October 11, 2000, E.C.B. No. 68/92/190 (70 L.C.R. 235)

Between:	Glendale Trading Ltd. and Elke Erika Reiner Claimants
And:	Her Majesty the Queen in Right of the Province of British Columbia as Represented by The Minister of Transportation and Highways Respondent
Before:	Sharon I. Walls, Vice Chair Lesley Eames, AACI, P.App., Board Member Firoz R. Dossa, Board Member
Appearances:	Reinhard Burke, For the Claimants Alan V.W. Hincks, For the Respondent

REASONS FOR DECISION

1.  INTRODUCTION

[1] The claimant, Elke Reiner, owns a residential property, Lot 5, at 2006 MacKenzie Avenue North in Williams Lake, British Columbia. She and her husband live in the residence on the property. Adjacent to Lot 5 to the east, at 2000 MacKenzie Avenue North, is Lot A which is improved with a convenience store. The claimant, Glendale Trading Ltd. ("Glendale"), owns Lot A. Elke Reiner and her husband are the only principals of Glendale Trading Ltd. and operate the convenience store business known as Glendale Trading.

[2] MacKenzie Avenue is the main highway to the industrial and mill area on the east side of the Columbia River. Lot A occupies the north west corner of MacKenzie Avenue and Pine Street. The respondent, the Minister of Transportation and Highways for British Columbia ("MoTH"), acquired a strip of land from the frontage of Lot 5 for the MacKenzie Avenue Upgrading Project ("the Project"). No land was taken from Lot A; however, the roadbed was built up along the frontages of Lot A on both MacKenzie Avenue and Pine Street. Both claimants and MoTH entered into an agreement under section 3 of the Expropriation Act, R.S.B.C. 1996, c. 125 ("the Act") for the land taken from Lot 5. This agreement provided that the date set for possession was June 28, 1991.

[3] Construction of the Project occurred between October 1991 and September 1993.

[4] Elke Reiner, as one of the two claimants, sought compensation under section 40(1) of the Act for the market value of the strip taken from Lot 5; for injurious affection to the remainder of Lot 5; and for disturbance damages for various problems during the period of construction such as vibration, severe dust, and additional clean up costs. All of these claims with respect to Lot 5 were settled by the parties during the hearing.

[5] Glendale also made a number of claims. MoTH pleaded that Glendale was not an owner entitled to compensation under the Act because no land was taken from its property, Lot A. After the conclusion of the evidence, MoTH conceded on the particular facts in this case that Glendale was also entitled to bring a claim for its losses under subsections 40(1) and (6) even though there was no direct taking from Lot A. Glendale had an option to purchase Lot 5 and claimed for the reduction in value of its interest in Lot 5 as a result of the taking. It also claimed for the temporary loss of use of part of Lot A between October 1991 and October 1993 when MoTH vehicles entered Lot A during the course of construction. Glendale also made a claim for injurious affection to Lot A under section 40(1) as a result of the construction of the Project. Glendale claimed that the increased elevation of MacKenzie Avenue and Pine Street had a number of negative impacts, including drainage problems on Lot A, particularly in the winter. Finally, Glendale claimed for business loss from the store during the two-year construction period but Glendale's claims for all disturbance damages, including business losses, were settled during the hearing. Thus, the only claims that remain for adjudication by the board are Glendale's losses under section 40(1) with respect to the option to purchase Lot 5; the temporary loss of use of part of Lot A during the two years of construction; and injurious affection to Lot A.

2.  BACKGROUND

[6] The Reiners have operated the Glendale Trading convenience store through their company since 1964. At that time it was a 2,000 square foot store on two lots on the corner of MacKenzie Avenue and Pine Street. In 1968 or 1969 they purchased two adjacent lots, Lots 4 and 5, for future expansion. Over the years they have expanded the store three times, so that it now has approximately 8,790 square feet of retail space plus a partial basement and covered entry. In 1984 Lot 4 was amalgamated with the two other lots to form Lot A. The total area of Lot A is approximately 0.26 hectares (28,000 square feet), including the parking lot of approximately 0.15 hectares (16,500 square feet). The store building is set well back from MacKenzie Avenue, close to Pine Street. The convenience store has paved parking in front of the store and on the west side between the store and the residence. There are two accesses to the parking lot, one from Pine Street and one from MacKenzie Avenue. At the time of the acquisition from Lot 5 there were gas pumps in front of the store near the Pine Street access but the volumes pumped per year were relatively low. The pumps ceased operation in 1996 and the tanks were removed in 1998 or 1999. Lot A is zoned C-4, Urban Commercial.

[8] In 1976 the Reiners moved into the residence on Lot 5 and have resided there since that date. Before the Project the house was set back 40 feet from MacKenzie Avenue. The property was zoned R-1, Single Family Residential.

[9] On May 10, 1991 Mrs. Reiner granted an option to purchase Lot 5 to Glendale. This option was not registered in the Land Title Office.

[10] The acquisition in June 1991 was only from Lot 5. The area of Lot 5 before the acquisition was 1,005 square metres (10,821 square feet). The strip that was acquired along the full 66 foot frontage of MacKenzie Avenue was 8.7 feet wide at the west end, tapering to 4.6 feet at the east end. The reference plan showed the area taken to be 39.93 square metres or 430 square feet. MoTH made an advance payment to Mrs. Reiner of $2,301 on August 7, 1991. The Notice of Advance Payment, which was addressed to both claimants, allocated this sum as follows:

	Elke Reiner
		i	land taken	$ 422.00
		ii	improvements	$ 879.00
		iii	injurious affection	$1,000.00
		Total		$2,301.00
	Glendale Trading Ltd.			Nil

[11] MacKenzie Avenue was widened from two lanes to four lanes and, as part of the Project, the elevation of the road along the entire frontage with Lot A was raised. Because MacKenzie Avenue was elevated, work was also necessary on Pine Street at the intersection with MacKenzie Avenue and approximately 50 metres along Pine Street, beside Lot A. Before the Project, Pine Street sloped downhill towards MacKenzie Avenue. As part of the Project, Pine Street was also elevated in the vicinity of the intersection with MacKenzie Avenue and for 50 metres up Pine Street adjacent to Lot A. As a result of this elevation change, the overall grade on Pine Street was reduced. Curbs and gutters were installed on Pine Street for the 50 metres closest to MacKenzie Avenue. A sidewalk was installed on the MacKenzie Avenue frontage. Four storm drains were installed: one on either side of the MacKenzie Avenue access; one at the corner of Pine Street and MacKenzie Avenue; and one on Pine Street between the curb and the store building.

[12] Correspondence between the claimants and MoTH revealed that MoTH had initially contemplated taking a construction or working easement on Lot A. A plan showed this easement to be 42 square metres or 452 square feet in the south east corner of Lot A, running along the Pine Street frontage, including the access driveway from Pine Street. However, there was no reference to any construction easement in the section 3 agreement. Nor was there any reference in the Notice of Advance Payment. There was photographic evidence that during construction of the Project gravel trucks and construction equipment entered onto the parking lot on Lot A. Mrs. Reiner stated that none of the drivers ever asked permission, nor did she or her husband object. It appears that the equipment entered onto the parking lot to turn around or to access a particular area of the Project, as well as to do the work on the driveway accesses to Lot A. Access to the parking lot was occasionally blocked for short periods. Sometimes equipment was left in the parking lot for some periods.

[13] As a result of the presence of construction equipment, the parking lot was very oily or muddy from time to time, to the extent that some customers took off their boots when they entered the store and shopped in their stockinged feet. The parking lot had to be cleaned by Glendale and the floor of the store had to be washed more often than normal. In addition, the construction caused other difficulties for Glendale's business. There were numerous breaks in the gas and water mains, as well as power outages. The use of a compactor on the highway caused vibrational damage. As a result of the power outages, the computerized cash register system malfunctioned. These difficulties caused a great deal of inconvenience and extra work for the Reiners and their employees. Four invoices for the cleaning of the parking lot and repairs to the computerized cash register system totalling approximately $600.00 without GST were submitted. There was also a claim for business loss during the two-year construction period. All disturbance damage claims settled during the hearing.

[14] Glendale's main concern with respect to the construction of the Project was the effect that the elevation of the two roads had on access and drainage of water onto Lot A. Shortly after a public meeting to discuss the Project hosted by MoTH on May 22, 1990, Glendale's solicitor, David Gillespie, wrote to MoTH expressing these concerns. In particular, Gillespie stated that the parking lot was 20 inches below the existing level of both Pine Street and MacKenzie Avenue. If the Project resulted in a raising of the road levels, the problem of water and gravel washing into the parking lot would be greater than the existing situation. Raising of the road levels would also adversely affect the access to the parking lot. MoTH replied stating that, as a result of construction of the Project, the road levels would be approximately one metre higher than the parking lot but that water drainage would be controlled by a new curb and gutter along Pine Street. Some regrading and paving of the parking lot by MoTH would result in a grade no higher than 10% from the parking lot to Pine Street.

[15] Prior to the Project, Glendale had evidently had some problems with drainage from Pine Street. In addition to David Gillespie's initial letter in June 1991, referring to existing problems, there was evidence of a letter written on behalf of Glendale in 1982 complaining about water coming down the relatively steep slope on Pine Street and causing wash-outs on the corner. In 1986 Mrs. Reiner signed a petition addressed to the Mayor and Council of Williams Lake requesting, among other things, storm sewers as well as curbs and gutters. Photographs taken before the construction of the Project showed water flowing down Pine Street running into the parking lot. There was a speed bump running along the frontage of Lot A on Pine Street, which Mrs. Reiner explained was installed to deflect water away from the parking lot and down Pine Street. She stated that this measure was relatively effective and most of the water flowed down Pine Street and into a drain near the corner with MacKenzie Avenue. However, it appears that some water did flow down the Pine Street access and into the parking lot.

[16] Following the Project, Mrs. Reiner complained about problems from the drainage system, especially in the winter. MacKenzie Avenue is now four lanes wide and when the two lanes of snow adjacent to Lot A are plowed the snow ends up on Lot A. Frequently the drains on Lot A become blocked with snow. Glendale has paid approximately $500 per year to remove the snow from its property since the Project but we do not know what the cost of snow removal was before the Project. Because the slopes of the accesses have increased, when melting snow freezes on the access driveways vehicles sometimes have trouble driving up the steeper slopes. Glendale has had to purchase additional ice melting material, subsequent to the Project, at an extra cost of between $100 to $200 per year. Pine Street now has curbs and gutters, which it did not have before, but this does not stop the water that is running down Pine Street from running through the access where the curb is lower. Because the access driveway from Pine Street is now steeper than Pine Street itself, more water and melting snow runs into the parking lot than it did before the Project, especially if there is any slush in the Pine Street gutter. In addition, MoTH only installed curbs up Pine Street to the end of Lot A. Above that point, curbs were the responsibility of the City of Williams Lake. There was evidence that water runs onto the shoulder and onto Lot A behind the curb installed by MoTH.

[17] It is Glendale's position that, as a result of the drainage and access problems caused by the project, the parking lot has to be filled and repaved so that it is no longer so much lower than the two roads that flank it. The remedial work has not yet been carried out although it is almost six years since construction of the Project has been completed. Mrs. Reiner explained that this was in part because they continued to sell gas from the gas pumps for a few years after the Project was completed and the gas tanks were only removed in 1998.

[18] The board was also asked to consider the impact of the Project on Glendale's business. In fact, however, we were given evidence that Glendale's business had increased following completion of the Project, although Mrs. Reiner explained that some of the significant increase in business in 1996 was related to a strike at a competitor for two or three months.
[19] The main issue to be decided by the board is whether it is appropriate to value the reduction in market value to Lot A as the cost to mitigate the drainage and access problems by filling and repaving the parking lot.

3.  MARKET VALUE

3.1 Expert witnesses

[20] The board heard expert appraisal evidence from Danny R. Grant, of Interwest Property Services (1991) Ltd. on behalf of the claimants. Grant treated Lot 5 and Lot A as a combined parcel and provided an estimate of market value of both lots before and after the taking from Lot 5. He estimated the injurious affection to the remainders after the taking by the Cost Approach to value using the costs of various mitigative measures. MoTH filed a report from William G.R. Gosset of Kent-McPherson Appraisals with respect to Lot A as an exhibit for identification, but we did not hear from Gosset and neither of his reports on Lot A or Lot 5 were entered as exhibits. The claimants also relied on an engineering report from Don Bowins of D.K. Bowins & Associates Inc. with respect to the access/egress and drainage conditions on Lot A. Finally the claimants called Slade Dyer of Slade Dyer & Associates who was qualified as an expert in land use. His report primarily dealt with the parking situation on Lot A before and after the taking. Because the claim for market value of the land taken from Lot 5 was settled, we only need to deal with certain parts of Grant's report and evidence.

3.2 Loss as holder of an option to purchase Lot 5

[21] Glendale claims $100 under section 40 for its losses as a holder of an option to purchase Lot 5. This claim is in effect for the market value of Glendale's interest in the land that was taken. MoTH says Glendale has suffered no loss of its interest as a holder of an option to purchase Lot 5. It submits that the option was only granted to facilitate Glendale being able to come to the hearing as an owner.

[22] In Captain's Square Holdings Ltd. v. British Columbia (Minister of Transportation and Highways) (1997), 61 L.C.R. 68, the claimant company said that it had an implied easement over part of the land expropriated from an adjacent property owned by a related company. In that application the claimant company established that it had long used a portion of the adjacent property owned by a related company in order to fully operate a warehouse building on its property. When the adjacent property was expropriated, Captain's Square also suffered a loss. In the circumstances of an expropriation of the adjacent property, the board found that Captain's Square had an implied easement over that part of the adjacent property that it used, despite the lack of a registered easement.

[23] As noted earlier, MoTH has conceded that Glendale is entitled to make a claim for its losses under section 40 of the Act, despite the fact that its option was not registered. Therefore we do not have to make any ruling on entitlement. At the time of the acquisition from Lot 5 by MoTH in June 1991, Glendale had an unregistered option to purchase Lot 5. We note that Glendale had previously acquired a lot (Lot 4) from the Reiners in 1984 in order to expand its business. Given the relationship between Glendale and Mrs. Reiner and the circumstances in this case, Mrs. Reiner's motive in granting the option is irrelevant. In his report Grant conceded that the partial acquisition of approximately four per cent of Lot 5 had a minimal effect on its market value. As a result of the partial acquisition from Lot 5, Glendale has suffered a nominal or notional loss in its interest as a holder of an option to purchase Lot 5. In these circumstances we agree that the claim for $100 compensation is appropriate.

3.3 Temporary and partial loss of use of Lot A during the two years of construction

[24] Glendale also claims under section 40(1) for the temporary and partial loss of Lot A during the construction of the Project from the fall of 1991 until the fall of 1993. This claim arises from the presence of construction equipment on Lot A and the temporary blocking of access from time to time. Both the pleadings and the argument framed this claim as applying generally to Lot A and made no specific reference to the loss of use on the working easement. Grant did not attempt to value this temporary and partial loss. The claimant states that it is only claiming the nominal sum of $1,500 per year, or $3,000 in total, for the temporary and partial loss of use of Lot A during the construction. Glendale referred us to Medomist Farms Ltd. v. Surrey (District) (1991), 62 B.C.L.R. (2d) 169 (B.C.C.A.) and an excerpt from John A. Coates and Stephen F. Waqué's, New Law of Expropriation, (Toronto: Carswell, 1997) at p 35-99 with respect to valuing temporary easements.

[25] MoTH opposes this claim. It does not think that Medomist Farms is applicable. MoTH urges us to consider any temporary operation of construction equipment on Glendale's property as a type of nuisance or inconvenience for which the British Columbia Court of Appeal, in Patterson v. Ministry of Transportation and Highways (1997), 62 L.C.R. 89, held there was no recovery under the Act.

[26] We are assisted by Demosten v. British Columbia (Minister of Transportation and Highways) (1996), 60 L.C.R. 68 (B.C.E.C.B.), a case referred to by Coates and Waqué in the excerpt provided to us. It reviews a number of cases from other jurisdictions in which there was a claim for rent for land subject to a construction easement. In some of these cases long term damage to the temporary easement area was also considered in determining the award. In the end this board in Demosten adopted the approach used in two of the cases it reviewed and awarded a notional rent during the term of the construction easement. Similarly, this board has awarded rent for temporary rights of way in both Husband v. Langley (Township) (1996), 59 L.C.R. 221 and Mayfair Resources Corp. v. Greater Vancouver Water District (1997), 61 L.C.R. 183.

[27] We agree with MoTH that Medomist Farms can be distinguished. In that case a municipality was held liable in nuisance for flood damage. Damages were awarded not only for the actual physical damages to the property, but also for damages for the plaintiff's loss of enjoyment of the property. In our opinion, the damages for loss of enjoyment of property as damages at common law are not of great assistance in considering claims for compensation in an expropriation case where compensation must be based on statutory provisions. We note that in Patterson the British Columbia Court of Appeal upheld this board's decision that there was no claim under the Act for loss of enjoyment of land in relation to various nuisance type claims. However, unlike Medomist, in our opinion the claim in this case is for notional rent for a temporary and partial loss of use under section 40(1).

[28] In the present case we are uncertain as to the final status of the working easement that had been designated over the 452 square feet area in the south east corner of Lot A. We are left with the more general evidence that a working easement was designated and discussed between the parties but appears not to have been signed by the parties and registered on title. Construction equipment did use the parking lot on Lot A during construction from time to time; presumably this was primarily in the area that had been designated as a working easement and occasionally in the remainder of the parking lot. There were also frequent occasions when there was a temporary loss of access. We do not have any useful appraisal evidence on the valuation of this claim. We do note that the partial loss of use of the parking lot and the temporary blocking of access are presumably reflected in the business loss claim during the period of construction that has been settled. This business loss claim should also include some of the inconvenience and extra work required by staff during this period. Nonetheless, we agree that if a working easement had been registered, Glendale would have been entitled to some rent during the period of the easement. In circumstances where there has been what was in effect an equitable working easement on part of Lot A, Glendale is entitled to some rent for the temporary and partial loss of use. We accept the notional rent claimed by the claimant and as a result we award a total of $3,000 for this claim.

3.4 Reduction in Market Value
3.4.1 Glendale's position

[29] In Glendale's pleadings, this claim is stated to be for injurious affection to Lot A and during the hearing Glendale made clear that this claim was brought under section 40. Grant provided an estimate of injurious affection to Lot A in his report. As stated above he treated the two lots, Lot 5 and Lot A, as a common parcel but valued it as a sum of its component parts. Since the claims with respect to Lot 5 have settled, we need only consider Grant's evidence with respect to Lot A. His first step was to measure the market value of Lot A immediately before the taking using the Direct Comparison Approach. This provided a market value for Lot A of $8.00 per square foot or $225,008. In Grant's opinion, the injurious affection to Lot A as a result of the construction of the Project was the drainage problems that created icy access driveways in the winter. He concluded that the only remedial measure to alleviate these problems was to restore the relative elevation of the parking lot and the two adjacent streets. He proposed installing an average of 11/2 feet of fill and then resurfacing the parking lot. The cost of the fill was estimated at $6,400 and the cost of repaving 16,500 square feet was $29,700 for a total of $36,100 plus GST. These figures were based on a written estimate dated August 8, 1997, presumably based on 1997 prices. Grant stated that this sum of $36,100 was a measure of a substantial part of what he terms the damages to Lot A, as a result of the Project.

[30] Grant also described an area of Lot A between the store and Pine Street, uphill of a catch basin at the corner of the store building, that would continue to be affected by drainage problems after the filling and resurfacing of the parking lot. This is a paved area, 10 feet by 40 feet. Grant stated that this land lost value as commercial land and the claimants are entitled to this loss as part of the reduction in market value of the Lot A portion of the remainder. He estimated the loss in value at $8.00 per square foot plus $1.80 per square foot for paving, for a total of $3,920.

[31] Grant then considered whether there was any betterment or enhancement of value as a result of the mitigative works that needed to be deducted. The work that he proposed for the parking lot would only restore it to the condition that it was before the Project and therefore, in his opinion, would not result in any betterment. The existing paving was in good condition at the time of taking and therefore there would be little enhancement from new paving. He concluded that there was no betterment and therefore no need to deduct anything from the cost of the mitigative works for Lot A. Thus, the total claim for injurious affection to Lot A was the sum of $36,100 for filling and repaving the parking lot plus $3,920 for the reduction in value arising from the alleged loss of utility of the 400 square feet beside the store, or approximately $40,000. He calculated the market value of the Lot A portion of the remainder after the taking by deducting the $40,000 cost to cure from the market value of Lot A before the taking of $225,000. This yielded an after value for Lot A of $185,000. Under section 40(3) he applied a before and after approach to obtain a reduction in the market value of Lot A of $40,000. He also applied the summation approach by adding the value of the land taken from Lot A, which is nil, to the damages to the remainder of $40,000, for a total of $40,000.

[32] Don Bowins provided engineering evidence for Glendale. He stated that Williams Lake does not have any written standards for the grade of driveway access and that, in his experience, most municipalities do not have standards for driveway grades. There was evidence that MoTH has desired grades for driveways onto various categories of roads and that at least portions of the present driveway accesses onto Lot A do not meet these desired grades. The driveway entering Pine Street is the steeper of the two, especially at the southern side. Bowins' main concern with respect to the grade of the access driveways, as well as the drainage difficulties, is the slippery conditions on the parking lot and the access driveways in icy weather. Bowins also recommended filling and repaving the parking lot to decrease the slopes of the access driveways. Bowins' cost for the work, based on 1997 local prices from one contractor were approximately $24,000 (plus 35% for contingencies), plus GST. He also estimated $6,500 for a retaining wall that would be required in front of the store.

[33] Slade Dyer provided a land use report in which he applied MoTH standards for parking lot stalls to the parking lot before and after the Project, ignoring the existence of the gas pumps that were present in front of the store and assuming the fill and repaving recommended by Bowins after the Project. His drawings indicate a potential reduction of four parking stalls from 38 before the Project to 34 after the Project.

[34] Glendale emphasized the numerous ways that Lot A was impacted and injuriously affected by the Project. The commercial enterprise was now below grade with respect to the adjacent roads, the two access driveways were narrower as well as steeper, there was less usable space for parking, both roads were physically closer to the store, and finally drainage conditions had worsened. Glendale submits that as a result of the Court of Appeal decision in Ingham v. Creston (1999), 66 L.C.R. 161 (B.C.C.A.), it is not appropriate to use the before and after approach using the direct market comparison of other sales to determine compensation in a partial taking. The problem, they say, is that the general benefit enjoyed by the claimant as a result of the Project is included in the market value after the taking. When this market value after the taking is deducted from the market value before the taking to arrive at the compensation, the general benefit included in the after value is also deducted from the compensation. Glendale says in these circumstances, the appropriate options are to use the cost to mitigate or to apply a percentage reduction in market value as a result of the partial taking. Glendale cites Re MacLeod and Ministry of Transportation and Communication (No. 2) (1983), 29 L.C.R. 245 (Ont. Mun. Bd.); affd 45 L.C.R. 285 (Ont. Div. Ct.) as authority for the principle that the "cost to cure" is an acceptable approach to determine injurious affection to the remaining land.

3.4.2 MoTH's position

[35] MoTH says that the cost of mitigative measures is not an appropriate method to measure loss in market value of the remaining land under section 40(1). Under the Act the loss in market value is to be measured according to what a prudent and willing buyer and seller would agree as the purchase price for the property before and after the Project. MoTH says that the cost to cure does not reflect this loss in market value and referred us to the board decision in Ingham v. Creston (Town) (1996), 59 L.C.R. 113. MoTH says that as a commercial enterprise Glendale has flourished and there is no evidence that it has suffered any loss in market value as a result of the Project. MoTH suggests that if mitigative works were carried out by a claimant, they might be claimed as disturbance damages or as reasonable expenses or personal losses that are directly attributable to the taking or that result from the construction or use of the works under either section 34 or 40.

[36] More particularly, MoTH objects to the characterization of the drainage difficulties as being entirely due to the Project. As noted earlier, there was evidence that some drainage difficulties existed prior to the Project. Neither Bowins nor Dyer saw Lot A prior to the Project and both erroneously assumed that the parking lot was level with the two adjacent roads before the Project, rather than being 20 inches below the street level. Grant also did not know that Pine Street was higher than the parking lot before the Project. There was no evidence that the section of the parking lot between the store and Pine Street for which Grant asserts a loss of use was ever used before the Project. It was a sloped narrow area both before and after the Project. Finally, MoTH disputes that there has been any loss of parking. Adequacy of parking has never been an issue at Glendale. There were no marked parking stalls either before or after the Project. Dyer's plan for parking stalls before the Project made erroneous assumptions about the existing access at that time.

3.4.3 Discussion

[37] Section 32 of the Act provides:

32	The market value of an estate or interest in land is the amount that would have been paid for it if it had been sold at the date of expropriation in the open market by a willing seller to a willing buyer.

At the time this case was heard sections 40 and 44 of the Act provided:

40 (1)	Subject to section 44, if part of the land of an owner is expropriated, he or she is entitled to compensation for
	(a)	the reduction in market value to the remaining land, and
	(b)	reasonable personal and business losses that are directly attributable to the taking or that result from the construction or use of the works for which the land is acquired.
(3)	If part of the land is expropriated, the market value of the land expropriated may be established by determining the market value of the area of all of the land before the date of expropriation and subtracting from it the market value of the land remaining after the expropriation occurs, but in no case, subject to section 44, must compensation be less than the amount determined by multiplying the ratio of the area of the land taken to the area of all of the land before it was taken, times the value of the land before it was taken with the appropriate reduction if the interest expropriated is an easement, right of way or similar interest less than the fee simple interest.
44 (1)	If part of the land of an owner is expropriated, and the construction or use of works by the expropriating authority are of special benefit to that owner or to his or her remaining land beyond any general benefit to any other owner benefited by the construction or use, there must be deducted from the amount of compensation payable to that owner the estimated value of the benefit.

Shortly after the hearing in this matter sections 40 and 44 of the Act were amended by the Miscellaneous Statutes Amendment Act (No. 3), S.B.C. 1999, c. 39, (in force July 15, 1999). These two sections now read as follows:

40 (1)	Subject to section 44, if part of the land of an owner is expropriated, he or she is entitled to compensation for
	(a)	the market value of the owner's estate or interest in the expropriated land, and
	(b)	the following if and to the extent they are directly attributable to the taking or result from the construction or use of the works for which the land is acquired:
		(i)	the reduction in the market value of the remaining land;
		(ii)	reasonable personal and business losses.
(3)	If part of the land is expropriated the amount of compensation payable in respect of the matters referred to in subsection (1)(a) and (b)(i) may be established by determining the market value of the area of all of the land before the date of expropriation and subtracting from it the market value of the land remaining after the expropriation occurs, but in no case, subject to section 44, must compensation be less than the amount determined by multiplying the ratio of the area of the land taken to the area of all of the land before it was taken, times the value of the land before it was taken with the appropriate reduction if the interest expropriated is an easement, right of way or similar interest less than the fee simple interest..
44. (1)	If part of the land of an owner is expropriated, and the expropriation or the construction or use of works by the expropriating authority are of special benefit to that owner or to his or her remaining land beyond any general benefit to any other owner benefited by the expropriation or the construction or use, there must be deducted from the amount of compensation payable to that owner the estimated value of the benefit.
(1.1)	If part of the land of an owner is expropriated, and the expropriation or the construction or use of the works for which the expropriated land was acquired are of any benefit to that owner, the estimated value of the benefit must be deducted from the amount of compensation otherwise payable to that owner, under section 40(1)(b)(i), for the reduction in the market value of the remaining land, whether or not any other owner is benefited by the expropriation of the expropriated land or by the construction or use of the works. (amendments underlined)

The Miscellaneous Statutes Amendment Act (No. 3) provides the following transitional section:

79	Sections 40 and 44 of the Expropriation Act, as amended by this Act, apply to any compensation claimed or payable in respect of any expropriation, whether or not that expropriation occurred before the coming into force of this section, unless, before the coming into force of this section,
	(a)	a court order had been made respecting compensation payable under the Expropriation Act in respect of the expropriation, or
	(b)	a determination had been made of the compensation payable under that Act in respect of the expropriation.

Thus the amendments apply to the present case. It is our opinion that the amendments to section 40(1) and 40(3) have not affected the substance of these sections as they have been applied by the board. The amendment to section 44(1) has no effect in this case. Section 44(1.1) is discussed below.

[38] The issue is whether the proposed mitigative efforts are an appropriate measure of reduction in market value that can be compensated under section 40. In this case, Grant measured the damages to Lot A after the taking by the cost to cure based on a contractor's estimate to fill and repave the parking lot (plus the alleged loss in value of the 400 square feet beside the store).

[39] First, we have some questions about the seriousness of the problems as a result of the Project in relation to the cost to cure put forward by the claimant. All of the experts overestimated the impact of the Project because they assumed that the site was level with the roads before the Project when this was not the case. Bowins, the engineer, was mainly concerned with the grade of the driveway during icy conditions. In his report the appraiser, Grant, stated that "the water does not create a measurable damage but ... snow and ice does create a damage". Mrs. Reiner estimated that an additional $100 to $200 per year was spent on an ice melting product after the Project. While we accept that the Reiners have somewhat steeper access driveways than before and that during snowy and slippery conditions they must sometimes clear drains and de-ice the driveways more often than before the Project, we have not been persuaded that Lot A has been significantly affected by the Project.

[40] Second, we have difficulty with Grant's premise that the only practical solution to the access and drainage problems is to restore the elevation of the parking lot by fill and repaving. Although fill and repaving appears to be a simple restoration of the relative elevations prior to the Project, Bowins points out in his report that the elevation of the store stays the same. After the fill and repaving a retaining wall in front of the store would be required and as a result the front door to the store would be lost. As Bowins indicates, the customers would then access the store via a door on the west side of the building facing the parking lot between the store and the residence on Lot 5. A door in this location would be less visible. Thus the "cure", while improving the relative elevation and the slope of the access driveways, would leave the store below the level of the parking lot in front of the store and cause the closure of the front door. This would be likely to have a significant negative marketing impact on Glendale's business. In our opinion, the proposed works are not a simple cure to the problems identified by Grant.

[41] Third, and most importantly, Grant does not provide a satisfactory basis for linking the cost to restore the elevation of the parking lot to any reduction in market value. In his report, Grant said that the increased drainage problems in the winter would "in turn affect [Glendale's] business volume and net profits and thereby the value of the property." He went on to add that this situation would affect the value for any prospective purchaser. Grant offered no support for this assertion that business volumes and net profits would decrease. Mrs. Reiner did not give any evidence that supports this statement. The report from the claimant's business valuer showed that Glendale's business volumes and net profits increased after the Project. Since the problems with the site were alleged to occur in the winter, on Grant's hypothesis the sales during the winter months ought to have decreased after the Project. In fact, the ratio of sales in the winter months to the annual sales was the same after the Project as before. We conclude that there was no evidence that the business volumes were negatively impacted by any drainage problems.

[42] Grant went on to say in his report that it was not possible to provide specific market examples in support of his estimates of loss in value due to the limited nature of each category of damage being difficult to extract from market data. All that he was able to say is that observations of at least three regradings of similar commercial properties assisted in providing reasonable cost estimates of works that will return the property to its before taking potential. We have concluded that in this case the business volume and profits are not affected by the lower elevation and any drainage difficulties. As a result we do not find a passing reference to regrading of other unspecified commercial properties as sufficient basis for accepting that the cost of regrading has any link to market value or reduction in market value of a commercial property. We also note the disparity between Grant's quote to fill and repave at $36,100 and Bowins' estimate of $32,590, including a 35% allowance for contingencies (with both experts applying 1997 costs to a 1991 valuation). In our opinion, this disparity further emphasizes the weaknesses in the attempt to link the cost of restoration to the reduction in market value. Grant gave us no alternative evidence, as he did in Ingham, with respect to a percentage reduction in market value of a commercial property for any of the factors such as grade or drainage that were alleged to have created a decline in market value.

[43] A property owner is not entitled to the cost of restoring every feature of the property that has been impacted by a partial taking. It is only where the loss an owner has suffered has caused a change in his or her economic position that such an entitlement arises. In Patterson Madam Justice Prowse stated at par 43:

... it was the view of the B.C. Law Reform Commission in its 1971 Report on Expropriation that economic reinstatement should be the goal of the proposed Expropriation Act. (emphasis in Patterson)

We have had no evidence that persuades us that in order for Glendale to maintain its economic position as it was prior to the Project it is necessary to reinstate the relative elevations of the parking lot and the two adjacent roads.

[44] Glendale relies on Re MacLeod and Ministry of Transportation and Communication (No. 2) (1983), 29 L.C.R. 245 (Ont. Mun. Bd.) as authority for the principle that mitigative costs can be a valid method of measuring injurious affection. In that case, the expropriation resulted in a loss of the use of 25 acres from a 200-acre farm. The compensation for the expropriated land was agreed and paid. The claimants sought to replace the farmland that had been lost. They had the assistance of what the Ontario Municipal Board termed "an impressive and knowledgeable expert witness in the whole field of practical agriculture" as to the practicalities and costs in replacing the farmland in this situation. The Board held that the "cost to cure" approach, consisting of the cost to replace this farmland, plus the cost of starting up this land and operating it at a distance, were an appropriate measure of the injurious affection. This decision was upheld by the Ontario Divisional Court (45 L.C.R. 285). Glendale says that in the present case the cost to restore the parking lot is similarly an appropriate measure and a reasonable estimate of the injurious affection to Lot A as a result of the Project.

[45] In our opinion, the circumstances in MacLeod can be distinguished from those in the present case. In MacLeod, the replacement of the farmland that was lost as a result of the partial taking and the start up costs for the replacement land were to put the owners in the same economic position, in terms of a viable farm operation, that they were in prior to the taking with the same amount of arable land. In this case Glendale is seeking the cost to restore the relative elevation of the parking lot and the two flanking roads to the position that they were in before the Project. Unlike the situation in MacLeod, we have had no evidence that for Glendale to maintain its economic position, it is necessary to restore the elevation of the parking lot.

[46] Further, in the Ontario legislation that applied in MacLeod, "injurious affection" is defined in the Expropriations Act, R.S.O. 1980, c. 148 as follows:

1(1)	In this Act...
	"injurious affection" means
	(i)	where a statutory authority acquires part of the land of an owner
	(a)	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 or by the use of the works thereon or any combination of them, and
	(b)	such personal and business damages, resulting from the construction or use, or both, of the works as the statutory authority would be liable for if the construction or use were not under the authority of a statute

The provision for compensation in the Ontario Act specifically provides for damages for injurious affection:

13(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, ... (emphasis added)

[47] Thus, the Ontario Act expressly provides for compensation for "injurious affection" which it defines to include both reduction in market value and personal and business damages. The British Columbia Act does not use the term "injurious affection" with respect to compensation for partial takings. In this case, all the claims for disturbance damages including business losses have settled and we are left with a determination of the reduction in market value of Lot A, as a portion of the remainder under section 40(1)(b)(i) of the Act. Madam Justice Prowse of the British Columbia Court of Appeal in Patterson v. Ministry of Transportation and Highways comments on a claim for relocation expenses in which Ontario cases had been cited and says at par. 34 "I agree with the Board that decisions from other jurisdictions based on different legislative provisions should be viewed with caution."

[48] In our opinion, reading sections 40 and 32 of the British Columbia Act together requires us to measure the reduction in market value in relation to what a willing buyer and seller would agree as a purchase price. We agree with this board in both of its decisions in Ingham v. Creston (Town), the decision in 1996 at 59 L.C.R. 113 and the unreported decision on July 28, 2000, (B.C.E.C.B. decision 30/93/187 and 32/93/187), that it is doubtful that the cost to cure is, in general, good evidence of the loss in market. The Court of Appeal, in its decision, said nothing that is contrary to this view. In this case, for the reasons given above, we are not satisfied that the evidence establishes that a change in the relative elevation of the parking lot has any impact on the price that a willing purchaser and vendor would agree for Lot A.

[49] Glendale submitted that, on the basis of the Court of Appeal decision in Ingham, we are precluded from using the before and after approach based on a Direct Comparison Approach to measure the reduction in market value. We are uncertain as to whether the Court of Appeal's reasons in Ingham go so far. In any event, as a result of the addition of section 44(1.1), any possible reading of the Ingham decision to prohibit the before and after approach in a partial taking no longer applies. As we have stated above, the transitional section in the Miscellaneous Statutes Amendment Act (No. 3) means that section 44(1.1) is applicable to this case.

[50] Further, both Mrs Reiner and Grant conceded that Glendale had received a betterment from the Project. The business is now located on a four lane road. There are also new curbs and gutters on both Pine Street and MacKenzie Avenue and a new sidewalk on MacKenzie Avenue. In addition, we note that there was evidence of an increase in Glendale's business for every year following the completion of the Project. This betterment was not considered during the hearing because it was a general benefit that was the same as the benefit for other property owners located on MacKenzie Avenue. However, section 44(1.1) now states that any benefit, whether or not any other owner is benefited, is to be deducted from the compensation awarded. If there had been evidence of a reduction in market value of Lot A, section 44(1.1) now requires us to deduct any benefit, although we note that in this case we also have no evidence on which to estimate the value of the betterment.

[51] With respect to the 400 square foot area beside the store that Grant states is no longer useable, we agree with MoTH that there is no evidence to support the contention that the use of this area was any different after the Project from what it was before. Neither was there any evidence that there was any change in the market value of Lot A as a result of changes in this area after the taking.

[52] The onus is on Glendale to establish that there is a loss in market value to the remainder as a result of the taking and that any such loss is not too remote. The test is whether a willing and prudent buyer and seller would agree on a lower purchase price for Lot A as a result of the taking from Lot 5 and the construction of the Project. In this case there is insufficient evidence to establish that the purchase price of Lot A after the taking has been reduced. Therefore, we award nil for the reduction in market value to the remainder of Lot A. This is consistent with this board's finding in Hughes v. Victoria (City) (1988), 40 L.C.R. 291 where no award was made for a reduction in market value following a partial taking for an easement because no evidence had been adduced to show that the market value was less. We note again that if there had been evidence of a reduction in market value of Lot A, in light of the enactment of section 44.1, we must now deduct any general benefit that was acknowledged by the claimants but not quantified.

3.5 Conclusion

[53] Under section 40(1) we have awarded Glendale $100 for the nominal loss in its interest as a holder of an option to purchase Lot 5. We have also awarded Glendale $3,000 for loss of market rent for the temporary and partial loss of Lot A during construction of the Project. However, we have declined to make any award to Glendale for reduction in market value as we have no evidence that Glendale has suffered any decrease in the market value of Lot A as a result of the Project.

4.  DISTURBANCE DAMAGES

[54] While we were satisfied that the Reiners were put to some inconvenience during the construction and, since then, some additional maintenance during the winter, all of the claims for disturbance damages claimed by both Mrs. Reiner and Glendale settled during the hearing.

5.  INTEREST

[55] We have awarded Glendale $3,100 compensation. The advance payment of $2,301 had been allocated by MoTH to Mrs. Reiner and during the hearing all of Mrs. Reiner's outstanding claims settled for an undisclosed amount. The advance payment allocated nil to Glendale. Therefore we must consider interest under section 46 of the Act.

[56] The compensation hearing in this matter had originally been scheduled to proceed on September 8, 1997. At the commencement of that hearing the claimants brought a preliminary application requesting that the panel disqualify itself. The basis of this application was that the board lacked institutional independence and that the particular panel on September 8, 1997 lacked impartiality because two members of the panel had served on a prior compensation hearing, Ingham v. Creston (Town) (1996), 56 L.C.R. 113, in which the board had made two rulings which were under appeal. These two rulings, that non-pecuniary losses were non-compensable and general benefits need not be deducted, were with respect to issues that were also present in the current case. As a result of the application, the compensation hearing was adjourned and the board subsequently issued written reasons with respect to the application. See 63 L.C.R. 52. The board dismissed the application that the panel disqualify itself. In its reasons, the board concluded that the claimants had caused an unreasonable delay in the proceedings and that, under section 47(a), they were to be deprived from interest on any eventual award between September 8, 1997 and the date when the compensation hearing recommenced; namely, June 14, 1999.

[57] The claimants urge us to reconsider this ruling on interest. They submit that the reason for bringing the application was that the present case had a similar issue as the case in Ingham, which issue was under appeal. Subsequently, after the application alleging bias, the board's decision in Ingham with respect to deducting general benefits under section [44] was overturned by the Court of Appeal. See 66 L.C.R. 161. The claimants say that they could have achieved the same end in this case by proceeding with the first compensation hearing and appealing the result, if necessary. If they had successfully appealed a board decision, they say that it would not be appropriate for the board to deprive the successful appellant of interest.

[58] It is not clear to us, even if we agreed with the claimants' position, that we have jurisdiction to reconsider an order of a previous and different panel that was not appealed. In any case, the board in the 1997 decision makes clear that the reason for depriving the claimants of interest was that they had caused an unreasonable delay by bringing motions claiming institutional bias and lack of impartiality without reasonable evidentiary or legal basis, without any notice to the board or the respondent, and at the commencement of the scheduled compensation hearing. The interest penalty was not imposed merely because of delay caused by an unsuccessful application that resulted in a de facto adjournment of the compensation hearing. Therefore, in accordance with the board's order in the earlier decision in this matter, no interest is awarded for the period from September 8, 1997 until June 14, 1999.

[59] Under section 46(1) interest on compensation for market value runs from the date that the owner gave up possession, while interest on compensation on any other amount runs from the date that the loss or damages were incurred. While possession of the partial taking from Lot 5 occurred on June 28, 1991, the compensation in this case is almost entirely for the temporary loss of the use of Lot A, in part as a result of the area designated as a working easement. There was no evidence on the period during which the working easement was to be operative. There was evidence that construction commenced in October 1991 and the pleadings claim for the temporary loss of use of Lot A between October 1991 and October 1993. Therefore interest pursuant to section 46(1) will run from October 1, 1991, the date on which Glendale first gave up temporary loss of use on Lot A, until September 8, 1997 and from June 14, 1999 until paid.

[60] As noted earlier, the advance payment under section 20 specifically allocated nil to Glendale. As the advance payment to Glendale was less than 90% of the total compensation awarded, pursuant to section 46(4) MoTH must also pay additional interest to Glendale, at an annual rate of five percent, on the principal amount outstanding. This interest award is also subject to the penalty contained in the previous decision at 63 L.C.R. 52, 63. Therefore, the additional interest is payable from the date the advance payment was made, August 7, 1991, until September 8, 1997 and from June 14, 1999 until the date of this decision.

6.  COSTS

[61] Mrs. Reiner's claim did not settle until the morning of the third day of the hearing. Her costs were not part of the settlement. We do not have any jurisdiction with respect to her costs which are governed by section 45(8) of the Act.

[62] We have awarded Glendale $3,100. This compensation is greater than 115% of the advance payment of nil to Glendale. Therefore, pursuant to section 45(4), Glendale is entitled to its reasonable legal, appraisal and other costs. The Tariff of Costs Regulation, B.C.Reg 189/99 does not apply. We do note, however, the comments of the board in the prior decision in this matter with respect to whether some of the costs for the adjourned compensation hearing were "necessarily incurred". See 63 L.C.R. 52 at p. 63.

THEREFORE IT IS ORDERED THAT MoTH shall pay to Glendale Trading Ltd.: