Canada: You're Expected To Give And Take, But Not Be Unreasonably Burdened: SCC Clarifies The Law Of Injurious Affection

On March 3, 2013, the Supreme Court of Canada (the "SCC") issued its decision in the matter of Antrim Truck Centre Ltd v Ontario (Transportation).1 Allowing the appeal, the SCC restored the decision of the Ontario Municipal Board (the "Board") which awarded the claimant damages of $393,000. The decision clarifies the law surrounding the rights of land owners to compensation for "injurious affection" stemming from construction of public works where no land is expropriated.

Facts

Between 1978 and 2004, Antrim Truck Centre Ltd. ("Antrim") owned a property on Highway 17 near Ottawa on which it operated a busy truck stop servicing drivers travelling both east and west along Highway 17. In 2004, the Ministry of Transportation ("MTO") constructed a new stretch of Highway 417 parallel to the segment of Highway 17 on which Antrim's property was located.

The construction by MTO significantly reduced access to the Antrim property from Highway 17 and failed to provide direct access from another highway, Highway 417, resulting in diminished traffic to Antrim's property and business loss. Antrim brought a claim for compensation for injurious affection under the Expropriation Act (the "Act") to the Board.

Injurious affection may occur with or without physical expropriation of land. In circumstances where no land is taken from the landowner but where, as in the Antrim case, construction by a statutory authority negatively impacts the use and enjoyment of the owner's land, Section 1(1)(b) of the Act is applicable and defines injurious affection as:

(i) such reduction in the market value of the land of the owner, and

(ii) such personal and business damages,

resulting from the construction and not the use of the works by the statutory authority, as the statutory authority would be liable for if the construction were not under the authority of a statute.

Prior decisions

The Board found that the construction of the new stretch of Highway 417 resulted in reduced access to the Antrim business that constituted "serious impairment in nuisance" and awarded Antrim $58,000 for business loss and $335,000 for loss in market value of the land.

The Divisional Court upheld the Board's decision, which was subsequently set aside by the Court of Appeal on the basis that the Board failed to enumerate and explicitly consider all three factors in its reasonableness analysis and also "failed to recognize the elevated important of the utility" of MTO's conduct.

SCC decision

From the outset Justice Cromwell, writing for the unanimous Court, focused on the singular contentious element of injurious affection in this case: If the construction of Highway 417 had not been undertaken pursuant to statutory authority, could Antrim have successfully sued for damages under the law of private nuisance?

A claim in nuisance entails the interference with the landowner's use or enjoyment of land that is both substantial and unreasonable in all of the circumstances. In the Antrim case, only the reasonableness of the interference was at issue. While the SCC endorsed the various factors to be considered in determining the reasonableness of the interference (its severity, character of the neighborhood, utility of the respondent's conduct, and the sensitivity of the claimant), it rejected the stringent approach of the Court of Appeal in the application of those factors. The SCC adopted the view that the factors are not a mandatory checklist which must be explicitly enumerated, but form part of a comprehensive analysis that includes consideration of all of the circumstances.

The correct analysis, held the Court, is to be framed as "whether, in all of the circumstances, the individual claimant has shouldered a greater share of the burden of construction than it would be reasonable to expect individuals to bear without compensation."

The balancing of private and public rights is highlighted in the key distinction made by the Court "between interferences that constitute the "give and take" expected of everyone and interferences that impose a disproportionate burden on individuals." In the case before the Court, Antrim's rights were interfered with by the construction of the new stretch of Highway 417, which interference inflicted "significant and permanent loss".

The underlying theme throughout the decision is the balance between the fundamental rights of private landowners and state power. The SCC made it clear that private property ownership interests and public utility are not to be afforded equal weight. It also noted that if such an approach were endorsed, public works would overshadow most injurious interferences with a private landowner's rights, negating the purpose of compensation for injurious affection.

Footnotes

Antrim Truck Centre Ltd v Ontario (Transportation), 2013 SCC 13.

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2013 McMillan LLP

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