October 10, 1997, E.C.B. Control No. 23/97/146 (62 L.C.R. 222)

 

Between: Robert W. Reimer and Jo-Ann M. Reimer
Claimants
And: The City Of Surrey
Respondent
Before: Robert W. Shorthouse, Chair
Fiona M. St. Clair, Vice Chair
Sharon I. Walls, Board Member
Appearances: Robert W. Reimer and Jo-Ann M. Reimer, for the Claimants
Craig MacFarlane, for the Respondent

 

1. INTRODUCTION

Robert and Jo-Ann Reimer, the claimants, are former owners of a property at 9873 - 182A Street in Surrey B.C. Robert Reimer purchased the property in 1970 and resided there with his family until 1996. He used the 3.0 hectare property (7.5 acres) as a hobby farm on which he kept some livestock.

This hearing was brought by the Reimers on the issue of whether they are entitled to claim compensation under the Expropriation Act, R.S.B.C. 1996, c. 125 (the "Act") for a loss in value of a 30 metre strip of their property. They maintain that this strip was rendered valueless by Surrey's plans for a future roadway, the South Fraser Perimeter Road. Mr. Reimer appeared on behalf of himself and his wife at the hearing. While Mr. Reimer did not file an affidavit, he did present the board with a well organized argument in which he set out the chronology of events with specific references to attached documents and letters. There was no dispute raised about Mr. Reimer's account of events or the authenticity of the documents and we are prepared to accept them as evidence. Surrey filed an affidavit from Robert Chaboyer, its Roads and Transportation Planning Manager.

In 1995 the Reimers decided to sell the property and listed it with a realtor for $1,050,000. This price was based on the property's development potential in a growing municipality. The property had split zoning: the southern portion, approximately 0.9 hectares (2.2 acres), was zoned suburban residential (minimum 1.0 acre lot size) and the remainder of the property was zoned light industrial. The Official Community Plan also showed a split between residential and industrial use. The City of Surrey had passed a subdivision by-law which contained a map showing future City arterial roads, including the South Fraser Perimeter Road. Maps indicated that this road would pass through the Reimers' property, alongside the northern boundary. When the Reimers purchased the property in 1970, no proposed road was shown on the property. The subdivision by-law required any owner who applied for subdivision approval to donate without compensation a strip of land up to 20 metres in width to accommodate proposed arterial roads such as the South Fraser Perimeter Road. The affidavit of the Roads and Transportation Planning Manager, Mr. Chaboyer, stated that if an application for subdivision was made, Surrey would require a further 10 metres as part of the right of way in addition to the 20 metre strip that was to be donated under the by-law. The terms of the acquisition of the additional 10 metres would have to be negotiated. The Reimers knew that the total width of the strip for the future right of way would be 30 metres or 0.65 hectares (1.61 acres).

In order to assist the marketing of the property, the Reimers had an artist's rendering prepared that showed an aerial view of the property following a future subdivision. The drawing indicated the 30 metre allowance for the City arterial road, the outlines of five residential lots, and a larger industrial parcel with an industrial building on it. In response to various enquiries from prospective purchasers, the Reimers entered into discussions with Surrey as to the specific plans for the South Fraser Perimeter Road and the impact that this road might have on their property. Suffice it to say that the plans for the road were unclear and that there was some possibility that when it was built it would be as a Regional arterial road rather than as a City arterial road. If that was the case, the Reimers were told that more than the 30 metre strip would likely be required and in addition, a significant setback might be required. It was also likely that there would be no access from this future Regional arterial road to the northern part of their property.

The Reimers became concerned when they were told of these possibilities. They took the property off the market for a time and attempted to find out as much as they could about the proposed road. The Ministry of Transportation and Highways was involved in plans for the South Fraser Perimeter Road but no definite decisions had been made. However, most of the dealings the Reimers had were with various people working for Surrey. The Reimers retained an appraisal firm, Penny & Keenlyside Appraisal Ltd., to provide them with the current market value of the property. The Reimers included only excerpts from the appraisal in the material they presented to the board and there is no date on these excerpts. However, there is reference to the appraised value of $918,000 in a letter from the Reimers to Surrey dated June 5, 1996. This appraised value is based on the highest and best use of development of the land into two one-acre residential lots, including the existing house on one of those lots, an industrial lot on the northern portion of the site and a transfer of the 30 metre strip for the future South Fraser Perimeter Road. The Reimers also obtained estimates for the costs of surveying, services, and road construction if they went ahead with an application for subdivision. It appears that the Reimers did not obtain legal assistance and Robert Reimer acted on behalf of himself and his wife throughout their discussions with Surrey.

After the Reimers resumed efforts to sell the property, potential purchasers indicated that they were reluctant to assume the risk of the uncertainties posed by the future road and, in any event, were not prepared to compensate the Reimers for the portion of the property that would eventually become the South Fraser Perimeter Road. The Reimers concluded that, because of Surrey's plans for the future road, their property was unsaleable and they asked Surrey to purchase it, or, in the alternative, to purchase one of the proposed rights of way, or in the further alternative to take the property or one of the rights of way in trade for another property. In a letter dated June 24, 1996, Surrey conceded that the Reimers were suffering hardship in not being able to sell their property and entered into negotiations to purchase the property or the right of way. However, Surrey stated that if the Reimers were successful in selling the property the negotiations would cease.

In August 1996 the Reimers sold the property to a third party, Targa Contracting Ltd. The Land Title records indicate that the property was acquired for a declared value of $900,000. In their chronology of events the Reimers acknowledged that they had sold the property for approximately the sum set out as the market value by their appraiser. However, they claim that this appraised value did not include any value for the 30 metre strip that would have to be transferred for the future South Fraser Perimeter Road. After various enquiries, they brought this application as to whether they could claim compensation from Surrey, pursuant to the Act, for the 30 metre strip that they state was rendered valueless by Surrey's designation.

 

2. REIMERS' POSITION

The Reimers' position is that when they bought the property in 1970, Surrey had not made any plans for a road to be built on it. When they sold the property in 1996, they were unable to obtain any value for the 30 metre strip that had been designated as part of the future South Fraser Perimeter Road. Since it was Surrey's actions that had caused this portion of their property to become valueless, Surrey should compensate them for this loss.

Furthermore, the Reimers felt aggrieved in their dealings with Surrey. The uncertainties about the plans for the road had caused a year's delay in the sale of their property and resulted in the Reimers expending $10,000 on consultants and advertising. The Reimers thought that Surrey had been making excuses in initially saying it did not have the funds to purchase their property. Surrey eventually did enter into negotiations to purchase the property but there were further delays in obtaining more appraisals. When the Reimers were successful in selling the property to Targa Contracting Ltd., they did not understand why Surrey then refused to consider any compensation for the 30 metre strip. The Reimers suggest that Surrey exhibited bad faith in its dealings with them.

 

3. SURREY'S POSITION

The City of Surrey states that it has never taken formal steps to expropriate any part of the Reimers' property. It has not passed an expropriation by-law, nor taken any steps under the Act such as filing an expropriation notice or entering into a s. 3 agreement. Neither has the City encroached on the property in any way that could diminish the Reimers' interest. There is a valid subdivision by-law in place that locates a segment of the South Fraser Perimeter Road on the property and provides for road dedication if a subdivision application is made. The Official Community Plan also identifies a major proposed road known as the South Fraser Perimeter Highway running through the Reimers' property.

In addition, Surrey submits that the Reimers have no jurisdiction to bring a claim for compensation to this board because they are no longer owners of the property and therefore do not qualify as owners under the Act.

 

4. DISCUSSION

4.1 Introduction

It is not disputed that Surrey passed a subdivision by-law that established a future arterial road on the Reimer's former property. Prior to the Reimer's sale of the property, however, Surrey had not taken any formal steps to expropriate a portion of that property for the highway right of way. The issue is whether Surrey's designation of a 30 metre strip of the property for a future road is nonetheless an expropriation during the period when the Reimers were owners of the property, which would entitle the Reimers to compensation under the Act.

4.2 Compensation for loss in market value through the planning process

The designation of transportation corridors that will be needed in the future is part of the long term planning process for a municipality. Surrey has authority under the Municipal Act, R.S.B.C. 1996, c. 323 to pass subdivision by-laws and official community plans that designate where proposed municipal roads will go. Furthermore, Surrey has authority under s. 945 of the Municipal Act to pass a subdivision by-law that provides for the owner to dedicate land for planned roadways without payment when an application for subdivision is being considered.

945. An approving officer may require that the owner of the land being subdivided provide, out of the land being subdivided, and without compensation, land not greater than

(a) 20 metres in depth, for a highway within the subdivision, ...(emphasis added)

Thus, once future roads are formally designated, there is a period before the roadway is built during which a municipality may acquire portions of the right of way without compensation, provided that during this interval there are applications for subdivision of the land on which the proposed road is to be built.

The rights of property owners vary depending on whether their land is affected only by the planning procedures of a municipality or whether it is actually taken in an expropriation process. E.C.E. Todd in The Law of Expropriation and Compensation in Canada, 2nd ed. (Carswell Co. Ltd., Toronto, 1992) has this to say at p. 22 about compensation for loss in market value through land use planning:

Today the principal restrictions on land use arise from the planning and zoning provisions of public authorities. By the imposition, removal, or alteration of land use controls a public authority may dramatically increase, or decrease, the value of land by changing permitted uses which may be made of it. In such a case, in the absence of express statutory authority to the contrary an owner is not entitled to compensation or any other remedy notwithstanding that subdivision approval or rezoning is refused or blocked or frozen pursuant to statutory planning powers in order, for example, to facilitate the future acquisition of the land for public purposes. (emphasis added)

The recent decision by the Supreme Court of Canada, Toronto Area Transit Operating Authority v. Dell Holdings Ltd. (1997), 60 L.C.R. 81 also comments on this issue. Dell Holdings Ltd., a development company, owned some land that it intended to subdivide and develop as residential lots. The Transit Authority proposed two possible sites for a new GO Train transit station, both of which sites were on Dell Holding's property. While the Transit Authority was considering these two options, the city withheld all planning approvals from Dell Holdings' proposed development. Eventually, the Transit Authority decided on one of the sites and expropriated the necessary land from Dell Holdings. Dell Holdings was then able to go ahead with its development of the remainder of the property, but established that it had suffered $500,000 in damages occasioned by the two year delay in development of the property while the expropriating authority was considering its two options. The Supreme Court of Canada allowed an appeal and held that these damages were compensable under the Ontario Expropriations Act, even though the damages had occurred before the expropriation. At pp. 93 and 94, Cory J. states on behalf of the majority:

The whole purpose of the Expropriations Act is to provide full and fair compensation to the person whose land is expropriated. It is the taking of the land which triggers and gives rise to the right to compensation. An owner whose land is caught up in a zoning or planning process but not expropriated must simply accept in the public interest any loss that accrues from delay. (emphasis added)

Furthermore, sections 324 and 914 of the Municipal Act provide a statutory basis for a distinction in the right to compensation depending on whether the planning process is underway or expropriation has actually occurred. Section 914 specifically prohibits compensation for loss in value to property that is affected only by the planning process.

914.(1) Compensation is not payable to any person for any reduction in the value of that person's interest in land, or for any loss or damages that result from the adoption of an official community plan ... or a [land use] by-law under this Division.

However, if the land is eventually taken or expropriated, then s. 324 provides that compensation must be paid:

324. The council must make adequate compensation to owners ... [of] real property ... entered on, taken, expropriated or used by the municipality in the exercise of any of its powers or injuriously affected by the exercise of any of its powers, for any damages necessarily resulting from the exercise of these powers beyond any advantage which the claimant may derive from the contemplated work.

Therefore, to the extent that Surrey's designation of the 30 metre strip for the future arterial road was merely part of the planning process, the Reimers are not entitled to compensation.

4.3 Has there been an expropriation?

While it is agreed that Surrey's designation of the road in compliance with the legislation is short of a formal expropriation, can it nonetheless be an expropriation or taking that entitles the Reimers to compensation?

In The Queen v Tener, [1985] 1 S.C.R. 533, the Supreme Court of Canada considered whether the British Columbia government's actions with respect to the owner's property rights could amount to an expropriation or taking, despite the absence of steps under any expropriation legislation. Tener and others were owners of mineral claims on land which eventually became a provincial park. Subsequently the British Columbia government imposed regulations which made it impossible to access mineral claims in a provincial park. The British Columbia government submitted that denying access to mineral claims in a park involved mere land use regulations such as zoning regulations or the regulation of activities on lands, which did not entitle the land owner to compensation. The Court held that the province's denial of access to the mineral claims was more than a mere regulation of the owners' interests and, in fact, amounted to an expropriation of those interests. Since it was an expropriation of property rights, compensation must be paid to the owners. The Court had to consider the distinction between regulation which did not give rise to a claim for compensation and expropriation which did. At p. 550 Wilson J. stated:

... it can not be viewed as mere regulation when it has the effect of defeating the respondent's entire interest in the land. Without access the respondents cannot enjoy the mineral claims granted to them in the only way they can be enjoyed, namely by the exploitation of the minerals. ... The reality is that the respondents now have no access to their claims, no ability to develop and realize on them and no ability to sell them to anyone else. They are effectively beyond their reach. They are worthless.

However, we find that the facts in this case are distinguishable from those in Tener. Surrey's designation of the road did not restrict the Reimer's entire interest in the land. As long as they owned the property the 30 metre strip continued to be used as part of their hobby farm. They were eventually successful in selling the property for approximately the appraised market value. Until the property is subdivided or the road is built, the current owner can continue to use it as part of a hobby farm, or for other limited uses short of subdivision development. It is true that there were restrictions on subdivision development on the 30 metre strip, but this is a long way from rendering the property worthless.

Similarly, in Schatroph v B.C. (1987), 11 B.C.L.R. (2d) 198 (S.C.), Wallace J. distinguished Tener and refused to characterize the province's actions with respect to a number of properties owned by the Schatrophs in a newly created park as a "constructive" expropriation. Neither had the province "effectively expropriated" the properties. The province's discouragement of development did not preclude the Schatrophs from doing anything useful with their lands, as evidenced by their ability to sell a number of the lots.

We are also assisted by the decision of Purchase v Terrace (1995), 26 M.P.L.R. (2d) 126 (B.C.S.C.), in which Dorgan J. considered the issue of whether the City of Terrace had "constructively" expropriated a strip of the petitioner's land for a statutory right of way. There was an easement over Purchase's land to provide access to at least one property owner beyond Purchase's land. A gravel road had existed on the easement for at least twenty years and a number of vehicles made use of the road, including logging trucks. Terrace attempted to buy the right of way from Purchase and when negotiations failed it wrote him a letter saying it intended to expropriate the right of way. However, in the end, city council failed to pass a by-law for expropriation of the right of way and after some further delay it purchased an alternative right of way through neighbouring land. Madam Justice Dorgan considers a number of cases including Tener, Schatroph, Casamiro Resource Corp v B.C. (1991), 80 D.L.R. (4th) 1 (B.C.C.A.), and B.C. Gas Inc. v Lansdall (1992), 48 L.C.R. 209 (B.C.E.C.B.), and concludes that Purchase did not suffer a "constructive" or de facto expropriation. Purchase did not have his principal interest in the land taken away by Terrace; he did not have all access to his property denied as in Tener and Casamiro, nor did he have a permanent encroachment on his property as in B.C. Gas Inc.

We conclude from our review of these cases that Surrey's designation of the road is in the nature of a planning regulation and does not amount to a "constructive" or de facto expropriation, nor has it "effectively expropriated" the right of way. Since there has been no expropriation, Surrey has no obligation to compensate the Reimers for any loss in value to their land.

4.4 Surrey's negotiations to buy the property

It is true that Surrey entered into negotiations to purchase the property from the Reimers. There also appears to have been contemplation of some payment for the 30 metre strip. However, Surrey was not required to purchase the property in advance of the final decision to complete the assembly of land and commence construction of the road. See Hartel Holdings Co. v Calgary City Council, [1984] 4 W.W.R. 193 (S.C.C.), where the Supreme Court of Canada held that under the Alberta legislation there was no obligation on the City to immediately purchase or expropriate property on which development had been prohibited because of future plans for a park in the area. Wilson J. at p. 208 comments on the Alberta equivalent to s. 914 of the Municipal Act as follows:

These sections indicate that the Alberta legislature has decided that if the rights of individuals and the public conflict, then, to the extent necessary, the "greater public interest" must prevail, ...

... If [the city's actions ... have been taken pursuant to a legitimate and valid planning purpose] then the resulting detriment to the [owner] is one that must be endured in the public interest. To force the city to acquire land at the point when long range planning decisions are initially made would thwart, rather than promote, the planning process. (emphasis added)

It appears that Surrey considered purchasing the property out of some sympathy for the Reimers' predicament in being unable to find a purchaser for the property after one year of marketing. In a letter dated June 24, 1996, Surrey set out a number of procedural steps that were necessary before the City could purchase the Reimers' property, or any part of it. Surrey also clearly indicated that if the Reimers were able to sell their property in the meantime, all negotiations would cease. While various appraisals were being undertaken by the municipality, the Reimers were finally successful in selling the entire property for approximately the appraised value.

The Reimers state that it is unfair that they should not be compensated for the strip of property that Surrey designated as a future road. While we are sympathetic to the Reimers' perception, there is no legal basis under the Act, nor under the case law, for the Reimers to be given any compensation in the present circumstances. It is unfortunate that the Reimers do not appear to have obtained legal advice as to their rights to compensation from Surrey. However, we note that the Reimers did sell their property for approximately the appraised market value. The appraised market value was based on a highest and best use of development into residential lots and an industrial site, rather than the value as a hobby farm. Part of the cost of this subdivision development was the transfer of the 30 metre strip for the South Fraser Perimeter Road. The Reimers appear to have obtained the benefit of a price based on this development potential. As a result of the sale, the Reimers are no longer in a position to transfer the 30 metre strip to the City. Surrey must still acquire the 30 metre strip at some future time from a different owner.

 

5. CONCLUSION

We must dismiss the Reimers' application that they were entitled to bring a claim for compensation under the Act as a result of Surrey's designation of a 30 metre strip of their property as part of the future South Fraser Perimeter Road.

There remains the matter of costs. Since there has been no expropriation, s. 45(3) of the Act, which entitles persons whose interest in land is expropriated to their costs, has no application. We have no other statutory jurisdiction under which to base an award of costs and so make no award.

 

 

Government of British Columbia