minister”.
[^5]: Provincial Standards under the ARA, V.1.0 (Regulation 244/97)(referred to as the “provincial standards”).
[^6]: Exhibit 7.
[^7]: Exhibit 23, Fig. 4-4.
[^8]: Minister of Transportation v. 1520658 Ontario Inc., [2009] O.J. No. 4475, 90 M.V.R. (5th) 523, 2009 CarswellOnt 6923 (Div. Ct.)(referred to as the “Divisional Court Decision”), at paras. 31-33.
[^9]: Divisional Court Decision, at paras. 31-33.
[^10]: Exhibit 2, Tab 3.
[^11]: Exhibit 2, Tabs 4, 5, 6.
[^12]: Exhibit 2, Tabs 17, 18.
[^13]: Minister of Transportation v. 1520658 Ontario Inc., 2011 ONCA 373 (referred to as the “Court of Appeal Decision”).
[^14]: Exhibit 3, Tabs 36, 37, 38, 39.
[^15]: Minister of Transportation v. 1520658 Ontario Inc., [2009] O.J. No. 4475, 90 M.V.R. (5th) 523, 2009 CarswellOnt 6923 (Div.Ct.) at paras. 12-14.
[^16]: Mining Act, R.S.O. 1990, c. M.14, (referred to as the “Mining Act”), s. 1(1) definition of “Crown Land”; s. 27.
[^17]: Exhibit 12.
[^18]: The map setting out these lettered properties is found in the section of these Reasons entitled The Defendant’s Expert Valuation Opinion.
[^19]: Gordon, at para. 7.
[^20]: Mining Act, s. 44(1), 44(2), 48(5)(a).
[^21]: Public Lands Act, R.S.O. 1990, c. P.43.
[^22]: Canada Chrome Corp., at para. 67.
[^23]: Rock Resources Inc., at paras. 61-62.
[^24]: Rock Resources, at paras. 87, 88, and 104. Section 64(8) was enacted in 1999.
[^25]: Mining Act, s. 27(a).
[^26]: Exhibit 2, Tabs 11, 13. Mr. Hanilla’s report was admitted for the truth of its contents. All parties agreed that he would have testified as to the report’s authenticity.
[^27]: Mining Act, s. 48(5).
[^28]: Exhibit 2, Tab 3.
[^29]: Divisional Court Decision, at paras. 30-33.
[^30]: Court of Appeal Decision.
[^31]: Exhibit 5, Tab 4.
[^32]: Exhibit 2, Tab 3.
[^33]: Exhibit 2, Tabs 17, 18.
[^34]: Exhibit 3, Tabs 36, 37, 38, 39.
[^35]: Exhibit 3, Tab 26.
[^36]: Exhibit 2, Tabs 12, 14. Hanilla invoiced the Plaintiff $3,249.74. Trow invoiced the Plaintiff $1,476.60.
[^37]: These are expert opinions dealing with valuation. They are canvassed later in this opinion.
[^38]: Exhibit 16.
[^40]: Exhibit 5, Tab 14.
[^41]: Exhibit 5, Tab 15.
[^42]: Exhibit 5, Tab 18.
[^43]: Exhibit 5, Tabs 27, 28, 29, 30.
[^44]: Exhibit 5, Tab 32.
[^45]: Planning Act, R.S.O. 1990, c. P.13, s. 3(5).
[^46]: The Court of Appeal in Windsor did not comment on this part of the majority judgment, largely because it is settled law.
[^47]: Exhibit 23.
[^48]: Exhibit 24.
[^49]: Exhibit 36.
[^50]: Exhibit 42.
[^51]: Exhibit 37.
[^52]: Exhibit 47.
[^53]: Mr. Hains’ss C.V. was filed as Exhibit 22.
[^54]: Exhibit 21. Generally referred to as the “CIMVAL Standards”.
[^55]: The MTO and Marslen actually settled for $160,000.00.
[^56]: Although the Golder report was prepared by both Mr. Schneider and Mr. Mitz, I will generally refer to Mr. Schneider because he actually testified.
[^57]: Pioneer Construction tested rock extracted during construction of the realigned Highway 69.
[^58]: Exhibit 42, Fig. 2.
[^59]: I refer interchangeably between PWC and Mr. Siegel.
[^60]: In submissions, both parties seemed to accept that there was, in reality, little difference between the June 2003 and December 2004 dates for the purpose of valuation.
[^61]: The Schedules refer to the Schedules in the PWC Critique Report.