May 16, 2000, ECB Control No.: 30/96/183 (70 L.C.R. 52), 31/96/183 (70 L.C.R. 52)

REASONS FOR DECISION

1.  INTRODUCTION

[1]  The claimants, George Walter Horsley and Janet Horsley, owned a residential property of approximately one acre at 6603 Aulds Road in Nanaimo, British Columbia ("the Horsley property"). The claimant, Florence Ethel Jones, was Janet Horsley's mother and she owned an adjoining residential property of approximately the same size at 6607 Aulds Road ("the Jones property"). Both properties were required by the respondent, the Minister of Transportation and Highways ("MoTH"), for the Nanaimo Parkway. The properties were acquired by agreements under section 3 of the Expropriation Act, R.S.B.C. 1996, c. 125 ("the Act"), with acquisition dates of April 20, 1995 and March 31, 1995 respectively.

[2]  Prior to the hearing Ethel Jones had died and her claim is on behalf of her estate.

[3]  The sole issue in this case is the highest and best use of the two properties. The claimants say that the highest and best use is as a vacant site for medium density multiple family housing while MoTH says that the highest and best use was as residential holding property. This difference in highest and best use results in a difference in market value. The claimants value the Horsley property at $367,000 and the Jones property at $375,000. MoTH says the market value of the Horsley property is $242,000 and the Jones property is $232,000.

[4]  In addition to their claims for market value, both claimants claim five percent of the market value as occupiers pursuant to section 38 of the Act. In the event that the board decides the highest and best use is the existing use of residential holding, the claimants say that they are entitled to their moving expenses and other disturbance damages.

[5]  MoTH made an advance payment of $256,000 on the Horsley property on April 20, 1995. This payment was based on the market value in an appraisal report prepared and served under section 20 of the Act by Brian Cornborough. The advance payment on the Jones property on the same date was $234,000. This sum was also based on the market value in an appraisal report by Brian Cornborough. Mrs. Jones' estate received a supplemental advance payment on April 21, 1999 of $9,600, which sum was stated to be for the additional five per cent occupier's allowance.

2.  BACKGROUND

[6]  All of the claimants had lived in the immediate neighbourhood north of Nanaimo for many years prior to Ethel Jones and her husband purchasing the two contiguous properties, Lot 1 and Lot 2, situated on the south west corner of Aulds Road and Green Acres Way, in 1970. George and Janet Horsley acquired the corner property, Lot 2, from the Joneses in 1973 and built a one storey house on a finished basement the same year. The Joneses built a ranch style bungalow on a crawl space on Lot 1 in 1974. At that time neither property was within the boundary of the City of Nanaimo, but in the adjoining municipality of Wellington. Both properties were generally level although there was some moderate sloping at the rear of the properties. There was attractive landscaping around the residences, including a number of trees, while the southerly portions at the rear were still naturally treed. There were some views of coastal mountains from the front of the properties. Each property had a 36.6 metre (120 foot) frontage on Aulds Road, and was approximately 129 metres (422 feet) deep with the eastern boundary of the Horsley property along Green Acres Way. The Horsley property, Lot 2, was 0.46 hectares (1.14 acres) and the Jones property, Lot 1, was 0.47 hectares (1.16 acres).

[7]  The two properties are in the north-east corner of a residential subdivision. The houses in this neighbourhood are at least twenty years old and are predominantly single family residences on relatively large lots of between 0.5 and 2.0 acres. Mr. Horsley testified that it was an agreeable place to raise a family with friendly neighbours. The Esquimalt and Nanaimo Railway bisects the neighbourhood and on the other side of the railway is Green Lake. The area around Green Lake and Brannen Lake to the south is generally called Pleasant Valley.

[8]  Across Aulds Road to the north of the two properties is the Woodgrove Centre, Nanaimo's largest shopping complex, which opened in 1981. Along Aulds Road to the east was a large undeveloped property that since the acquisition in 1995 has become a new retail complex featuring "big-box" retailers, such as Home Depot and Staples, as well as a restaurant, a retail clothing outlet known as Mark's Work Wearhouse, and several banks. Further along Aulds Road, two blocks to the east, is the intersection with the Island Highway which also has commercial development, including a Costco outlet, a Future Shop and a Canadian Tire store.

3.  LAND USE CONTROLS

[9]  An important issue in this case is the land use controls that applied to the subject properties at the time of acquisition. In February 1988 Nanaimo adopted the Official Community Plan #3500 ("OCP"). Under this plan the two properties were designated Urban Residential. This designation was described as:

primarily... single detached housing on serviced urban-sized lots with local support facilities. It also includes duplexes, townhouses, and low density apartments, mobile home parks, local commercial and civic, and institutional uses as permitted on a specific zoning basis.

This OCP did not show the proposed Nanaimo Parkway, although the transportation sections of the OCP identified the general location of an arterial road in the area of the current Parkway.

[10]  In January 1993 the OCP was amended by the North Nanaimo Concept Plan Bylaw 6000 ("NNCP"). The North Nanaimo Planning Study that was part of the process for developing the NNCP states at p. 33:

Throughout the course of the North Nanaimo Planning Study it became evident that the community areas west of the Island Highway are distinct areas with very little in common with the rest of the study area. Pleasant Valley, Metral Drive and Green Lake are unique semi-rural areas.

[11]  The Executive Summary of the NNCP says that one of its purposes was to "provide a framework for considering rezoning, subdivision and development permit decisions". With respect to housing policy, the Summary states that "the [NNCP] provides protection for existing single family neighbourhoods and some rural areas, and designates sites near commercial centres for high density housing". One of the Community Goals is "To preserve the RURAL CHARACTER IN SPECIAL NEIGHBOURHOODS which desire to remain less urban in nature, particularly the Pleasant Valley/Green Lake areas ..."(emphasis in original). Under the NNCP the designation of the two properties was Rural. This designation provides:

Lower density, rural areas of Pleasant Valley are to be preserved through larger lot sizes. This reflects the current use pattern, provides a transitional use from the less developed lands to the west, and also reflects the lack of a sanitary sewer in the area. In the long term, reconsideration of residential lot sizes may be warranted as servicing becomes available, and the alignment of the Parkway is finalized.

Other areas which currently have a rural character and larger lot sizes ... also exist. However, these areas are more transitional in nature and are designated for Mixed Housing to reflect the siting of these areas within developing residential districts.

Under the heading Multi Family Medium Density it provides that "These higher density housing forms are not considered compatible within other residential areas." The proposed Nanaimo Parkway route is marked on the NNCP, although the Parkway was not constructed until 1997.

[12]  Nanaimo began working on a new OCP for the city in the mid 1990s and the first draft of this plan was released in November 1995. The two properties were identified Rural Residential in this draft. This designation carried the following description:

Infill for rural residential growth and other compatible uses will be encouraged, including: single family homes on large lots with limited services (0.8 hectares plus); other residential uses as permitted by the zoning in place at the time of adoption of this Plan; mobile home parks and RV parks on lots zoned for such uses at the time of adoption of this Plan; ..

[13]  The new OCP that was adopted in July 1996 designated the subject properties as Suburban Neighbourhood. This allowed:

Low density residential land uses, including: single detached dwellings; clustered housing; mobile homes; park and recreation uses; and resource uses that are compatible with suburban land use (eg. small scale farming, woodlots)

[14]  In July 1993 the City of Nanaimo adopted a new Zoning Bylaw 4000 that designated the two properties as RS1 (Single Family Residential). This zoning provided:

Low density urban or suburban type residential areas in which an open type of development will be encouraged.

Permitted uses included bed and breakfast, boarding or lodging, and single family dwellings. Duplexes were no longer a permitted use, although they had been a permitted use under the earlier R3 zoning under Zoning Bylaw 2370. In the new RS1 zone, the minimum lot sizes were 600 square metres (6,459 square feet) for serviced lots, 750 square metres (8,073 square feet) for serviced corner lots, and 2 hectares for unserviced lots. An additional single family dwelling is permitted on a lot exceeding 0.4 hectares.

[15]  At the time of acquisition, both properties were connected to the Nanaimo water supply. Neither of them was serviced for storm drains nor sanitary sewers, although there was a sanitary sewer main near the Horsley property on the other side of Green Acres Way and a storm drain along Aulds Road.

4.  HIGHEST AND BEST USE

4.1  Expert Witnesses

[16]  Both parties relied on a planning consultant and a real estate appraiser for evidence on the highest and best use. Glenn Carey of Glencar Consultants Inc. provided land use evidence on behalf of the claimants, while David L. Kirk of Cunningham and Rivard (Nanaimo) Ltd gave expert appraisal evidence. MoTH relied on Jay Wollenberg of Coriolis Consulting Corp. for planning advice and Rod Malcolm of Kent-MacPherson Appraisals for expert valuation evidence. The two appraisers differed in their opinion on the highest and best use of the properties. Kirk concludes that the highest and best use was medium density multi-family, while Malcolm concludes that it was the existing residential use with long term potential for redevelopment.

4.2  Claimants' Position

[17]  At the time of acquisition, both the Horsley and Jones properties were large single family lots improved with residences. The claimants' view that this is not the optimum use of the properties is based on a Feasibility Analysis prepared by Carey. Carey is a land use consultant based in Nanaimo specializing in assisting developers with the initial phases of proposed developments. Carey reviewed the site characteristics, the services, the local economy, and the land uses surrounding the two sites, which he treated as a combined parcel of 0.93 hectares (2.3 acres). He identified the applicable designation under the NNCP and the zoning by-law that were in effect at the relevant time and anticipated the new OCP that was currently being developed.

[18]  Carey's conclusion was that, were it not for the Parkway, the highest and best use of the sites was multi-family, commercial, or a mix of the two. It appears that the basis for this conclusion was, in large part, his interpretation of the NNCP which he read as designating the subject properties as Single Family. The housing policies of this designation provide:

The areas which are intended to remain predominantly single family are indicated on Map 4. However, the Plan recognizes that there are undeveloped sites within this designation which may be suitable for some low-density multiple family development. Low density multiple family development will generally be ground-oriented.

Notwithstanding the reference to ground-oriented housing, it was Carey's opinion that a low rise apartment could be constructed on the amalgamated site, subject to rezoning to RM-5 Medium Density Multiple Family (Suburban). Rezoning to C4 Mixed Use Commercial, C13 Service Commercial, or C15 Suburban Office were also options in his view.

[19]  In his appraisal reports on the two properties, prepared in September 1995, Kirk accepted and adopted Carey's report as the basis of his highest and best use analysis. With reference to Carey's report, Kirk commented on the lack of multi-family housing in the immediate neighbourhood, although vacant commercial property was available. He noted that there are a number of low rise apartment sites to the north of Woodgrove Centre. On this basis, and without any additional data of his own, Kirk concludes that the highest and best use was low rise medium density Multiple Family Residential with rezoning to RM-5 as outlined in Carey's report.

[20]  Carey discovered, some time before the hearing, that he had misinterpreted the colour shadings of the NNCP and that the actual designation of the property was Rural and, as previously described, there is no suggestion of any type of multi-family use in this category. During the hearing, Carey attempted to rationalize his opinion by contending that under the Act the NNCP should not be considered in any event because it includes the routing of the Nanaimo Parkway. Even if the NNCP were to be considered, he thought that the background study on which the NNCP was based, supported a different use because an overlay to the map showing future land use in the area seemed to him to show the subject as in Woodgrove, rather than Pleasant Valley, with the overlay shading the area to the west of Aulds Road as a major development node. Relying more on the OCP in effect in March 1995, he maintained his opinion that a multi-family use was still feasible.

4.3  Respondent's Position

[21]  Malcolm, the appraiser on behalf of MoTH, presented a detailed highest and best use analysis in which he considered a number of factors underlying the definition as set out by the Appraisal Institute of Canada. The four principal factors that he considered particularly applicable in this case were:

• Locational factors
• Physical characteristics of the property
• Land use controls
• Market and economic factors

Based on a number of considerations related to these four factors, Malcolm concludes that the optimal land use of the Horsley property was that of a residential holding property, with future potential for subdivision into six bareland strata lots. Similarly, it was his opinion that the Jones property had potential, in the medium to long term, for subdivision into five lots.

[22]  Malcolm tested a preliminary application of the Development Approach on each of the properties as a cross check, to determine whether this type of subdivision was feasible under existing market conditions. This test led him to conclude that subdivision would not at that time be economically viable. Even if the two parcels were amalgamated, it was his opinion that a substantial holding period would be necessary before any development was economically feasible.

[23]  In addition to the analysis of the appraiser, Malcolm, MoTH relied on an independent professional planning opinion with respect to the development potential of the two properties from a professional planner, Jay Wollenberg, of Coriolis Consulting Corporation. Wollenberg is based in Vancouver and advises developers, businesses, and different levels of government on land use planning, community planning and market analyses for retail, service, residential, office and industrial projects. He described the history of land use regulations in the area in some detail and reviewed all the applications to amend either the OCP or the zoning in the general area.

[24]  While the designation of the two properties in the OCP adopted in 1988 provided for low density multi-family, Wollenberg noted that this density was not necessarily applicable to the subject properties as it was only "as permitted on a specific zoning basis". At that time the applicable zoning bylaw designation, RS3, allowed duplexes but not multi-family housing. Other suggested uses in the OCP designation, such as townhouses and low density apartments were only available if there was a change in the zoning.

[25]  In January 1993, the NNCP was adopted which changed the OCP designation to Rural. It specifically provided that lower density areas of Pleasant Valley are to be preserved in their current use through larger lot sizes. It did contemplate possible subdivision as services became available. Later the same year, in July 1993, the new Zoning Bylaw 4000 was adopted that designated the properties RS1. This zoning provided for "low density urban or suburban type residential areas" and took away the duplex zoning allowed under the former zoning. No multi-family type uses were permitted under this zoning. These were the land use controls that were in effect at the time of the acquisition. Thus, at least since 1993, Wollenberg concluded, the City of Nanaimo land use control policy for the subject lands was low density residential with some potential for subdivision once services were available.

[26]  Wollenberg reviewed the list of applications to amend the OCP designation and to rezone property in Nanaimo between 1993 and 1995. There were no applications to amend the OCP in the residential subdivision containing the subject properties. There was one rezoning application to bring an existing duplex into conformity. In the general vicinity of the two subject properties beyond the immediate neighbourhood subdivision, he found only a few applications for changing the OCP designation from Rural or Suburban Residential to Urban Residential or for changing the zoning from RS1 to multi-family or commercial. Of the four that he found, only two were successful and he stated that these were located in more urban areas.

[27]  Wollenberg made a detailed analysis of the impact of the Nanaimo Parkway to measure its role in the planning issues of the area. Based primarily on the long-standing existing land use of the immediate neighbourhood of the subject properties, he concludes that, if the Parkway had not been built, it is likely that the boundary between urban density and low density residential use would have been Aulds Road and Green Acres Way. This would mean that the subject properties would still have been designated as low density residential.

[28]  Based on the various factors that he had reviewed, but without reference to any market considerations, Wollenberg concludes that the Horsley and Jones lots would likely remain single family residential. It was his opinion that if the sewer services were extended, the Horsley corner lot had potential to be subdivided into seven building lots. He also concludes that the Jones lot did not have any potential for independent development, but if it were consolidated with the Horsley lot, there was potential for a 12-lot site on the consolidated parcel.

4.4  Analysis as to Highest and Best Use Issue

4.4.1  Land Use Designation

[29]  The principal land use regulations in effect for the two subject properties, at the time of the taking in the spring of 1995, were the Nanaimo Zoning Bylaw 4000 that showed the land as RS1 Single Family Residential, and the NNCP that designated the sites as Rural.

[30]  It became clear early in the claimants' case that the land use consultant, Carey, had made a significant error in the land use analysis by mis-reading the NNCP, the sector plan for the Nanaimo OCP. He thought that the two subject properties were designated Single Family when in fact they were designated Rural. Single Family allowed "some low-density multiple family development" while Rural did not. Kirk, the appraiser for the claimants, perpetuated this error by not confirming the correct designation. It was these experts' opinion that a change of land use to a higher density use than single family would require only a re-zoning application that would conform to their interpretation of the OCP.

[31]  A secondary issue flowing from Carey's mis-reading of the NNCP designation is the density of use that he adopted. Even if Carey had been correct that the subject properties were designated Single Family, we note that the NNCP definition provides that "low density multiple family development will generally be ground-oriented." Carey, and by extension Kirk, did not satisfactorily explain why they did not explore the feasibility of a townhouse project nor examine the probability that an apartment would still require a variance or amendment to the OCP.

[32]  Carey originally suggested to the claimants that he amend his report but, for whatever reason, this was not done. The claimants took the position that his error in the designation was immaterial as, under the Act, this part of the NNCP should not be considered in determining highest and best use.

4.4.2  Section 33 and Designation of Rural in the NNCP

[33]  Section 33 of the Act provides the following:

33.  In determining the market value of land, account must not be taken of ...

(d)  an increase or decrease in the value of the land resulting from the development or prospect of the development in respect of which the expropriation is made, ...

(g)  any increase or decrease in value of the land that results from the enactment or amendment of a zoning bylaw, community plan or analogous enactment made with a view to the development in respect of which the expropriation is made.

[34]  The claimants referred us to Lord Denning's judgment in Wilson v. Liverpool City Council, [1971] 1 All E.R. 628 in which he described at p. 634 the gradual impact of a proposed project on the value of land surrounding it:

At first it has little effect because [the proposed project] 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 as at the time when the value is to be assessed.

By the time the NNCP was adopted in 1993, the claimants say that the location of the Nanaimo Parkway was known and was having an impact on value. The claimants relied on Vision Homes Ltd. v. Nanaimo (City) (1994), 54 L.C.R. 103 (B.C.E.C.B.) a case involving a property not far from the two properties in this case and therefore being subject to the same OCP and NNCP. In Vision Homes, this board concluded that pursuant to section [33(g)], those sections of the OCP, the NNCP, and the associated by-laws that were made with a view to the proposed project for which the land was expropriated should be ignored in making a determination of highest and best use. As a result, those portions of the OCP and associated by-laws that located the proposed road on the subject lands and that required the developer to construct two lanes of the proposed road were disregarded when the determination of highest and best use of the subject lands was made. Counsel for the claimants acknowledge that, in Vision Homes, the board did not ignore those portions of the OCP and associated by-laws that specified the designation of use and the zoning for the property. However, the claimants submit that in this case, unlike in Vision Homes, the NNCP created a new and lesser designation of use and therefore pursuant to section 33 (g) this use ought to be ignored. Further, since the construction of the Nanaimo Parkway created a boundary, cutting off the two properties in this case from the commercial development to the north, this is an additional reason for the NNCP designation to be excluded.

[35]  MoTH's position is that the NNCP need not be excluded under section 33(g). The NNCP, it says, was not made with a view to the development of the Nanaimo Parkway, although it refers to the Nanaimo Parkway. The designation of the subject properties and their immediate neighbourhood as Rural is a result of the special nature of the neighbourhood and not as a result of the Parkway. Although the proposed Parkway forms a boundary to this neighbourhood in the NNCP, this neighbourhood was discrete long before the NNCP when it was excluded from the commercial development for the Woodgrove Centre. MoTH referred us to the Court of Appeal's decision in Vision Homes (59 L.C.R. 106 ) in which Prowse J.A.speaking for the court stated at p 110:

the critical issue in determining whether previous by-laws, plans or other enactments should be excluded in determining market value is whether those provisions were passed "with a view to the development in respect of which the expropriation is made". In other words, the issue is one of nexus or causation.

MoTH also relied on Kramer v. Wascana Centre Authority, [1967] S.C.R. 237, a decision of the Supreme Court of Canada. The majority of the court upheld the arbitrator's finding that a Regina by-law was an independent zoning enactment for the entire city and was not part of the expropriation proceedings by the province for the Wascana Centre - although the city by-law was passed with knowledge of the Wascana Centre Scheme. MoTH submits that the NNCP is similarly a Nanaimo by-law for the entire north Nanaimo area and is not part of MoTH's expropriation proceedings for the Nanaimo Parkway.

[36]  Adopting the test set out by Madam Justice Prowse in Vision Homes, we conclude that in this case there is not sufficient nexus between acquisition of the two properties for the Nanaimo Parkway and the designated use of the properties as Rural in the NNCP that this designation should be ignored. We agree with MoTH that this designation, which is applied to the whole neighbourhood, is as a result of the nature of the neighbourhood rather than the presence of the Nanaimo Parkway. The neighbourhood is at least 20 years old and we note the frequent references in the NNCP to preserving existing neighbourhoods and the rural character of specific neighbourhoods including the one in which the subject properties are located. While the Nanaimo Parkway separates the subject properties and the Woodgrove Centre to the north, we accept Wollenberg's analysis that in the absence of the Parkway, it is probable that the boundary between commercial and low density residential would be in the same place.

[37]  In our opinion the present case is quite different from that of Vision Homes. In that case it was only those sections of the OCP, the NNCP, and the associated by-laws that were specifically related to the location and construction of the proposed project, Uplands Drive, which were ignored. The designation of use in the OCP and the zoning by-laws were not excluded. There was not sufficient nexus between the expropriation and this part of the OCP that those provisions needed to be excluded. Similarly, in the present case, the designation of Rural in the NNCP is not specifically related to the Nanaimo Parkway.

[38]  Therefore the NNCP and the designation of the two properties as Rural is one of the factors to be considered in the determination of highest and best use.

4.4.3  Other factors

[39]  It is true that the subject properties are on a corner site, with the Woodgrove Centre to the north and new commercial development to the east. Sewer facilities are located not far from the Horsley property. It is also the case that there are some sites near Woodgrove Centre on which low rise apartments or townhouses have been built. However, there was evidence that many of these multi-family sites were built on vacant land rather than on sites with existing single family houses in established neighbourhoods.

[40]  While the claimants emphasized the subject properties' location across the street from Woodgrove Centre, they have ignored the fact that these properties are part of a long-standing single family neighbourhood. As already indicated, we accept Wollenberg's review of the NNCP and its emphasis on preservation of existing neighbourhoods. The zoning map in effect at the date of acquisition clearly delineates the boundaries of the single family neighbourhood containing the subject sites as Green Acres Way to the east and Aulds Road to the north. We note that the only rezonings in this neighbourhood are a few small pockets of two family housing, apparently rezoned to bring them into conformity with existing uses.

4.5  Conclusion as to Highest and Best Use

[41]  The test for determining a highest and best use that depends on a change in the OCP or rezoning is that there must be a probability or a reasonable expectation that such a change in the regulation will take place. See Farlinger Developments Ltd. v. Borough of East York. (1975), 8 L.C.R. 112 (Ont. C.A.) at p 123. The claimants' contention in this case that the two sites could be consolidated and could reasonably support an apartment site with an amendment to the OCP and RM-5 rezoning is not supported by the evidence.

[42]  First of all, Kirk, in relying on Carey, without any independent verification, accepted an incorrect land use designation and a density of use that was not supportable even if the error had not been made. Kirk also failed to consider such factors in the highest and best use analysis as market demand and the potential for profit that were not considered by the land use consultants. While an appraiser may be assisted by the analysis of a planner or land use consultant, in the board's opinion, it is the responsibility of appraisers to determine the highest and best use on which to base their valuation.

[43]  Both Malcolm and the planner, Wollenberg, correctly identified the site as Rural in the NNCP, with no suggestion of a multi-family use. We have determined that this designation of Rural is to be considered in this analysis. Wollenberg's comprehensive over-view of the land use regulations was of assistance to us in establishing that there was little possibility, much less probability, of an amendment to this designation as well as a rezoning to RM-5, both of which would be required for a low rise apartment site in this neighbourhood. Malcolm's analysis was detailed and included the market and economic factors that were not addressed by Kirk. We therefore agree with MoTH that the highest and best use of each of the sites was as the existing use as a residential property with long term potential for development to a higher density of single family use.

5.  MARKET VALUE

[44]  Kirk and Malcolm used entirely different data to value the two subject sites. Based on his opinion of the highest and best use for the two properties being consolidated and rezoned to RM-5, Kirk applied the Direct Comparison Approach to the land as if vacant, and used seven sales of sites for multi-family use. All of these comparables were vacant sites and all but one were already zoned for multi-family use. Kirk then applied an 8% discount rate to allow for a 24 month period for rezoning and a change in the OCP. His conclusion is a market value of $367,000 for the Horsley site and $375,000 for the Jones site.

[45]  Malcolm used five sales of single family dwellings on small acreage lots. Two of these sales had potential for subdivision on a medium to long term basis. Malcolm concludes a market value on this Direct Comparison Approach of $242,000 for the Horsley property that was a 0.46 hectare site improved with a house with a full finished basement. He concludes a market value of $232,000 for the Jones property that was a 0.47 hectare site improved with a rancher style bungalow.

[46]  Because the board has found that the highest and best use is the existing use as residential property with long term potential for subdivision, it follows that Kirk's analysis based on vacant multi family sites is of no assistance to us.

[47]  Malcolm did not make specific adjustments to his comparables and therefore it is difficult for us to definitively determine the comparability of the sales he used in direct market comparison. The lack of adjustments also makes it difficult to compare the two subject properties. He did provide detailed descriptions of the differences between the comparable properties and each of the Horsley and Jones properties. Malcolm placed most weight on two transactions for each property that he identified as possessing the most similar characteristics to the respective subject properties. The sales prices for these comparables, after adjustment for market conditions, were $232,000, $238,326 and $244,398. Malcolm concludes a value of $242,000 for the Horsley property and $232,000 for the Jones property, based on these sales. Malcolm's valuation evidence is detailed and we have no reason to disagree with his conclusions. We therefore find the market value of the Horsley property as $242,000 and the Jones property as $232,000.

[48]  The claimants asked us to draw an adverse inference as a result of MoTH's failure to call the appraiser, Brian Cornborough, who had carried out the appraisals that were served with the advance payments in the spring of 1995 in accordance with what is now section 20 of the Act. They relied on the case of McTavish v. McGillivray, unreported [July, 18 1997] B.C.S.C. At par 17 Burnyeat J. quotes the following passage from Wigmore on Evidence, 3rd ed., Vol.II, p. 162:

. . . The failure to bring before the tribunal some circumstance, document, or witness, when either the party himself or his opponent claims that the facts would thereby be elucidated, serves to indicate, as the most natural inference, that the party fears to do so, and this fear is some evidence that the circumstance or document or witness, if brought, would have exposed facts unfavourable to the party. These inferences, to be sure, cannot fairly be made except upon certain conditions; and they are also open always to explanation by circumstances which make some other hypothesis a more natural one than the party's fear of exposure. But the propriety of such an inference in general is not doubted.

[49]  We do not think that this principle applies in the circumstances before us. The Act requires an expropriating authority to serve on a claimant the advance payment together with a copy of the appraisal report on which it is based. Thus the claimants have a copy of Cornborough's two appraisals. These appraisals valued the Jones property at $234,000 and the Horsley property at $256,000, compared to Malcolm's valuations of $232,000 and $242,000 respectively. There is no basis for requiring the expropriating authority to continue to rely on its initial expert opinion at a compensation hearing several years later. There was no suggestion that Cornborough might have known any additional facts that could only be elucidated by him being called as a witness. In fact, as MoTH points out, an appraisal for a section 20 payment is carried out before the actual expropriation and the construction of the project so that Cornborough might not have had all the relevant information.

6.  OCCUPIER'S ALLOWANCE

[50]  The claimants plead that since they occupied the two residences on the properties, they are entitled to the extra allowance under section 38(1) of the Act. Section 38 (1) provides:

38 (1) If expropriated land includes a residence that is

(a) occupied by a person who, in respect of that residence, would be entitled to a grant under the Home Owner Grant Act, and

(b) not being offered for sale by him or her on the date the expropriation notice under section 6 (1) (a) or order under section 5 (4) (a) was served on him or her,

the person is entitled to be paid, in addition to the amount required to be paid to him or her under section 34, an amount equivalent to 5% of the market value of his or her estate or interest in that part of the land, not exceeding 0.5 ha, that is used personally by him or her for residential purposes.

[51]  There was evidence from Mr. Horsley that at the time of the acquisition in the spring of
1995, he and his wife lived in the residence on their property. Mrs. Jones was in a nursing home at this time but since her entitlement was not contested we assume that her residence still qualified under the Home Owner Grant Act, R.S.B.C. 1996, c. 194. Neither property was for sale at the relevant time and both of them are less than 0.5 hectares.

[52]  Therefore under section 38(1) Mr. and Mrs. Horsley are entitled to 5% of the market value of their property or $12,100. Mrs. Jones' estate is entitled to 5% of the market value of her property or $11,600.

7.  DISTURBANCE DAMAGES

[53]  The claimants plead in the alternative that if we conclude the highest and best use is the existing use as a residential holding property, they claim moving expenses and other disturbance damages. The difficulty is that we were given no evidence of any moving costs or disturbance damages. The onus is on the claimant to prove the disturbance damages. See E.C.E. Todd in The Law of Expropriation and Compensation in Canada, 2nd ed. (Carswell Co. Ltd, Toronto, 1992) at p. 322 and Sutherland v. Langley (Township) (1999), 68 L.C.R. 49 (B.C.E.C.B.) at pp 66-67. In the absence of any evidence on this issue we must deny this claim.

8.  SUMMARY

[54]  Mr. and Mrs. Horsley have been awarded a total of $254,100. Since the advance payment of $256,000 is more than the compensation awarded, under section 30(2) we certify $1,900 as a debt due by the Horsleys to MoTH.

[55]  The estate of Mrs. Jones has been awarded a total of $243,600. She received an initial advance payment of $234,000 plus an additional advance payment of $9,600 on April 21, 1999, for a total of $243,600.

9.  INTEREST

[56]  Since neither the Horsleys nor Mrs. Jones' estate have been awarded any compensation in excess of their respective advance payments they are not entitled to any interest.

10.  COSTS

[57]  Under section 45(5) of the Act, if the compensation awarded is less than 115% of the advance payments, the board has a discretion in awarding the claimant his or her reasonable legal appraisal and other costs. In this case the claimants have received no extra compensation, although we note that Mrs. Jones was not provided with full compensation until the second advance payment in April 1999, shortly before the hearing.

[58]  We have reviewed a number of cases in which this board has exercised its discretion to award less than 100% of the claimant's costs. The test is whether it was reasonable for the claimant to have brought expert evidence and arguments to a hearing. See Baines v. British Columbia (Minister of Transportation and Highways) (No. 2) (1997), 62 L.C.R. 210. In this case the only issue was highest and best use. In the end, we did not accept the highest and best use put forward by the claimants. However, the issue is not whether we rejected the claimants' highest and best use but whether it was reasonable for the claimants to continue to rely on their experts' reports. Carey realized that he had made a mistake in the NNCP designation of use prior to the hearing. In addition to this mistake, in our opinion, the claimants' two experts failed to properly consider two of the basic tenets in determining highest and best use, regulatory controls and market conditions. In our view, it ought to have been apparent to the claimants and their advisors prior to the hearing, that given their initial mistake in the NNCP designation, continuing to rely on a highest and best use as an apartment site was an uphill battle. The claimants did have a fallback argument that the designation in the NNCP ought to be ignored in any event. Although this was also rejected, we think that there was some reasonable basis for it being brought. After considering all of the circumstances in this case we award the claimants 90% of their actual reasonable legal costs and 70% of their actual reasonable appraisal and land consultant's costs.

EXPROPRIATION COMPENSATION BOARD

Sharon I. Walls, Vice Chair
Lesley Eames, AACI, P.App., Board Member 
Julian K. Greenwood, Board Member