December 28, 2000, E.C.B. Control No. 71/00/194 (71 LCR 241)

Between:Rascal Trucking Ltd.
And:City Of Nanaimo
Before:Sharon I. Walls, Vice Chair
Appearances:Hans Heringa, P.Eng., For The Claimant
Guy E. McDannold, Counsel For The Respondent




1.0  Introduction

[1] This is an application by the respondent, the City of Nanaimo, for an order that the Application for Determination of Compensation filed by the claimant, Rascal Trucking Ltd. ("Rascal"), be dismissed on the grounds that the Expropriation Compensation Board does not have jurisdiction. I heard this application in my capacity as vice-chair of the board and in exercising the powers and jurisdiction of the board under section 26(5) of the Expropriation Act, R.S.B.C. 1996, c. 125 ("the Act").

[2] The facts giving rise to this application may be briefly summarized. Rascal occupied land owned by Kismet Enterprises Inc. located at 6231 Hammond Bay Road in Nanaimo. The claim involves 15,000 cubic metres (approximately 529,720 cubic feet) of topsoil that Rascal trucked onto the property in June 1996. Nanaimo ultimately passed two resolutions ordering Kismet and Rascal to remove the topsoil under section 936 of the Municipal Act R.S.B.C. 1979, c. 290 on the grounds that the topsoil was a nuisance. When the topsoil was not removed Nanaimo attended at the Hammond Bay Road property to remove the topsoil but was prevented by Kismet and Rascal from doing so. On application by Nanaimo, Maczko J. of the British Columbia Supreme Court declared that Nanaimo had the jurisdiction to declare the topsoil a nuisance and order its removal. Subsequently, a second application was brought and Rowan J. granted a declaration that Rascal and Kismet were in breach of Nanaimo's order to remove the topsoil and that Nanaimo was authorized to remove the topsoil if Rascal and Kismet refused to do so. Rowan J. also dismissed a petition brought by Rascal and Kismet seeking that Nanaimo's resolutions to remove the topsoil as a nuisance be quashed on the basis that Nanaimo lacked the requisite jurisdiction. After providing various options to Kismet and Rascal in terms of removing the topsoil or directing Nanaimo as to where they wanted the topsoil delivered, acting on this Order, Nanaimo removed the topsoil on November 6, 1996 and placed it in Beban Park. Nanaimo has made some efforts to sell the topsoil but has so far been unsuccessful. Rascal appealed the Orders of Maczko J. and Rowan J. and on May 20, 1998, the British Columbia Court of Appeal allowed the appeal and quashed Nanaimo's resolutions. See Nanaimo (City) v. Rascal Trucking Ltd. (1998), 49 B.C.L.R. (3d) 164. Nanaimo appealed the Court of Appeal's Order and on March 2, 2000, the Supreme Court of Canada allowed the City's appeal and reinstated the orders of Maczko J. and Rowan J as well as Nanaimo's resolutions. See [2000] 1 S.C.R. 342.

[3] On October 4, 2000, Rascal filed a Form A, or Application for Determination of Compensation. In the Form A Rascal seeks compensation for the market value of the topsoil that was removed from the property on Hammond Bay Road under sections 31, 40, and 41 of the Act as well as under sections 544 and 557 of the Municipal Act, R.S.B.C. 1996, c. 323. Rascal is also claiming various disturbance damages, frustration of an option to purchase the land, interest and costs.

[4] Nanaimo filed a Form B Reply and brought this application. The bases for the application that the board lacks jurisdiction are twofold:

1.Nanaimo's actions in removing the topsoil were the exercise of a statutory remedy which has been approved by the Courts and which does not include any right to compensation.
2.The topsoil is personal property and not land or real property.


2.0  Issues

[5] This board only has jurisdiction if there has been an expropriation of Rascal's interest or, in the alternative, if there has been injurious affection of Rascal's interest with no land taken under section 41 of the Act. In the case of McEachern v. British Columbia Hydro and Power Authority (1997), 60 L.C.R. 186 (B.C.E.C.B.) this board decided that it had jurisdiction to determine whether there has been an expropriation or other circumstances that gave it jurisdiction.


3.0  Has there been an expropriation

3.1  Expropriation or government regulation?

[6] The definition of "expropriate" in section 1 of the Act is:

"expropriate" means the taking of land by an expropriating authority under an enactment without the consent of the owner, but does not include the exercise by the government of any interest, right, privilege or title referred to in section 50 of the Land Act;

[7] Although not cited by either party, E.C.E. Todd's comments in The Law of Expropriation and Compensation in Canada, 2nd ed. (Carswell Co. Ltd., Toronto, 1992) are of assistance in distinguishing the concept of the taking of property which is an expropriation from other legal concepts of taking such as government regulation. At p. 24 he states:

In some situations it may not be easy to determine whether the exercise of a power affecting property rights constitutes expropriation and/or injurious affection for which legislation usually provides compensation or whether the exercise constitutes regulation and/or damage for which there is usually no compensation entitlement.

[8] Todd provides an example of a situation where the court found that what had occurred was not an expropriation: the English decision of France Fenwick and Co. v. R., [1927] 1 K.B. 458. The court held at p. 467 that even if the Crown had no right at common law to expropriate without compensation:

that rule can only apply (if it does apply) to a case where property is actually taken possession of or used by the Government, or where, by the order of a competent authority, it is placed at the disposal of the Government. A mere negative prohibition, though it involves interference with an owner's enjoyment of property, does not, I think, merely because it is obeyed, carry with it at common law any right to compensation. A subject cannot at common law claim compensation merely because he obeys a lawful order of the State. (emphasis added)

[9] By contrast, Todd cites two decisions of the Supreme Court of Canada that did decide that a particular form of government regulation was an expropriation that required compensation, although the takings, on their face, did not appear to be an expropriation. In The Queen in Right of British Columbia v. Tener (1985), 32 L.C.R. 340 the claimant owned mineral claims that were situated in a park. The Province ultimately passed legislation prohibiting any extraction of minerals in a park. The majority of the Court held that this situation entitled Tener to compensation for the expropriation of its interest in the mineral claims. In Manitoba Fisheries Ltd. v. Her Majesty the Queen, [1979] 1 S.C.R. 101 the claimant had its business of exporting fish from Manitoba shut down as a result of the Freshwater Fish Marketing Act, R.S.C. 1970, c. F-13. This statute created a Crown corporation with a commercial monopoly for the export of fish from participating provinces, including Manitoba. It was accepted that the claimant's goodwill had been extinguished by this legislation. The Court held that it was a taking for which compensation should be paid on "the recognized rule that unless the words of the statute clearly so demand a statute is not to be construed so as to take away the property of a subject without compensation".

[10] In this case section 936 of the Municipal Act states:

936.(1) The council may declare a building structure or erection of any kind, or on private land or a highway, ... a nuisance, and may direct and order that it be removed ... or otherwise dealt with by its owner, agent, lessee or occupier, as the council may determine and within the time after service of the order that may be named in it.

(3) The council may further order that, in case of default by the owner, agent, lessee or occupier to comply with the order within the period named in it, the municipality ... may enter and effect the removal ... at the expense of the person defaulting, and may further order that the charges for doing so, ... if unpaid on December 31 in any year, shall be added to and form part of the taxes payable on that land or real property as taxes in arrear.

[11] The Supreme Court of Canada in its ruling has upheld Nanaimo's right to remove the topsoil under section 936 and to pass resolutions declaring the topsoil a nuisance and ordering its removal. Section 936 specifically provides that if the owner, agent, or occupier fails to comply with the order to remove the nuisance, the municipality in this case can enter and remove the topsoil and charge the person who has defaulted. If these costs are not paid section 936 provides that they can be added to the taxes of the land. Nanaimo submits that there cannot be an implied right to compensation arising from a statutory provision that creates a penalty that can be attached as a charge on property arising from the failure of a person to obey Nanaimo's order to remove the nuisance. Compensation to Rascal for the removal of the nuisance would defeat the intention and wording of section 936.

[12] Rascal submitted that Nanaimo had granted Rascal a permit to bring the topsoil onto the property, and then after Rascal had expended money in bringing the topsoil onto the property, Nanaimo refused to grant it the necessary business license to sell the topsoil from the property. Rascal was left with orders to remove the topsoil but no place from which it could sell the topsoil. Rascal claimed that in these circumstances it had no option but to refuse to move the soil which would have meant incurring further costs and no clear means to recover the costs.

[13] I see the facts in this situation as quite distinct from those in either Tener or Manitoba Fisheries. While Rascal had a permit to bring topsoil onto the Hammond Bay Road property, it had an obligation to do so without creating a nuisance. By creating a nuisance it has attracted the regulatory procedures set out in section 936. This includes the penalty of either having to incur the costs to remove the nuisance or, in the alternative, to pay the costs of Nanaimo removing the nuisance. This is to be contrasted with the circumstances in both Tener and Manitoba Fisheries where the claimants had done nothing to trigger the legislation. The claimants' property interests were taken away as an incidental by-product of legislation whose purpose was to create a park that had no mining activity and to create a new Crown agency for the inter-provincial trade in fish. In the present circumstances, it appears to me that this is a case that falls into the category of government regulation where no compensation is contemplated rather than one of expropriation.

3.2  Expropriation

[14] I turn now to the question of whether the requirements for an expropriation under the Act are present. There have been no procedural steps taken by Nanaimo under the Act. However, this in itself is not determinative. A government cannot claim its own failure to follow the formalities set out in the Act as a reason to deny the claimant compensation under the Act. See McEachern v. British Columbia Hydro and Power Authority.

[15] If there has been an expropriation of Rascal's interest, Rascal would have a claim pursuant to either section 31 or 40 of the Act. These sections provide:

31 (1)The board must award as compensation to an owner the market value of the owner's estate or interest in the expropriated land plus reasonable damages for disturbance but, if the market value is based on a use of the land other than its use at the date of expropriation, the compensation payable is the greater of
(a)the market value of the land based on its use at the date of expropriation plus reasonable damages under section 34, and
(b)the market value of the land based on its highest and best use at the date of expropriation
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.

[16] In order to find an expropriation there are a number of elements that must be present. See Vancouver Marina (1971) Ltd. v. British Columbia (Minister of Transportation and Highways) (2000), 70 L.C.R. 137 (B.C.E.C.B.).

i  a taking of land

[17] Reading the definition of "expropriate" and sections 31 and 40 of the Act together makes clear that an expropriation under the Act requires a taking of land or, at a minimum, a partial taking of an owner's interest in land. In this case there is no question that there has been a taking of topsoil that was brought onto the Hammond Bay Road property. Rascal submits that the topsoil is land by definition. Rascal also refers to various documents issued by Nanaimo council, and various decisions of the courts in this matter that Rascal suggests treat the topsoil as land or real property.

[18] Nanaimo relied on the case of Guiliano Construction Co. v. Simmons (1960), 147 Conn 441 (Supreme Court of Connecticut) as authority for the principle that when topsoil is severed from its original position and brought onto different land it becomes personal property. The topsoil might become a fixture if its new position on the land was intended to be permanent. But in Guiliano Construction the Court held that since the size of the pile of topsoil was the height of a two-storey house, this was sufficient basis for a determination that the topsoil was personal property and not a fixture on the land.

[19] In this case Rascal brought a very large pile of topsoil onto the land in order to sell it. Photos showed that this pile, like the one in Guiliano, was as tall as a house. It is common ground that the topsoil was not intended to stay on the property on Hammond Bay Road as a permanent fixture. In these circumstances I accept the principle that the topsoil is personal property and not land. The fact that the topsoil is personal property is not contradictory to the Supreme Court of Canada finding that the topsoil fell within the phrase "building, structure or erection" in section 936 of the Municipal Act. The topsoil is a temporary "building, structure or erection" that is personal property. I do not agree with Rascal's submission that the various documents produced by Nanaimo with respect to the topsoil do refer to the topsoil itself as real property and even if they did, a description in a document cannot transform the nature of the topsoil into real property.

ii  without the consent of the owner

[20] Part of the definition of expropriation is that the taking of land is done without the consent of the owner. Rascal has not co-operated in nor consented to the taking of the topsoil. However, that is not necessarily conclusive. In certain circumstances an owner can be said to have consented to the taking of some part of his or her property even though there has been no express consent. Professor Todd discusses at p. 21 how in making an original grant of land, the Crown may reserve the right to take back or "resume" some part of the land for a public purpose, such as road-making. In such circumstances the owner in effect consented to the Crown's subsequent taking by virtue of accepting the land under the terms of the reservation in the grant.

[21] Similarly, in Vancouver Marina, this Board held that the claimant had consented to the taking of property where the claimant had entered into a lease with the North Fraser Harbour Commission ("NFHC"). The lease permitted the NFHC to resume the land at any time if in the NFHC's opinion the land was required for government or public purpose. The claimant alleged that it had never consented to the taking of its property by NFHC. However, the claimant had entered into a lease that in effect gave consent in certain circumstances.

[22] In the present case, the Supreme Court of Canada has upheld Nanaimo's ability under section 936 of the Municipal Act to declare the topsoil a nuisance, to make an order that Rascal remove the topsoil, to remove the topsoil if Rascal refused to do so, and finally to add the charges to remove the topsoil to the taxes of the real property on which the nuisance was situated. Rascal's lack of consent to the taking of the topsoil has been overridden by the fact that it created a nuisance and brought into play regulatory procedures under a statute that have been confirmed by the Supreme Court of Canada.

[23] In Mariner Real Estate Ltd. v. Nova Scotia (Attorney General) (1999) 68 L.C.R. 1 (N.S.C.A.) the Court was also considering the question of whether an expropriation had occurred. I find Cromwell J.A.'s comments at p. 25 to be relevant:

While the term "land" must be given a broad and liberal interpretation, the interpretation must also respect the legislative context and purpose. As I will develop below, the Expropriation Act draws a line, on policy grounds, between the sorts of interference with the ownership of land that are compensable under the Act and those which are not. That line, in general, is drawn where land is taken. In interpreting where this line falls, the Court must give the term a meaning which is both consistent with the Act's remedial nature but also with appropriate regard to the legal context in which the term was adopted. It is not the court's function, as it would be if applying a constitutional guarantee of rights of private property, to evaluate the legality or fairness of where the legislature has drawn the line, but to interpret and apply it.

[24] I conclude that Nanaimo's removal of the topsoil was not an expropriation under the Act with a right of compensation under either section 31 or 40.


4.  Injurious affection with no land taken

[25] If there has been no expropriation then the only other means by which the board could have jurisdiction is if there has been injurious affection with no land taken within the meaning of section 41 of the Act which provides:

41(1) In this section, "injurious affection" means injurious affection caused by an expropriating authority in respect of a work or project for which the expropriating authority had the power to expropriate land.

(2) The repeal of the Expropriation Act, R.S.B.C. 1979, c. 117, and the amendments and repeals in sections 56 to 128 of the Expropriation Act, S.B.C. 1987, c. 23, are deemed not to change the law respecting injurious affection if no land of an owner is expropriated, and an owner whose land is not taken or acquired is, despite those amendments or repeals, entitled to compensation to the same extent, if any, that the owner would have been entitled to had those enactments not been amended or repealed.

[26] Some of the same difficulties in finding an expropriation apply to this section. Section 41 provides for compensation for injurious affection to an owner's interest in land in circumstances where none of that owner's land has been taken. In order to qualify for any compensation under section 41, a claimant must meet the four common law tests for injurious affection set out by the Supreme Court of Canada in R. v. Loiselle, [1962] S.C.R. 624, at p. 627. Rascal faces difficulty in meeting the third test, the "Nature of the Damage Rule". It is established law that for a claimant to be entitled to compensation for injurious affection where no land has been taken, the damage must be an injury to the land itself and not an injury to business or trade. In this case, Rascal's primary claim is for the business loss of not being able to sell this topsoil. It is not clear that there is any injurious affection to an interest in land of Rascal's that has arisen as a result of the topsoil being removed.

[27] In any event, Rascal has other difficulties in meeting the common law tests for injurious affection. Another requirement is that there must be statutory authority for the activity that caused the injurious affection and any compensation is as provided for in that legislation. Rascal relies on sections 544 and 557 of the Municipal Act. Section 544 provides for the municipality to provide compensation to owners or occupiers of real property for injurious affection necessarily resulting from the municipality exercising any of its powers. Section 557 provides that the municipality may enter onto land which may be injuriously affected by the exercising of any of its powers for the purpose of mitigating any injury. Section 936 of the Municipal Act authorized the removal of the topsoil as a nuisance. When this section is read together with sections 544 and 577 of the Municipal Act there can be no finding of injurious affection for which compensation is payable to Rascal arising from the taking of the topsoil under section 936.

[28] I conclude that Rascal does not have a claim for injurious affection with no land taken under section 41 of the Act.


5.  Conclusion

[29] Since Rascal does not have a claim for expropriation or injurious affection then the Board has no jurisdiction with respect to Rascal's claim. As a result Rascal's compensation claim is dismissed.



Government of British Columbia