February 28, 2000. ECB Control No.: 44/97/181 (69 L.C.R. 74)

Between:	George Fredrick Reti and Mary Genevieve Reti Claimants
And:	District of Sicamous Respondent
Before:	Sharon I. Walls, Vice Chair Lesley Eames, AACI, P.App., Board Member Julian K. Greenwood, Board Member
Appearances:	Reinhard Burke, Counsel for the Claimants James Yardley, Counsel for the Respondent

REASONS FOR DECISION

1.  INTRODUCTION

[1]    The issue of costs in this matter was adjourned pending written reasons on compensation. Those reasons were released on December 6, 1999. George and Mary Reti were awarded compensation in the amount of $66,000 for loss in market value to their property. This compensation was awarded pursuant to section 41(3) of the Expropriation Act, R.S.B.C. 1996, c.125 ("the Act") for injurious affection with no land taken.

[2]   Relevant portions of section 45 of the Act are:

45 (6) On a claim under section 41 (3), the board may award, in its discretion, costs to the claimant or the expropriation authority.

45 (7) The costs payable under subsection (3), (4), (5) or (6) are

(a) the actual reasonable legal, appraisal and other costs, or

(b) if the Lieutenant Governor in council prescribes a tariff of costs, the amounts prescribed in the tariff and not the costs referred to in paragraph (a)

45 (9) If the board determines the amount of compensation or damages to which a person is entitled, the amount of costs must be determined by the chair.

45 (10) In a determination of costs under...(9), the following considerations must be taken into account:

(a) the number and complexity of the issues;

(b) the degree of success taking into account

(i) the determination of the issues, and

(ii) the difference between the amount awarded and the advance payment under section 20....

(c) the manner in which the case was prepared and conducted.

2.  SUBMISSIONS OF THE PARTIES

[3]   The Retis submit that they were successful at the hearing and are entitled to their costs. There was an offer of settlement shortly before the hearing but it was for significantly less money than they were awarded at the hearing.

[4]   Sicamous makes four submissions:

a   Section 45(6) of the Act, unlike situations where a portion of the claimant's land has been taken, has no presumption that claimant is entitled to its costs. In addition, the board has a discretion to award costs to the expropriation authority.

b   The Retis in fact advanced four claims for compensation at the hearing:

i	physical damage to property
ii	loss in market value of property
iii	loss of value to improvements not reflected in market value
iv	loss of use and enjoyment of their property

Since they were successful in only one of these claims, the loss in market value of the property, it would be appropriate to apportion costs in favour of the respondent for the three issues in which they were unsuccessful.

c   Sicamous alleges that the appraisal evidence relied on by the Retis was not used by the board in coming to its conclusion on loss in market value. Further, this evidence contained material that was outside the appraiser's area of expertise which the board found had "no legal relevance". Under Rule 57(15) of the Rules of Court an otherwise successful party may be denied costs for an expert for which the party did not succeed. Sicamous submits that this principle should be applied here to disentitle the Retis to reimbursement of costs for an expert that was not accepted.

d   Finally, Sicamous submits that the respondent should be entitled to its costs for an application prior to the compensation hearing, in which it sought an order to compel reattendance of the claimants for discovery. The board did order reattendance but made no order for costs.

[5]   The Retis respond that the proper test for a disbursement for an expert report is whether the disbursement was necessary and proper at the time that it was incurred. Van Daele v Van Daele (1983), 56 B.C.L.R. 178 (C.A.). They submit that this should be dealt with at a section 45(9) hearing before the chair rather than by the board as part of the reasons for decision. They also submit that the facts that led to the order for reattendance at an examination for discovery were not straightforward and referred to their written submissions made at the time. Again they submit that this matter should be dealt with at a section 45 hearing.

3. ANALYSIS AND CONCLUSION

[6]   Under the Act claimants who seek compensation for injurious affection with no land taken do not enjoy the same presumption of entitlement to costs as claimants who have had at least some part of their land expropriated. The board may award costs to the claimant or to the expropriating authority. These costs may be awarded in whole or in part. However, if the board exercises its discretion to award the claimant all or part of its costs, then under section 45(7) of the Act the claimant is entitled to its costs on the same basis as other claimants. See Jesperson's Brake & Muffler Ltd. v. District of Chilliwack (No.2) (1993), 51 L.C.R. 62, where a previous chair of this board, Chair Harvey, discusses some of the principles of awarding costs in claims for injurious affection with no land taken.

[7]   There are no criteria under section 45(6) as to how the board should exercise its discretion. Unlike in Jesperson, we are deciding the issue of costs as a panel of the board as a supplement to our decision on compensation. There may be a further hearing before the chair under section 45(9) to actually determine the award for reasonable legal, appraisal and other costs if the parties cannot agree. Subsection 45(10) lists a number of factors that the chair must consider in a hearing under section 45(9) including the degree of success and the manner in which the case was prepared and conducted.

[8]   Panels of this board have sometimes commented on the complexities of the issues and the relative time spent on different issues at the hearing to consider whether the claimant should receive 100%, or some lesser percentage, of its legal or appraisal costs. See Baines and Minister of Transportation (No.2) (1997), 62 L.C.R. 210 (B.C.E.C.B) for a review of factors considered by panels of this board in deciding the level of costs that should be awarded.

[9]   In this case the Retis have been successful in proving a significant part of their primary claim. There is no advance payment in a claim of this sort and we note that the respondent denied the claim and initially offered only $7,500 or 10% of the 1995 market value if the market value decreased. Shortly before the hearing date this offer increased to $30,000 including costs. In the circumstances, we find that it was reasonable for the Retis to proceed to a hearing.

[10]   On the other hand, we agree with Sicamous that there are some problems with respect to the report from the claimants' appraiser, Danny Grant. As we said in our earlier reasons, the articles appended to Grant's report on disease bearing pathogens and chemicals were outside his area of expertise and were of no legal relevance. While little time was spent on this evidence in chief, it was a relatively significant issue in cross-examination. It is true that the board's rejection of expert evidence does not necessarily mean that costs for that expert evidence should be rejected or reduced. We agree with counsel for the Retis that the correct test is whether a disbursement can be considered necessary and proper at the time that it was incurred. See Van Daele v Van Daele. We appreciate that appraisers often attach appropriate data to their reports about trends in such areas as population, economic activity, construction levels and vacancy rates. We also recognize that the appraisers in this case had difficulties in measuring the negative impact of the sewage treatment plant on the Retis' property. Nonetheless, we wish to emphasize that, in our opinion, attachment of a variety of scientific technical articles collected by someone who has no expertise in this area, apparently to support an implication that sewage treatment facilities create health risks, is at no time necessary or proper or appropriate.

[11]   We also have a concern with a claim for the loss of value to improvements not reflected in the market value. As we noted in our earlier decision, the requirements for a claim of this type under section 31(2)(b) had been clearly set out in an earlier decision of this board, Branscombe v. British Columbia (1993), 51 L.C.R. 241. We think that it was unrealistic for the claimants to bring this claim for loss of value to improvements in the circumstances in this case. The board does not wish to inhibit novel and innovative arguments. However, we agree with the comments of this board in Apland v British Columbia (Ministry of Transportation and Highways) (1996), 60 L.C.R. 107 at 123 when it exercised its discretion to award the claimant less than 100% of his costs:

Although their argument was novel, requiring on my part a close analysis of the scheme of the legislation in order to determine the issue, it must have been evident from any informed review of the language of the Act and the decided cases interpreting it that the argument was fraught with difficulty and highly unlikely to succeed.

It is true that, in Apland, the hearing focussed on this one issue that was fraught with difficulty, whereas in this case the Retis have been successful in their main claim for injurious affection. We acknowledge that there is some difficulty in extracting the costs of advancing one argument amongst many.

[12]   At the date of the hearing there was no tariff in place. Because they were successful in their primary claim, in our opinion, the Retis are entitled to the majority of their costs. We agree with Sicamous, however, that the articles attached to the claimants' appraisal report on pathogens and chemicals associated with sewage were not necessary or proper. We also agree that the claim for the loss of value to improvements not reflected in the market value was unrealistic. After consideration of the submissions and all the evidence at the hearing we award the Retis 90% of their actual reasonable legal, appraisal and other costs.