In November, the B.C. Supreme Court (Court) issued an important
decision in the long-running litigation saga arising from the
construction of the SkyTrain's Canada Line between
Vancouver's downtown, the suburb of Richmond, and
Vancouver's international airport. The decision has significant
implications for public infrastructure projects, in identifying
those kinds of claims that may successfully be brought as a result
of large-scale construction and the limits on such claims. This is
particularly topical given the federal government's
announcement that it intends to fund a series of major public
infrastructure projects across the country in the near term.
In Gautam v. Canada Line Rapid Transit Inc.
(Gautam), the Court gave reasons after a common issues
trial in a class action about the impact of the Canada Line's
construction on a group of merchants and property owners along
Cambie Street in Vancouver. Built in part for Vancouver's 2010
Winter Olympics, the Canada Line was a massive infrastructure
project built through a public-private partnership. There have been
a series of individual and group actions related to this
construction dating back to about 2005.
Two construction methods were employed on the Canada Line. The
first was "tunnel boring" to create a path underground
without disturbing the surface. The other technique, known as
"cut and cover", was used for much of Cambie Street. This
more intrusive method entailed excavating a large trench,
constructing tunnels in the trench, and then rebuilding the street.
Over 250 businesses and approximately 70 owners of property located
on Cambie Street sued the members of the public-private
construction partnership for losses alleged to have resulted from
the decision to use cut and cover on that section instead of tunnel
The class members claimed for both nuisance and injurious
affection. The Court held that the claim of nuisance failed because
the defendants were exercising a discretionary statutory authority
and there was no practically feasible alternative to cut and cover.
Giving deference to the defendants, and after a careful review of
the evidence including the procurement process and available
technical alternatives, the judge concluded that tunnel boring was
impractical because of the associated risks. He found that
technical problems endemic to tunnel boring could have had
catastrophic consequences for the Canada Line project in regard to
costs and the construction schedule. In the circumstances, the
method of construction employed by the defendants was the only
practically feasible course open to them.
The Court allowed the claim for injurious affection, however.
This is a statutory cause of action under the Expropriation
Act (a B.C. statute that has analogues in most Canadian
jurisdictions). This encompasses injury to land, but not injury to
a person or business. In a precedent-setting judgment, the Court
determined that the cause of action was available to all members of
the class, landowners and commercial lessees alike. The Court went
on to find that injurious affection permitted claims for temporary
injury to rental values. A negative impact on rental values
constitutes injury to land sufficient to ground the cause of
action, even if this impact is only temporary. Having found that
the Canada Line's construction negatively impacted rental
values for some properties held by the class members, it was open
for the plaintiffs to establish injurious affection and claim
compensation on an individual basis. The amount of any such
compensation will be dealt with at a further hearing.
This decision sets limits on the ability of plaintiffs to claim
nuisance against major infrastructure projects being built for the
public good, and shows that the courts will exhibit deference to
practical project planning considerations beyond mere financial
costs. This type of approach will likely result in the elimination
of most business loss claims, which is the largest part of any
construction related action.
At the same time, the Gautam decision identifies rental
values as a new type of loss in Canada for which unsatisfied
landowners and leaseholders may pursue builders. It is a
circumscribed type of claim because it is not the loss of rent that
is compensable, but the consequent loss of value to the land. It
remains to be seen how expensive these types of claims will be, but
those involved in these types of mega projects should be aware of
this new risk class.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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