Canada: British Columbia Expropriation Association - Case Law Update

Antrim Truck Centre Ltd. v. Ontario (Transportation) – Supreme Court of Canada

On 7 March 2013, the Supreme Court of Canada ("SCC") released its decision in Antrim Truck Centre Ltd. v. Ontario (Transportation), 2013 SCC 13, the first significant SCC decision regarding expropriation law in many years. At issue in the case was how courts should assess the interference with an owner's use and enjoyment of private land when the interference results from the construction of public works.

BACKGROUND

Antrim Truck Centre Ltd. ("Antrim") brought a claim for compensation against the Province of Ontario alleging that, even though the Province had not actually taken any of Antrim's land, the construction of a new section of provincial highway effectively put its truck stop, which was located along the old highway, out of business. The Ontario Municipal Board ("OMB") agreed with Antrim's position and awarded damages of almost $400,000 for business losses and the reduced market value of its land. On appeal, the Ontario Court of Appeal overturned the award, essentially finding that it was reasonable for Antrim to suffer a permanent interference with the use of its land given that the highway construction served a greater public good, being a safer highway. In an unanimous decision, the SCC reversed the Ontario Court of Appeal and re-instated the original compensation award.

DISCUSSION

The legal foundation for Antrim's position was based on the obligation in the Ontario Expropriations Act that a public authority shall compensate an owner of land for the reduction in market value of land and personal and business damages even where none of the owner's land is actually acquired, a claim also referred to as "pure injurious affection." The applicable principles for assessing claims for injurious affection are found in case law. A claimant must satisfy the following three-part test:

  1. The damage resulted from action taken under statutory authority;
  2. The action would have given rise to liability at common law, but for that statutory authorization; and
  3. The damage resulted from the construction of the public work and not its use.

The first and third parts of the test were not in issue before the SCC. Rather, Antrim's claim turned on the second requirement: if the highway construction had not been performed under statutory authority, could Antrim have successfully sued for damages caused by the construction?" Antrim argued that it satisfied this part of the test because it would have been entitled to damages based on a claim of private nuisance. At common law, an owner of land abutting a highway enjoys the right of access to and from the highway and interference with such access may give rise to a claim in nuisance. Private nuisance claimants must show that the interference with the enjoyment of property is both "substantial" and "unreasonable."

There was little dispute that the highway construction caused "substantial" interference. The SCC primarily focused its analysis on the question of reasonableness, particularly in the context of interference caused by public works. The SCC held that there is a need to balance the competing interests of public authorities that undertake projects to further the public good, with the private interests of individual property owners. The SCC acknowledged that, to a certain extent, "everyone must put up with a certain amount of temporary disruption caused by essential construction." In concluding that a "reasonableness" analysis is required, the SCC essentially reversed the B.C. Court of Appeal's reasoning in Jesperson v. Chilliwack, (1994) Canlii 1662 (BCCA), that claimants would only have to establish a substantial or significant interference to prove their claim. The Antrim decision clarifies that the interference arising from a public work, even if "substantial", will not always be "unreasonable" so as to amount to a private nuisance.

Furthermore, the SCC made it clear that the importance of the activity cannot necessarily trump private interests. The distinction lies between, "on one hand, interferences that constitute the 'give and take' expected of everyone and, on the other, interferences that impose a disproportionate burden on individuals." In the circumstances of Antrim's case, the SCC held that the OMB was not wrong in its analysis of reasonableness, and the decision that Antrim had suffered disproportionately should be upheld. The OMB's damage award was restored.

IMPLICATIONS OF THE ANTRIM DECISION

The Antrim decision should highlight for expropriating authorities the importance of conducting strategic assessments of projects, to identify potential risks of claims for compensation even where no land is to be taken. Factors to keep in mind include:

  • Do not assume that the utility of a public work will always outweigh the resulting harm to neighbouring landowners, or that compensation will not be required;
  • Emphasize and develop evidence to prove betterment from the public work;
  • Avoid causing specific landowners to disproportionately shoulder the burden of the construction of a public work. To the extent possible treat landowners equally and consistently in terms of impact;
  • Consider mitigation options where appropriate: for example, provision of replacement parking and alternative access;
  • Put claimants to their duty to mitigate early and often;
  • Critically assess whether alleged damages are both causally related and substantial;
  • Make reasonable efforts to reduce the impact of public works and act fairly and openly, but recognize that some interference is reasonable for landowners to endure as part of the normal "give and take" of being part of a community;
  • Be aware that duration of construction is important – permanent impacts are far more likely to be considered unreasonable; and
  • Assess the other defences to injurious affection claims that were not raised in Antrim, or addressed in this case summary.

It is important to understand the Antrim decision in the context of the specific statutory scheme in Ontario, which clearly allows for compensation for damages arising from pure injurious affection. In contrast, while the B.C. Expropriation Act refers to "injurious affection if no land taken" (section 41), the application of our language is less clear and our courts have provided limited guidance on its interpretation. Owners' rights may differ in British Columbia for other reasons. For example, the Province of British Columbia enjoys statutory immunity under the B.C. Transportation Act from injurious affection claims. Furthermore, in cases where the legal basis for a business loss claim is the common law tort of nuisance, as was the case in Susan Heyes Inc. (Hazel & Co.) v. South Coast B.C. Transportation Authority, 2011 BCCA 77, the defence of statutory authority may apply to relieve an British Columbian authority from liability. It is unclear whether the Antrim decision will result in more successful compensation claims against public authorities in this province. However, it can be expected that more landowners will avail themselves of the Antrim decision to advance pure injurious affection claims, at least until our courts rule decisively on this issue.

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