February 15, 2000. ECB Control No.:
93/95/180 (69 L.C.R. 1)
Springs West Development Corporation|
Majesty the Queen in Right of the Province of British Columbia as Represented
by the Minister of Transportation and Highways|
I. Walls, Vice Chair|
Lesley Eames, AACI, P.App., Board Member
Greenwood, Board Member
L. John Alexander, Counsel for the Claimant|
Alan V.W. Hincks, Counsel for
claimant, Sequoia Springs West Development Corp. ("Sequoia Springs"),
owned a large development property (approximately 95 hectares or 234 acres) in
Campbell River, British Columbia ("subject property"). Barrie Brown
is the sole director and shareholder of Sequoia Springs.
respondent, the Minister of Transportation and Highways ("MoTH"), required
approximately 12 hectares or 29 acres of the subject property for the Inland Island
Highway. The parties entered into an agreement under section 3 of the Expropriation
Act, R.S.B.C. 1996, c. 125 ("the Act"), with an acquisition
date of March 31, 1995. Although this acquisition was by agreement, we have sometimes
referred to it in these reasons as a taking. The partial acquisition diagonally
bisects the property from the south-west to the north-east corner. The remainder
consists of two parcels, the eastern remainder 37 hectares (91 acres) and the
western remainder 46 hectares (114 acres), physically separated by the new highway.
the date for possession in the section 3 agreement was March 31, 1995, there were
three addenda made to the agreement which extended the time for making an advance
payment. Eventually, $1,425,000 was paid as a total advance payment. The appraisal
report delivered with the advance payment estimated the loss in market value as
$1,750,000. The appraisal report relied on by MoTH at the hearing estimated the
loss in market value as $1,265,000.
to the taking, Sequoia Springs planned to develop the subject property as a mixed
residential golf course community. However, as a result of the highway bisecting
the property and cutting off access between the two halves of the remainder, Sequoia
Springs says that it was forced to give up the golf course component of the development.
Eventually, in April 1998, Sequoia Springs received approval for a comprehensive
development plan ("CDP") involving mixed residential and community greenways
for the remainder of the property. Sequoia Springs claims that, as a result of
the taking, it suffered extensive disturbance damages for costs thrown away on
development of the golf course. In addition, it says that the taking delayed its
development of the property for a period of between two and four years and it
seeks compensation for this delay.
Springs' total claim for compensation is as follows (in approximate amounts):
value of the land taken and loss in market value to the remaining lands||$2,610,000|
| i ||expenses
| ||ii ||increase
in development costs due to the delay||$
520,000 to $3,000,000|
the total amount of compensation claimed in excess of the advance payment is approximately
$4,000,000 to $6,500,000.
2.1 Acquisition of the subject property
Brown, through one of his companies, has operated a golf course on lands immediately
adjacent to the subject property since 1975. He also owns and operates an automobile
dealership and an equipment leasing company. In the mid 1980's the golf course
acquired more land and expanded from nine to 18 holes. Brown wished to expand
further and sought to purchase the subject property.
fact, Brown subsequently acquired the subject property through a share purchase
of a company. The company's assets included not only the subject property, but
also two other adjacent parcels of land: the remainder of District Lot 1390 (approximately
eight hectares or 20 acres) and the remainder of District Lot 1392 (approximately
five hectares or 12 acres), as well as one other lot and some equipment. The list
of equipment included tools and heavy equipment, some items of which were described
as "not operating".
initial agreement in December 1990 was to purchase the shares and shareholder's
loan for $1,550,000, with a closing date of April 30, 1991. This agreement did
not complete. There were extensions incorporating the initial agreement, and the
transfer eventually occurred on May 31, 1993. $1,180,000 of the purchase price
remained unpaid and was secured by a promissory note and a mortgage. The subject
property was subsequently registered in the name of the claimant, Sequoia Springs.
2.2 Development of other parcels
Brown completed the share purchase of the company that owned the subject property,
all three larger parcels of land included in the assets were zoned CR-4, Country
Residential Four. This zoning permits residential lots with a minimum size of
two hectares (five acres). Shortly after acquiring the property, Sequoia Springs
applied for rezoning and subdivision of the two smaller parcels, the remainders
of District Lots 1392 and 1390, to R1, Single Family Residential. This zoning
permits a minimum lot size of 465 square metres. By September 1993 these properties
had been rezoned and preliminary layout plans for a 32 lot subdivision on part
of the remainder of District Lot 1392 had been approved by the District of Campbell
River. Subdivision was achieved in April 1994, and all of the lots in this subdivision,
called Bear Place, were sold by July 1994.
Lot 1390 was subdivided into a 60 lot subdivision called Fairway Village in July
1994. Twenty-nine of these lots sold during the second half of 1994, eight more
lots sold in 1995, and 17 lots sold in the first 8 months of 1996; two of the
lots were also resold.
property - before the taking
the date of the taking, the subject property was an irregularly shaped parcel
consisting of the remainder of District Lot 66 (92 hectares or 228 acres) and
two hectares (five acres) of the remainder of District Lot 1392 that had been
left out of the Bear Place subdivision created by Sequoia Springs in April 1994.
District Lot 66 was still zoned Country Residential Four (CR-4), while the small
portion of District Lot 1392 had already been rezoned by Sequoia Springs to Single
Family Residential (R1). The subject property was unimproved except for a derelict
residence, some gravelled areas used for parking lots, and a driving range associated
with the adjacent golf course.
subject property varies in elevation, rising generally from the north-east corner
to the southern boundary. In some areas of the subject property there are views
of the ocean towards the north-east. There are a number of ravines, some of them
with steep slopes.
 Three streams
cut through the subject property: West Kingfisher Creek, East Kingfisher Creek,
and a third creek identified as Creek A. All of them drain into the low wetlands
near the north end of the property. West Kingfisher Creek continues north towards
the Campbell River through an adjacent property, the Haig-Brown Kingfisher Creek
Conservation Area. A local group, the Haig-Brown Kingfisher Creek Society, has
been involved in enhancing the salmon-bearing properties of this Creek for many
2.4 Campbell River
- Population and economic factors
the subject property is so large, any discussion of its development must consider
statistics for population growth, residential construction, and the real estate
market in Campbell River during the relevant period. Campbell River's population
has grown substantially in recent years. Between 1991 and 1996 the compound growth
rate averaged 3.5% per annum. There was some downturn in the local economy during
this period with decreased opportunities in the forestry, mining, and fishing
sectors. Nevertheless, residential construction was growing in the early 1990s
with both the number of new units and the total value of residential construction
peaking in 1994. The total values for residential construction dropped by 50%
in 1995 and recovered approximately 25% in 1996. The number of new residential
starts also reflected this fluctuation. In 1997 the number of new residential
units remained steady, but in the first half of 1998 both the number of new residential
starts and the total value of residential construction declined over 65%. Similarly,
the number of sales of both single family units and residential lots was high
in 1994, declined in 1995, and recovered in 1996. In 1997 there was a significant
drop in the total value of MLS(r) sales in Campbell River, as well as in the number
of single family units and residential lots sold. The apartment vacancy rate,
another measure of demand, also reflected these trends. Rates were under 3% from
1990-1995, rising to 6.7% in October 1996 and 9.9% in October 1997. 1. 2.5 Neighbourhood
and land use controls
 The subject
property is approximately 2 kilometres west of downtown Campbell River in the
Quinsam neighbourhood. Immediately to the east of the property there is a school
site and the new subdivisions on District Lots 1390 and 1392. Further east is
an older residential neighbourhood. The Sequoia Springs Golf Course owned by Brown
is adjacent to the property to the south. There are also some hobby farms south
of the golf course. On the west, there are some older single family houses on
large lots, as well as a forest seed nursery and a salmon hatchery. To the north
is the Roderick Haig-Brown Kingfisher Creek Conservation Area and an older single
family neighbourhood with some light commercial industrial use.
Quinsam neighbourhood was a rural residential area lying outside the municipal
boundaries until it was incorporated into Campbell River in June 1991. By March
1994 Campbell River had prepared and adopted the Quinsam Local Area Plan as an
amendment to the Official Community Plan ("OCP"). Once this plan was
in place, new development became feasible. Some of the goals in the plan include:
preservation of the residential character of the Quinsam area; development of
a mix of housing types; development at a reasonable rate; development of a system
of trails for pedestrians and bicyclists; and provision of commercial and recreational
open space in small scale village squares.
Quinsam Local Area Plan designates District Lot 66, the primary component of the
subject property, as a Comprehensive Development Area. Section 10.0 of the Local
Area Plan states:
The intent of assigning
this designation ¼ is to provide for detailed and comprehensive land use planning
of the area by developers through the district's approval process. Development
of ¼ the ¼ area shall be prohibited until comprehensive development plans have
been adopted for the ¼ area.
4.1 of the OCP states:
Plans for the development
of these [Comprehensive Development] Areas indicating land uses and densities,
road networks, public open space, servicing and environmentally sensitive areas,
must be submitted for approval prior to development occurring.
the designation of "Comprehensive Development Area" prevented piecemeal
development of the subject property. Sequoia Springs could only develop the property
after it had obtained approval for a CDP for the entire property. We note that
District Lot 1392 and 1390, the two smaller parcels that had been acquired with
District Lot 66, were also initially designated as being in the Comprehensive
Development Area; however, Sequoia Springs was successful in removing these two
parcels from this designation with the result that they could be developed more
on the subject property prior to the taking
developing a CDP for the subject property a number of factors had to be resolved.
The location of the highway through the property needed to be known. The uneven
terrain and steep ravines on the property meant that some of the land could not
be developed and any layout had to be custom-designed for the topography. The
streams in the Kingfisher Creek system, both fish-bearing and non fish-bearing,
had to be protected from erosion and sedimentation.
initially hoped to extend the existing golf course into the subject property and
create housing along the fairways. Although a further 18 holes were contemplated
at one point, Brown stated that he had scaled this back to only nine more holes
by late 1992, even before he had acquired the property. In early 1994, Brown hosted
a number of promotional breakfasts for real estate agents at the golf course clubhouse.
He distributed a promotional brochure containing schematic drawings for a residential
golf course community called "Sequoia Springs West". This brochure was
an early concept, prepared in 1991 or 1992. It showed an 18 hole golf course with
residential housing running between the fairways, together with a club house and
tennis courts. The brochure showed the development to include not only the subject
property, but also District Lots 1392 and 1390, which were being subdivided separately
in April 1994 and July 1994 respectively. Brown described the promotional breakfasts
and brochures as promoting a golf course community on the subject property, but
the evidence indicates that their most immediate purpose was to promote the sale
of lots in the Bear Place and Fairway Village subdivisions, created out of District
Lots 1392 and 1390 respectively.
Springs retained Jeff Wilson in March 1994. Wilson had been a golf professional
and, more recently, a trouble-shooter and manager with a golf course management
company in the United States. His uncle was the golf professional at Brown's existing
golf course, adjacent to the subject property. Wilson reported that he and Brown
walked the subject property and discussed the layout of fairways. While he was
an employee of Sequoia Springs, Wilson helped with the management of the existing
golf course. He also spent considerable time promoting the sale of lots in the
Fairway Village subdivision as part of a golf course community. Wilson said that
he learned about the highway cutting through the subject property in late 1994.
He testified that he eventually resigned in April 1995 because it appeared that
the golf course concept would not be part of any development.
most of 1994 there was extensive clearing and fill on the subject property. Brown
reported that this work was in preparation for fairways and houses. In September,
after the highway route was known, Brown negotiated an agreement with MoTH to
remove sand and other material from the right of way to use as structural fill
on the rest of the property. The highway design called for a large cut to be made
in part of the right of way. By taking material from this area, Sequoia Springs
was able to narrow the required right of way to some degree and obtain a free
supply of fill for its development.
there was no CDP for the subject property dating from 1994, there was evidence
that in 1994 Highland Engineering Services Ltd. had done some development work
on the subject on behalf of Sequoia Springs, including reviewing plans for depositing
structural fill for houses and roadways.
November 1994, the provincial Ministry of Environment Lands and Parks ("MELP")
issued a "stop work order" for Sequoia Spring's development activity
because sediment was being deposited in the creeks on the property. As a result,
development work on the property ceased for a number of months while remedial
work was carried out. Sequoia Springs was able to arrange for some timber to be
removed from the right of way in early 1995. In January 1995, Sequoia Springs
applied to the federal Department of Fisheries and Oceans and to MELP for permission
to fill one of the large ravines on the subject property, referred to as Ravine
3. This fill was apparently necessary in order to provide access to a portion
of the subject property through an extension of one of the roads leading to the
property, Treelane Road. The application was refused and it was not until September
1995 that a permit for fill was finally granted.
of the acquisition
had known when he was negotiating to acquire the property in December 1990 that
there was a possibility that the Inland Island Highway might pass through the
property. The route had not been decided at this time and he still hoped that
a more westerly route would be chosen. However, by the time the final acquisition
documents for the share purchase were being prepared in May 1993, a special clause
was inserted in the mortgage documents referring to a possible expropriation.
In February 1994, Sequoia Springs was notified by the agent for MoTH that survey
teams would be on the subject property. In April 1994, Brown attended an information
meeting held by MoTH. Although three alternative routes were presented at this
meeting, the route that approximates the one that was eventually built was clearly
preferred. On May 24, 1994, MoTH sent Brown plans for a revised alignment
based on this preferred option. There was a meeting between Brown and MoTH in
September 1994 at which excavation of materials from the right of way was discussed.
In addition, Brown requested an access road over the highway, linking the two
 The section 3 agreement
was signed by Brown on December 22, 1994 and by the respondent on March 31,
1995. There was an addendum signed March 28, 1995 fixing the date for possession
as March 31, 1995 and the date for advance payment as July 31, 1995.
There was a second amendment on July 19, 1995, which extended the date for
advance payment to August 11, 1995. There was a third addendum signed on
August 10, 1995, providing for an immediate advance payment of $500,000 and an
extension of the date for the balance of the advance payment to August 31, 1995,
with interest to be paid on the balance from August 1, 1995 at 8.75%. On August 28,
1995, a further $925,000 was paid for a total advance payment of $1,425,000. The
appraisal that was served with this advance payment estimated the loss in value
caused by the taking as $1,750,000. MoTH said that it paid less than this sum
because of its concern about certain aspects of the disturbance damages. MoTH
subsequently agreed to pay interest on any outstanding amounts from March 31,
2.8 Construction of
acquisition plans for the right of way over the subject property were finalized
in May 1995 and were filed in the Land Title Office in August 1995. However, Sequoia
Springs was removing material from the right of way prior to these dates. Construction
began in 1995 and the highway opened in September 1997.
property - after the taking
1995-1996 -- First application for comprehensive
the taking, the subject property consisted of an eastern remainder of 37 hectares
and a western remainder of 46 hectares. A CDP for the subject property was submitted
to the District of Campbell River on July 12, 1995 by Highland Engineering Services
Ltd. on behalf of Sequoia Springs. In addition to the single family lots and five
multi-family sites, this plan showed almost six hectares of commercial area at
the north end of the property, next to the Haig-Brown Conservation Area. Almost
one half of the property, 37 hectares, was designated as pedestrian trails, park
land, leave strips and environmentally sensitive land.
plan assumed that there would be an overpass over the highway, linking the two
halves of the remainder. Sequoia Springs took the position that MoTH should provide
 Campbell River notified
Sequoia Springs in August, 1995, that there would be a delay in processing the
application because of a staff shortage. This CDP did not go to a public hearing.
Brown stated that this CDP was withdrawn because funding for a bridge had not
been negotiated. There were some notes in Campbell River's file dated September
26, 1995 that indicated that someone at Campbell River's planning office had met
with Sequoia Spring's agent for this CDP. There were notes from the following
day stating that Sequoia Springs would be submitting an alternate plan and setting
up a meeting. There was a memo in the District's files from MELP dated February
9, 1996 indicating that "Fish and Wildlife Branch has no comments on the
proposal, apparently [the Department of] Fisheries and Oceans rejected the application".
There was another memo in the District's files dated March 17, 1997 suggesting
that the file could be closed because Sequoia Springs intended to submit a new
2.10 Willow Street Sewer
Springs made a claim for monies it expended on the Willow Street Sewer extension,
which it says would not have been necessary but for the highway. As a result of
the highway, a portion of the eastern remainder of the subject property was isolated
from gravity sewer service. In the absence of any bridge over the highway, a gravity
sewer for this area would have to run down the highway right of way; however,
expressway standards prohibit this option. Campbell River would not permit any
option that required pumping of the sewage uphill. In 1996, the only other option
appeared to be to build a pipe bridge for the sewer line to cross Kingfisher Creek
and link up with an existing sewer running along Willow Street. This work had
to be done in conjunction with the construction of the highway in this area.
also heard that there had been a long-standing problem with flooding in the Willow
Street area during times of peak flow in both the east and west branches of Kingfisher
Creek. It appears that the existing storm drain system could not cope with the
volume of water during heavy rains or run-off periods. Neither the sanitary sewer
nor the storm sewer had sufficient capacity downstream for the proposed development
on the subject property. As a result of the highway being constructed the storm
sewer capacity was increased.
September 1996, Sequoia Springs requested the District of Campbell River to upgrade
the Willow Street sewer. Sequoia Springs had obtained a contractor's estimate
of $49,040 to upgrade and extend the sewer in accordance with a specified engineering
drawing. However, since the sewer upgrade work had to be co-ordinated with the
construction of the new highway, MoTH stipulated that any sewer upgrade work would
be done by its crew. Campbell River eventually submitted an invoice for this work
to Sequoia Springs for $116,548. Richard Stephens, the principal for Highland
Engineering Services Ltd., testified that the contractor's estimate was for less
extensive work than was reflected in the invoice eventually paid by Sequoia Springs.
2.11 Environmental factors
factors became an important consideration in the development of this property.
Both Sequoia Springs and MoTH were, at different points, required to temporarily
suspend their activities because of damage to the Kingfisher Creek system. As
described above, MELP issued a stop work order on Sequoia Spring's development
work in November 1994. MELP took nine months, from January to September 1995,
to grant Sequoia Springs a permit to fill Ravine 3. Permission from the Department
of Fisheries and Oceans for this work was also necessary.
the Department of Fisheries and Oceans suspended MoTH's construction work in April
1996 and in October 1996 it prosecuted MoTH under the Fisheries Act for
allowing construction material to get into West Kingfisher Creek.
mid 1996, it was assumed that only the west branch of Kingfisher Creek was fish-bearing.
However, in July 1996, there was a report to the Department of Fisheries and Oceans
that some salmon fry had recently been discovered in East Kingfisher Creek. This
led to increased concern about the effect of any development and construction
on this creek.
Property - after the taking
1996-1998 Second application for comprehensive
in 1996 Campbell River asked Brian Tutty, a biologist with the Department of Fisheries
and Oceans, to organize a meeting of the various parties interested in Kingfisher
Creek. The meeting was held in June 1996 and was attended by Brown, several staff
members from Campbell River, and members of the Kingfisher Creek Society. In a
subsequent letter to those in attendance, Tutty stated that a number of common
goals had been articulated during the meeting. He went on to strongly advocate
the use of greenways, or linear green corridors that connect natural areas, as
a means to achieve the common goals. He enclosed several copies of a 1995 book
that was co-published by the federal Department of Fisheries and Oceans, called
Community Greenways: Linking Communities to Country, People to Nature.
of the authors of the latter book, David Reid of Lanarc Consultants Ltd., was
retained by Sequoia Springs in July 1996, within a few weeks of this letter, to
assist Sequoia Springs in developing a new CDP that would meet the environmental
concerns. Reid, a landscape architect who specializes in land use and environmental
planning, had been involved in establishing community greenways and protecting
stream and watersheds for various clients. Reid initiated a planning roundtable
discussion of the various stakeholders called the Kingfisher Ad-Hoc Committee.
It met from August 1996 to the spring of 1997, during the period that Reid was
developing a new CDP.
 A second CDP
application was submitted by Lanarc on behalf of Sequoia Springs in April, 1997.
This plan had a higher density of housing units than the 1995 CDP. It contained
25 hectares in parks and dedicated greenways, together with another 6.8 hectares
in covenanted greenways, which would form part of the residential lots. The public
meeting for this CDP was held on July 15, 1997 and the plan was approved by Campbell
River as an amendment to the OCP, or Appendix H to the OCP, on April 28, 1998.
Reid testified that two items held up approval of the CDP: an agreement to pay
for the pedestrian overpass over the highway and emergency access to the subdivisions.
Since both of these issues arose as a result of the highway, Sequoia Springs claims
that approval of a CDP for the subject property would have been faster if the
highway had not been constructed. However, there was also evidence that other
issues were being negotiated after the public meeting in July 1997, including
the requirement for a commercial site on the subject. This issue was resolved
relatively quickly, but in September 1997 there were ongoing negotiations with
respect to the extension of the greenways trails to link up with other greenways
and the provision of access to Shepherd Road to the south of the subject. A letter
from Campbell River on November 25, 1997, indicates that most of these later
issues had been resolved by that point. This letter recommends that a study of
the physical and financial feasibility of the Greenway Trails and Overhead Crossing
be done by Lanarc as quickly as possible. It also recommends that approval of
the CDP be delayed until this study had been completed. A draft form of the feasibility
report was forwarded to Campbell River and Sequoia Springs on March 5, 1998.
the plan was approved, as of the date of the hearing there still had not been
approval by MoTH of emergency access from the highway.
the same time as the CDP was approved, part of the eastern remainder of the subject
property adjacent to Fairway Village was rezoned to R1, Single Family Residential,
for a 40 lot subdivision. By the time the evidence in this matter concluded, in
December 1998, no further development on the subject property had occurred. Brown
testified that one of the reasons for the delay in development was that the market
had declined and the claimant was waiting for market conditions to recover. He
had also been preoccupied in building a new club house for the existing golf course.
Brown also told us that the dedicated greenways had not yet been given to the
District of Campbell River or any other body because Sequoia Springs was hoping
to find an organization that could issue a tax receipt for this gift of land.
evidence was provided by Brian K. Davies of Interwest Property Services (1991)
Ltd. on behalf of Sequoia Springs and Dennis Parkhill of Kent-MacPherson Appraisals
on behalf of MoTH. Both appraisers used a before and after technique to
estimate the value of the lands taken and the reduction in value to the remaining
land. They each valued the subject property before the acquisition and deducted
the value of the two parcels remaining after MoTH's acquisition to derive an estimate
of the loss.
and Best Use
and Parkhill were generally agreed that the highest and best use of the subject
property, both before and after the highway, was for a residential development
with single and multi-family sites, with substantial park and green space, to
be phased in over a number of years. In both cases development was contingent
on zoning approvals and the adoption of a CDP for the property.
3.3 Appraisal Approaches
and Parkhill both used the Direct Comparison Approach and the Development Approach
to value the property in the before scenario. In the after scenario,
they used only the Development Approach. For this after scenario, they
both relied on variations of the site plan in the CDP that had been approved in
1998. They then attempted to adapt this plan to the original parcel which existed
before the taking.
used site layouts designed by Lanarc Consultants Ltd., the company that produced
the actual CDP that was approved; phased servicing and subdivision costs were
provided by Reid Crowther & Partners Ltd. Parkhill relied on Graeme &
Murray Consultants Ltd. for site layout, development, and servicing costs.
positions of each party, based on the appraisal evidence, may be summarized as
Sequoia Springs|| MoTH|
| || |
Comparison Approach||$ 7,870,000|| ||$
per Gross Acre||$ 33,426||$
|Estimate of Compensation|| ||$
is much commentary on the lack of reliability of the Development Approach to derive
value. One of the principal objections to the method is the hypothetical nature
of the exercise. E.C.E. Todd in The Law of Expropriation and Compensation
in Canada, 2nd ed. (Carswell Co. Ltd, Toronto, 1992) says at page 219:
...unless a proposed subdivision has actually been officially
approved there is always some degree of uncertainty as to whether, and under what
conditions, the subdivision would ever have materialized.
approach requires an estimation of numerous subjective factors such as the number
of lots, engineering and other development costs, absorption rate, developer's
profit and overhead, and the discount rate. Todd stipulates at page 221 that these
factors must be based on "solid factual evidence" not "balloons
in the sky". The use of all these factors in the Approach leads to a second
objection, which Todd describes at page 219:
approach is "volatile" in the sense that a comparatively minor change,
for example in the costing of services, can produce a figure ... which will significantly
affect the residual value.
goes on to state at page 220 that these potential weaknesses result in the Development
Approach being appropriate only "where the more reliable [Direct Comparison
Approach] cannot be used because of the absence of adequate data".
board has frequently rejected the Development Approach because the requisite conditions
are lacking. See McKinnon v School District No. 36 (Surrey) (1994), 54
L.C.R. 223 and Sutherland v Langley (Township) (1999), 68 L.C.R. 49. In
Ferancik v Langley (Township) (1996), 60 L.C.R. 123 this board did accept
the Development Approach on the basis that a subdivision and rezoning application
for eleven lots had gone through two readings and a public hearing process before
the Township ultimately decided to use the property for a park. In Double
Alpha Holdings Corp. v Centra Gas British Columbia Inc. (1998), 68 L.C.R.
99 this board reluctantly accepted the Development Approach because it had no
 In this case, we
do have an approved plan for the after scenario. There is some difficulty
in establishing a plan for the before scenario, as a variety of layouts
might have been approved. We also have the benefit of engineering evidence based
on the approved plan and other plans derived from the approved plan. However,
despite these factors, the volatility inherent in the Development Approach means
that the Direct Comparison Approach is to be preferred except where there is insufficient
evidence to support a comparative approach.
the before scenario, both appraisers have used the Direct Comparison Approach,
treating the subject property as a single 95 hectare site. All of the properties
that are used as comparables are much smaller than the subject property, with
the three most appropriate sales being between 15 and 39 hectares. Yet, in the
after scenario, when the two remainders are approximately 37 and 47 hectares,
neither appraiser attempted a Direct Comparison Approach. Parkhill claimed that
there was a dearth of sales for the after valuation. However, there seems
to be little reason why some of the same sales used in the before scenario
could not also have been applied after the highway taking, albeit with
additional adjustments for the highway.
with no evidence in the after scenario but that from the Development Approach
we reluctantly rely on this approach to reach a valuation of the property after
the taking. See Double Alpha Holdings. In the before scenario,
we have evidence based on both the Direct Comparison Approach and the Development
Approach; however, the two appraisers conclude relatively similar values from
each approach. For the reasons outlined above we give more weight to the Direct
Comparison Approach - Before Value
3.5.1 Direct Comparison Approach
- Before Value - The Evidence
an attempt to find valuation evidence from the market, both appraisers looked
at sales of larger parcels of land in the Campbell River area that had short or
long term potential for development. Davies' report included an analysis of six
such sales. Parkhill analyzed 10 transactions, five of which overlapped with Davies'
sales. Parkhill selected three sales he considered most comparable to the developable
area of the Sequoia Springs lands: a 36 acre site on Galerno Road, a 75 acre site
on Hilchey Road, and a 97 acre site on the Island Highway. Davies also used these
three sales. At the conclusion of his analysis, Parkhill relied on one of these
three sales, Hilchey Road, as the best comparable.
treated the subject property as being 75.7 hectares or 187 acres, after deducting
the dedicated greenways, but not the park area. He did not make any deductions
for parks or schools from the comparable properties although he did deduct a 2.5
acre sediment pond on the Hilchey Road property. His comparables ranged in size
from 8.8 acres to 96.9 acres, with sales prices of $16,500 to $43,750 per acre
before adjustment. Parkhill used a somewhat different approach. He assumed the
subject had 68.8 hectares or 170 acres available for development and sale, after
deducting both the parks and dedicated greenways. He also deducted any park or
school or sediment pond dedication from his three preferred comparables and used
the net land area available for development. His three selected sales ranged from
34.1 to 85.6 developable acres, with effective sales prices of $18,691 to $29,283
per developable acre before adjustment.
appraisers both adjusted for changes in market conditions over the period of time
covered by the sales to the date of taking of March 1995. They used similar sources
for this adjustment: local real estate board statistics and paired lot sales.
However their conclusions were somewhat different. Davies decided on a compounded
time adjustment of 2.5% per month during 1992, 1.5% in 1993, 1.0% in 1994, and
no adjustment for the first part of 1995. Parkhill used 2.0% per month for 1992
and 1993, and 1.0% for 1994 and 1995.
and Parkhill made further adjustments to the comparables for the cost of delivering
off-site services, for physical and locational differences, and for size. Parkhill
also applied a zoning adjustment to three of his sales. The appraisers chose a
different method of applying the adjustments. Parkhill calculated an aggregate
total of the adjustments to each sale, after market conditions, and derived an
adjusted value per acre. Davies, however, made the adjustments in three stages,
in addition to the adjustment for market value, calculating a price per acre at
 Using the Direct Comparison
Approach, Davies estimated a range of adjusted values for his six comparables
of $26,400 to $44,114 per acre. Four sales were in the narrow range of $40,335
to $44,114 per acre. Davies concluded a value of $42,000 per acre for 187 acres
or $7,870,000. Parkhill's three selected comparables produced a narrow range of
values from $29,451 to $31,382 per acre, and he relied on his best comparable,
Hilchey Road, which provided a value of $31,382 or $31,400 per acre. The appraisers
assumed that any development on the subject in the before scenario would
involve a similar proportion of greenway as was eventually included in the approved
CDP. Davies considered the 48 acres of dedicated greenway to have no value, although
he made a 5% adjustment to the comparables on account of the greenways on the
subject. Parkhill estimated the contributory market value of the non-developable
green land on the subject property in excess of the percentage of non-developable
green land on the Hilchey Road comparable. He estimated a value of $3,800 per
acre for the greenway area from two sales of rural land. Applying the value for
the surplus green land on the subject, spread over the 170 acres of developable
land, he obtained a contributory value which he added to the $31,400 per acre
to conclude a total of $32,000 per acre or $5,465,000.
Comparison Approach - Before Value - Analysis and Conclusion
appraisers have provided a detailed analysis with much information. We are assisted
by the three comparables selected by Parkhill, which were considered by both appraisers,
although all three are considerably smaller than the subject. A number of the
other comparables were much smaller, at less than 20 acres, and we do not find
them useful. We agree with Parkhill that the 75 acre Hilchey Road property is
the best of the three selected comparables. It is true that this sale was not
sold on the open market, a portion of it being part of a trade with the Crown.
However, both appraisers, after their various enquiries, were satisfied with the
sale price that had been established by two appraisals. The Hilchey Road property,
like the subject, required a CDP; and the CDP that was eventually adopted proposes
a mix of single and multi-family housing (55%/45%) that is similar to the mix
in the CDP for the subject property (40%/60%). One of the other selected properties,
Galerno Road, is only 36 acres, 89% of which was slated for single family residences.
The third selected property, the Island Highway, was 97 acres, but at the time
of sale was subject to restrictions on development in the OCP that made future
projections of development uncertain. A CDP has now been approved for that property
that provides for 100% single family subdivision.
large percentage of the subject property, approximately 25%, is set aside for
park and dedicated greenways. Another 10% of the land is in covenanted greenways
that will form part of the residential lots. For the purposes of comparison, both
appraisers deducted the dedicated greenways from their calculations of developable
land, as they are an unusual feature of the property and cannot be sold. For the
same reason, they also deducted the detention pond from the Hilchey Road comparable.
Parkhill deducted the park area from the subject and the proposed park and school
sites from the comparables. The Municipal Act provides for municipalities
to require a developer to transfer a certain percentage of land for parks and
schools, or to pay monies in lieu of the land. We do not see any reason to disagree
with Davies' approach of deducting only the unusual features of the properties
that could not be developed. The parks and school dedication provisions for all
development land are negotiated between the developer and municipality under the
same statutory and bylaw framework.
justifying the adjustment for location, Parkhill analyzed a wider range of lot
sales than Davies. We agree with his conclusion that there is no reason to make
an adjustment for location between the subject property and developments in south
Campbell River. Similarly, we agree with Parkhill's reasons for making a 5% zoning
adjustment. We disagree with Davies' treatment of the adjustments in separate
stages, which has the effect of compounding the adjustments. After the time adjustment
is made, the other adjustments should be applied concurrently.
was a significant discrepancy between the two appraisers with respect to the cost
of off-site services for the Hilchey Road comparable, the primary sale relied
on by Parkhill. Davies used $1,215,000 while Parkhill used $567,000. The actual
costs appear to have been approximately $520,000. There was not much support for
the $1,215,000 figure, although it appears that potential costs of this magnitude
had been a possibility at some point during the negotiations. Although the knowledge
of the purchaser at the date of purchase is relevant, in this case we do not have
sufficient evidence of the purchaser's expectations at the time of purchase to
accept the higher amount. While developers have to consider various risks in determining
the price they are willing to pay for a property, we do not accept that they always
estimate their price on the most pessimistic assumptions. We prefer Parkhill's
figure for off-site servicing as being closer to the actual costs. Applying Parkhill's
figure for the off site servicing to Davies' analysis, the final value for the
Hilchey Road property with this correction only is approximately $34,000 rather
than $43,416 per acre.
 We do not
agree with Davies' adjustment for land size. He treated the 187 acre subject property
as divided into two theoretical parcels, one of 107 acres for all the areas with
single family lots and one of 81 acres for the areas of multi-family units. As
a result, Davies' size adjustments were much smaller than Parkhill's. We recognize
that there is some subjectivity in size adjustments. Davies' adjustments ranged
from nil to 12% for the three selected comparables while Parkhill's range was
from 15% to 35%. When Parkhill's size adjustments are applied to Davies' analysis
of the comparables, the final adjusted values with this correction only are $39,469
per acre for Hilchey Road, $32,242 for Galerno Road, and $25,278 for the Island
Highway properties. When Parkhill's costs for off-site services and his size adjustment
are applied to Davies' analysis of the Hilchey Road property, the final adjusted
value, with these two corrections only, is approximately $31,000 per acre rather
than $43,416 per acre. Thus, with these two corrections, the values per acre for
the three properties are similar to Parkhill's values of $29,738 to $31,382, although
they are based on a slightly different amount of developable acres for each property.
was drawn to the board's attention that the subject property was purchased as
part of a share purchase in 1993 for $1,550,000. The company's assets at this
time included the subject property as well as District Lots 1392 and 1390, which
were subsequently subdivided separately into a total of 92 lots, plus one other
lot, and some equipment. Although the share purchase price had originally been
agreed in 1990, a review of the documents suggests that the parties renegotiated
the price at some date prior to May 1993. Parkhill stated in testimony that the
value, adjusted for market conditions from May 1993 to the valuation date in March
1995, was approximately $2,000,000. If the correct date for the agreement of the
purchase price was in 1990, then the adjusted value would be significantly higher
than $2,000,000. Neither appraiser used this sale. Although there are a number
of uncertainties surrounding this sale, it does support a value at the lower end
of the range of $5,465,000 to $7,870,000 established by the appraisers.
considering all of the evidence, we find Parkhill's analysis to be the superior
of the two appraisals: it is well researched and supported by the data. We do,
however, accept Davies' use of a developable area to include allowances for parks
and schools. Parkhill's final adjusted price for the Hilchey Road property is
$31,382 per acre for 67.32 developable acres. If this is recalculated using a
developable area of 72.57 acres, which includes the park but excludes the detention
pond, the final adjusted price for the Hilchey Road property is just over $29,000.
If we add Parkhill's estimate for the contribution of dedicated greenways we conclude
a value for the subject property before the taking using the Direct Comparison
Approach of $30,000 per acre for 187 acres, or $5,610,000. We note that this value
is supported by the adjusted per acre value for the other two selected comparables,
especially the Galerno Road property. The value per acre for the Island Highway
property is somewhat lower, perhaps because of the uncertainty surrounding potential
development at the time of the sale.
Springs' property was ripe for some kind of development scheme. With the assistance
of the planners, both Davies and Parkhill used a Development Approach valuation
based on the CDP that was eventually approved. The board was presented with a
complex array of subdivision plans and cost analyses to assist in measuring the
effect of the highway across the subject property.
giving planning evidence for Sequoia Springs, started with an after plan
similar to the CDP that was eventually approved. Lanarc provided us with a total
of three variations of the after plan on the theory that a potential purchaser
in March 1995 would not necessarily have had the benefit of the various development
cost savings that were eventually negotiated in the approved CDP. Plan C was the
Plan that was most similar to the approved CDP. Plan B provided for secondary
access to the western remainder by a costly road connecting to 16th Avenue in
Campbell River. Plan D provided for secondary access to the western remainder
by a less expensive road through a townhouse development on the subject. Because
Davies assumed that a purchaser in March 1995 would not have the benefit of Lanarc's
negotiations with respect to secondary access, he used Plan B as the most appropriate
to determine his after value. He also provided an alternative valuation
based on Plan D.
 Lanarc prepared
another plan, Plan A, showing what it considered to be a logical development layout
of the entire property if the highway were not present. In this before
scenario, it attempted to keep the 40:60 ratio of single family and multi-family
units similar to the ratio in the after scenario.
& Murray developed one after plan for MoTH which was similar to the
approved CDP. This after plan varied in minor ways from the approved CDP
due to misinformation from Campbell River, but we did not see these variations
as significant. In its before plan, Graeme & Murray showed much of
the land where the highway was eventually located as multi-family. This had the
effect of changing the mix of land use. While 60% of the units were multi-family
in the after scenario, the design of the before layout resulted
in the multi-family component representing 64% of the units.
Approach - Before Value - The Evidence
and Parkhill each looked to the Campbell River market to derive potential sales
prices for the individual lots. Davies reviewed the sales of 33 lots in Fairway
Village and Cambridge Estates. After an adjustment to the Cambridge Estates lots
for location, he concluded individual sale prices from $55,000 to $89,000, based
on Lanarc's average density of 4.5 lots per acre for single family dwelling sites.
Davies analyzed sales of five multi-family sites from which he derived an average
value of $27,440 per unit for his 506 townhouse and apartment units. His conclusion
of the gross potential revenue to the overall site, in the before scenario,
was $21,581,000 for single family and $13,885,000 for the multi-family sites.
reviewed 170 sales of single family lots in six subdivisions in Campbell River,
from which he derived a value for the Sequoia lots of $50,000 to $85,000. He analyzed
six sales of townhouse sites and one apartment site. Basing his valuation on a
per acre comparison, his conclusions showed an average per unit value of $20,182
for his 565 multi-family sites. Parkhill's conclusion of the gross revenue potential,
before the highway, was $17,330,000 for single family and $11,402,750
for the multiple family sites.
appraisers had different opinions as to the length of time it would take for the
local market to absorb this large number of units. Davies estimated an absorption
period of seven and a half years based on the length of time taken to sell lots
in Bear Place, Fairway Village, Cambridge Estates, and the Rockland Road neighbourhood.
He referred to new and existing condominium units which had sold on MLS(r) from
1992 to 1995 for an absorption rate for the multi-family units. It was Davies'
opinion that the subject lands would account for 70% to 80% of all townhouse and
apartment sales in Campbell River over the period of the project.
concluded an absorption period of ten years in the before scenario. He
reviewed the absorption of lots in the same subdivisions, with particular emphasis
on the history of availability of single family lots in North Campbell River.
This data suggested that there was a pent-up demand for lots in Bear Place and
Fairway Village in 1994. He reviewed the historical and projected population growth
of Campbell River as it related to housing demand. Parkhill also made reference
to a statement in Appendix H of the Campbell River OCP, which adopted the Sequoia
Springs CDP: "The development proposes 750 units (after highway) phased in
over ten years¼".
 Each appraiser
prepared a discounting schedule based on a number of assumptions. Davies relied
on engineering hard and soft costs provided by Reid Crowther. He used a marketing
cost of 6% of total gross revenues, a developer's profit of 20%, and a discount
rate of 8.25%. Davies' analysis showed a net revenue before discounting of $11,978,494.
Parkhill's engineering costs were provided by Graeme & Murray. Parkhill also
used a marketing cost of 6% but recognized that this would be stepped down to
3% on amounts over $100,000 on his ten multiple family sites. He estimated a developer's
profit of 25% of effective gross sales revenue and a discount rate of 9%. His
total net revenues were $9,020,988 before discounting.
were two significant differences in the method of determining costs of development.
Parkhill's layout utilized a higher percentage of multi-family housing than Davies'
plan, requiring less road construction. Davies applied a per unit development
cost charge ("DCC") to all 864 units, while Parkhill contended that
the multiple family lots only generated a single DCC prior to being built out.
Davies' before value by the Development Approach was $7,810,000; Parkhill
Approach - After Value - The Evidence
of the same assumptions used by Davies and Parkhill in the before highway
scenario were also adopted in the after scheme. Single family and multiple
unit lot values, derived from the same data, were applied to the layout now crossed
by a highway. The appraisers were each of the opinion that the absorption time
for take up of lots would not change with the highway; they also retained the
same percentage of marketing costs, developer's profit, and discount rate. Development
costs were provided by the engineers based on each of the plans. Phasing for the
after scenario was relatively similar to the before scenario in
both engineers' plans. In both Davies' and Parkhill's appraisal reports, phases
of development were spread throughout the site, commencing at the serviced areas
close to the eastern and northern parts of the land, and did not appear to be
a function of the highway location.
on Plan B and the resulting development costs, Davies concluded an after
value of $4,720,000. However, he offered an alternate calculation based on Lanarc's
Plan D, which resulted in an after value of $5,845,000. Taking the mid
point of the values indicated by the two different project schemes, Davies came
to a final conclusion of $5,200,000 for the after value by the Development
 Parkhill concluded an
after value for the subject lands of $4,220,000.
Approach - After Value -Analysis and Conclusion
are satisfied that the appropriate after plan is one that closely approximates
the eventual CDP. Lanarc's Plan B includes a steep road access that was not present
in the CDP and results in development costs which are about $1.3 million higher.
While we appreciate that Lanarc was trying to devise a plan that was based on
what knowledge a purchaser might have at the date of purchase, we think that hindsight
should be applied consistently. The claimant has the benefit of higher density
using the approved CDP, and should not try to increase its loss by ignoring the
benefit of decreased development expenses achieved in the approved CDP. Thus,
we prefer Lanarc's Plan D over Plan B. The Graeme & Murray plan for the
after scenario used by Parkhill is also similar to the CDP.
are several significant differences between Davies' and Parkhill's Development
Approaches. First, Davies' projected gross revenues are much higher than Parkhill's,
although both appraisers have used very similar plans: Davies projects gross revenue
of $29,438,500 compared to Parkhill's figure of $24,189,450. Davies' average single
family lot is valued at $59,538 while Parkhill's is valued at $53,413. For multi-family
units, Davies' average value is $26,535, while Parkhill's is $19,722. One of the
main explanations for the differences between the average prices is a 10% location
adjustment made by Davies to comparables in south Campbell River. As we indicated
in our discussions of the Direct Comparison Approach, we do not accept this adjustment.
Thus we prefer Parkhill's evidence on projected revenues.
the appraisers differ considerably on the length of time predicted for the Campbell
River market to absorb the entire supply of single and multi-family units. We
find Parkhill's absorption rate of ten years to be the better supported of the
two, relying on a wide range of data and factoring in predicted population changes
and market fluctuations.
 A third
difference between the appraisers is the issue of DCCs. Davies' calculation of
DCC costs is almost $1.3 million more than Parkhill's. Davies relied on Reid Crowther's
calculations, apparently without verification, and applied DCCs on an escalating
scale to all 747 of his units, both single and multi-family. Parkhill, in his
calculations, applied a DCC of $2,500 for each of his 293 single family lots and
his nine multi-family lots.
of Campbell River Bylaw 2341 states at par 8(b):
costs charges shall be paid as follows:
(a) for single-family
residential development, the charge shall be paid prior to the final approval
of the plan of subdivision.
(b) for all other development,
the charge shall be paid prior to the issuance of the building permit.
under the Bylaw, the DCCs for single family lots are paid on subdivision while
the DCCs for the multi-family units are paid later. The purchaser of the multi-family
parcel would pay the DCCs for these units when it applied for the building permits
for the site. We find that Davies' calculations for Sequoia Springs are in error.
We accept Parkhill's evidence on the point.
have accepted Parkhill's valuation on these main points in the after scenario.
In general, we prefer his evidence for this scenario and thus, we find the
after value of the property to be as he concluded: $4,220,000.
3.5.3(e) Development Approach - Before Value
-Analysis and Conclusion
after value of the property is more easily substantiated by the Development
Approach due to the existence of an approved CDP. In the before scenario,
the planners had to derive a hypothetical layout from the approved plan, which
would optimize the use of the entire 234 acre site. The main difference between
the Lanarc and the Graeme & Murray plans for the before scenario was
that Lanarc kept the 40:60 ratio of single and multi-family units, as in the approved
after situation, while Graeme & Murray's percentage of multi-family
units increased to 64%. Counsel for Sequoia Springs pointed out that this increase
in the Graeme & Murray plan, resulted in a lower potential gross income from
lot sales. He suggested that the relative percentage of single and multi-family
units should conform to that in the approved after plan.
do not agree that the unit mix necessarily needs to be identical in both scenarios.
Any number of before plans could have been approved for the site; in fact,
the plan attached to the OCP makes only general reference to the mix of housing
styles. We do agree with Sequoia Springs, however, that the scheme which gives
optimum value to the property is the appropriate one under the circumstances.
The Graeme & Murray subdivision design for the before situation shows
that two townhouse sites have been superimposed on a large part of the right of
way. If these sites were to be partly converted to single family lots, altering
the single family and townhouse count to maintain the 60% multiple and 40% single
family mix used in the approved plan or by Davies, a higher before value
would result, giving a more equitable comparison for measuring the value of the
taking and loss in value to the remainder. The board notes that these lots which
would have been affected by the highway are in Stage 10 of Parkhill's 14 stage
analysis and therefore subject to deep discounting. Parkhill countered that an
increase in the ratio of single family lots would mean increased DCCs and servicing
 Replacing 41 townhouse units
with 41 additional single family lots in Parkhill's before scenario; revising
the DCC calculation accordingly; and adding a nominal 5% to the construction costs
results in a final value approximately $355,000 higher than Parkhill's $5,485,000,
 With respect to other
aspects of the before valuation, we accept Parkhill's analysis for the
same reasons as in his after scenario. We find the appropriate before
value by the Development Approach to be $5,840,000.
3.5 Market Value - Conclusion
relied on the Development Approach in his conclusion of the before value
of the subject property. It was his opinion that, while the Development Approach
was more complex, it gave a better answer in situations where development was
imminent because it considered more factors. He deducted his after value
of $5,200,000 from this before value of $7,810,000 for an opinion of the
value of the land taken and reduction in value to the remainder of $2,610,000.
stated that the Direct Comparison Approach was the more reliable estimate of the
before value and he concluded a before value of $5,475,000, which
was between his values from the Direct Comparison Approach and the Development
Approach. In the "before and after" method, however, he used the
before value of $5,485,000 derived from the Development Approach from which
he deducted the after value of $4,220,000 to calculate the compensation
for the taking of $1,265,000.
the Direct Comparison Approach we have found the before value of the subject
property to be $5,610,000. Using the Development Approach we have concluded the
before value to be $5,840,000. We have decided that more weight should
be given to the Direct Comparison Approach. We acknowledge that there are some
weaknesses in the comparable sales: the three most appropriate sales are much
smaller than the subject property and there has been some disagreement with respect
to the cost for off-site services on the Hilchey Road sale. However, we accept
Parkhill's analysis of these factors as described above. We conclude a before
value of the subject property of $5,700,000.
the "before and after" method, the difference between our value conclusions
for the before value of $5,700,000 and the after value of $4,220,000
is $1,480,000. The board finds this amount to represent both the market value
of the land taken together with the reduction in the market value of the remaining
land. The compensation amount of $1,480,000 exceeds the minimum value calculation
for the land taken as set out in section 40(3) of the Act.
DAMAGES or BUSINESS LOSSES
Springs claims a number of expenses as disturbance damages or business losses.
In a partial taking an owner's expenses arising from an expropriation may be claimed
under sections 34 or 40 of the Act. See Patterson v. British Columbia
(Ministry of Transportation and Highways) (1997), 62 L.C.R. 89 (B.C.C.A.).
The relevant portions of these sections in effect in February 1999 when argument
on this matter concluded were:
(1)||An owner whose land is expropriated
is entitled to disturbance damages consisting of the following:|
costs, expenses and financial losses that are directly attributable to the disturbance
caused to the owner by the expropriation; ...|
(1)||Subject to section 44, if
part of the land of an owner is expropriated, he or she is entitled to compensation
(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.|
40(1) has been amended since submissions were heard in this matter but we do not
consider that the amendment alters the substance. Although the pleadings and final
submissions refer to various costs as disturbance damages, they do not specify
the section of the Act upon which Sequoia Springs relies in claiming these
expenses. As indicated in this board's decision in Patterson (53 L.C.R.
88), section 40 offers a wider basis for claims than section 34. Under section
40 claims can be made for losses related to the construction or use of the works
for which the land was acquired, as well as for losses related to the taking.
We will consider each expense put forward by Sequoia Springs under both sections.
4.2 Disturbance damages or business losses
that occur before the taking
number of expenses and losses claimed by Sequoia Springs predate the taking on
March 31, 1995. These include work done on the subject property which the claimant
says were thrown away on golf course development that could not proceed because
of the taking. Some of the claims for delay damages also predate the taking. Sequoia
Springs relies on Dell Holdings Ltd. v. Toronto Area Transit Operating Authority
(1997), 60 L.C.R. 81 (S.C.C.) as authority for permitting disturbance damages
that were suffered before the expropriation had occurred. At par. 38 Cory J. states:
The approach to damages flowing from expropriation should
not be a temporal one; rather it should be based upon causation. It is not uncommon
that damages which occur before the expropriation can in fact be caused by that
takes the position that none of the costs and losses incurred prior to the taking
can be compensated under either section 34 or 40. It submits that the proper interpretation
of these sections is that costs that have arisen before the acquisition cannot
be directly attributable to the disturbance of leaving the land nor can they be
directly attributable to the taking. They also can not result from the construction
of the highway. MoTH says that Dell Holdings should be distinguished because
the Ontario provision for recovery of disturbance damages is different from sections
34 or 40 of the British Columbia Act. Section 18 of the Ontario Expropriations
Act, R.S.O. 1980, c. 148 provides in part:
The expropriating authority shall pay to an owner...in respect of disturbance,
such reasonable costs as are the natural and reasonable consequences of the
expropriation (emphasis added).
section does not include the phrases "directly attributable to the disturbance",
or "directly attributable to the taking" that are found in the British
 We concur with
the claimant, Sequoia Springs, that the difference in wording between the Ontario
and the British Columbia provisions are not such as to make the Dell Holdings
finding on disturbance damages before the taking inapplicable in British Columbia.
We construe both phrases, "the natural and reasonable consequences of the
expropriation" and "directly attributable to the taking", as providing
that costs can be claimed if they have been caused by the expropriation or taking.
In addition, as noted by Newbury J.A. in Bayview Builders Supply (1972) Ltd.
v. The Queen in Right of British Columbia (1999), 66 L.C.R. 176 (B.C.C.A.),
a decision handed down following argument in this case, section [40(1)(b)] contains
an alternative basis for claiming business losses - those that "result from
the construction or use of the works". At par. 18 Newbury J.A. says:
[t]he phrase "that result from" implies the Legislature
intended a broader view of causation from the "directly attributable to"
wording of the first branch.
in our opinion, if disturbance damages or business losses are otherwise recoverable,
the fact that they occurred before the taking does not preclude their being awarded.
4.3 Costs thrown away
Springs claims approximately $2,370,000 for costs thrown away. The basis for the
claim is that the residential golf course development was rendered impractical
by the highway. As a result, all the work and expenses incurred in the preparation
of this development should be recoverable. The approximate figures for the claimed
costs thrown away include the following:
rental for clearing, filling and grading the property for the residential golf
to operate the clearing and earthmoving equipment||$
expenses, including gravel for roads and drains, erosion protection materials,
engineering costs, etc.||$
for consultant Wilson for one year||$
for Brown's time on the project|| $
 This sum does
not include the cost of the Willow Street sewer upgrade, which is dealt with below.
A further claim for $694,500 for loss of sand and gravel on the right of way was
argues that none of these expenses is recoverable. Its most fundamental objection
is that the abandonment of the residential golf course development was not attributable
to the highway at all. Rather, it says, this development was abandoned because
it was simply not the highest and best use of the property. MoTH points out that
neither of the appraisers found the highest and best use at the date of taking
to be a residential golf course development. MoTH suggests that the golf course
proposal was not financially feasible and would likely never have been approved.
These are the real reasons the residential golf course development did not proceed.
Further, MoTH says that if the highest and best use is different from the existing
use then under section 31 of the Act, no disturbance damages are payable.
Therefore, if the highest and best use is residential greenway development, while
the existing use was a residential golf course development, no disturbance damages
arising from the golf course are payable.
second argument is that many of the costs claimed are unreasonable even if they
are costs thrown away. It points to a large claim for Brown's personal time spent
on the golf course project and the claim for remedial work on the property carried
out to satisfy environmental authorities.
MoTH states that some of the expenses claimed were of benefit to the claimant
and can not properly be considered as losses. These include the cutting of trees
from the right of way and Wilson's work selling lots in the neighbouring Fairway
Village. It also includes a substantial amount of the clearing and shifting of
soil on the subject property because such work was equally valuable for the residential
development that was eventually approved.
the abandonment of the golf course component related to the highway?
threshold question is whether the abandonment of the golf course development can
be attributed at all to the acquisition for the highway. If it cannot, then all
the relevant disturbance damages claimed by Sequoia Springs must be disallowed,
and it becomes unnecessary to consider individual categories of those damages
on their own merits.
 The board does
not accept MoTH's argument that the golf course was abandoned for reasons other
than the highway. When he acquired the property Brown was hoping to develop it
as a residential golf course project. The highway bisecting the property created
design difficulties and costs that made the golf course component impractical.
There may well have been, and likely were, other reasons contributing to the abandonment
of the golf course extension. However, Newbury J.A. in Bayview Builders
said that a business loss under section [40(1)(b)] need not be solely
caused by the taking or the construction in order that the board consider compensation.
In Bayview Builders the issue was whether the claimant/appellant was entitled
to disturbance damages for reconfiguration of its retail building supply site.
At par. 20 the Board was criticized for "rejecting the claim for any and
all [disturbance damages for] relocation costs out of hand" on the grounds
that any relocation was not caused solely by the highway. Part of the Board's
award was overturned and at par 23 Newbury J.A. stated:
[I]direct that the Board reconsider the applicability of s. 39(1) to Bayview's
claim, and in particular whether relocation costs should be awarded as business
losses "that result from the construction or use of the works for which the
land is acquired". In reaching that decision, the Board should give due weight
to the fact that the "wooden barrier" concession can be discontinued
anytime at will by the Ministry, and should make clear findings of fact concerning
the viability of Bayview's business on the site as presently "configured"...
of building supplies will cease when the respondent Ministry stops large trucks
from entering the site directly from the highway, which the Ministry acknowledges
it will be obliged to do at some point for safety reasons.
this case, the fact that the highway raised a serious hurdle for golf course extension
means that we are prepared to accept that Sequoia Springs has met the threshold
test for claiming disturbance damages that were wasted on golf course development,
even if there were other reasons that contributed to the golf course being abandoned.
We will not reject any and all costs thrown away on the golf course out of hand
because the highway may not be the sole reason that the golf course was abandoned.
Board has next considered the argument under section 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,
(b)||the market value of the land based on
its highest and best use at the date of expropriation.|
case involves a partial taking and, as discussed above, damages are available
under sections 34 and 40. Section 31 does not affect reasonable personal and business
losses available under section 40. See Vision Homes Ltd. v. City of Nanaimo
(1994), 54 L.C.R. 103; aff'd 59 L.C.R. 106. Thus, Sequoia Springs is entitled
to reasonable business losses under section 40 regardless of the highest and best
use. In any event, in our opinion, comprehensive development with mixed uses,
upon approval for rezoning and subdivision, is a general enough use that it might
include mixed housing with greenways or parks or a golf course. This would mean
that the highest and best use at the date of acquisition is the same as the existing
use. Therefore, section 31 does not apply.
it does not follow that all of the costs claimed by Sequoia Springs as costs thrown
away are recoverable. We must examine each of the claims to decide whether they
are financial or business losses that are directly attributable to the disturbance
or the taking or that result from the construction or use of the highway.
4.3.4 Work on the subject property between
1993 and 1997
Springs' claim for wasted land preparation work on the subject property appears
to cover essentially all of its development expenses between its acquisition of
the property in 1993 and the opening of the highway in 1997. The large claim for
equipment rentals consisted, in fact, of amounts recorded as paid to another of
Brown's companies, which owned the earthmoving equipment. Sequoia also claimed
the wages and benefits paid to the operators of the equipment over the same period.
Finally it had accumulated some 200 invoices from its books for the period which
Brown said were related to the development.
difficulty with all of this evidence was that there was little or nothing to show
why the expenses should be considered disturbance damages under section 34 or
business losses under section 40. The question for the board is not whether the
expenses were incurred (the board has no reason to doubt that they were); rather
it is whether they constitute reasonable financial losses which are directly attributable
to the taking, to the highway, or to the disturbance caused by the taking. If
they were expenses that Sequoia Springs might have incurred in any event for purposes
other than golf course development, then they ought not to be chargeable to MoTH.
Given that any development of the property would have involved clearing, fill,
compacting, and grading, the board has to have some basis for deciding which expenses
were clearly wasted, and which were not. Evidence on which the board could make
such distinctions was simply not provided.
accept that Brown intended to put a golf course on the subject at some point.
The issue is how much of the money that Sequoia Springs spent on developing the
subject property, including development of a golf course, was, in the end, thrown
away because of the highway. With respect to work on golf course construction,
there were only two very schematic and dissimilar drawings before February 1995,
by which date most of the work claimed for golf course development was complete.
There were no contemporary documents or plans that showed in any detail what was
done or what was planned for any golf course residential development on the subject.
The only evidence we had was Brown's testimony describing two or three locations
where he said work was done developing a particular fairway. We have no evidence
identifying specific work or a specific time frame for the development of these
proposed fairways. Instead, Sequoia Springs has claimed what seems to be all of
the development work on the property until mid 1995 as costs thrown away on the
golf course. We note that the highway route was certain from May 1994. Without
more concrete evidence, we do not believe that Brown would have carried on with
work on the subject for the whole of the following year if that work would have
no value because of the highway. Sometime in the spring of 1995 Brown wrote on
a draft copy of a Highland Engineering report about the impact of the highway
"Would we not be better off to go for fill and cuts rather than overpass
as far as return on investment". We found Brown's evidence with respect to
the extent of the development work on the golf course vague. Stephens of Highland
Engineering agreed that, in late 1994, 60,000 to 100,000 cubic metres of sand
removed from the right of way was being used as structural fill for roads and
housing, not for golf course fairways. None of Highland Engineering's invoices
in evidence for 1994 or 1995 refers to work on the golf course. In re-examination,
Stephens stated that during this period he was not retained for surveys for a
golf course on the subject property, but for physical development work on the
property. Thus, we do not have any evidence to link any development costs on the
property specifically to a golf course. Further, after considering the evidence
that we do have, it appears to us that there is no indication that any of these
claimed costs would have been avoided if there had been no highway.
claim for equipment and other costs in relation to the filling of Ravine 3, is
another example of a claim for work required whether or not the highway was present.
The principal reason why Ravine 3 was filled was to extend Treelane Road to the
west to access one of the sections of the subject property. In the various layout
plans for development of the subject property both before and after the acquisition,
both appraisers showed access to this part of the property through the same extension
of Treelane Road. Clearly, in the absence of persuasive evidence to the contrary,
there was no basis for assuming that the filling of the ravine was a cost made
unnecessary by reason of the highway.
with respect to the 200 invoices for a total of approximately $300,000, there
was virtually no evidence to establish any of the invoices as costs thrown away
because of the highway. In cross-examination, Brown seemed uncertain as to why
certain invoices had been included. We find it difficult to understand how particular
invoices can possibly be the basis of a claim against MoTH. There are invoices
claimed for pit run gravel and drain rock purchased for roads and drains, but
no evidence as to which roads and drains were made unnecessary because of the
highway. There are invoices for the purchase of interlock blocks for a vehicle
compound to prevent theft of the vehicles during non-working hours, but no evidence
as to why the highway made the vehicle compound necessary. There are invoices
for such items as hiking boots, vests, chains, and a saw. There is a bill for
rock raking and harrowing the driving range which operated on the subject property
throughout, but no evidence as to why this apparently ordinary maintenance cost
is thrown away. There are invoices from the engineer and the surveyor for work
that, on its face, does not relate to the golf course project or any other aspect
of the development rendered unnecessary because of the highway. (We have extracted
two invoices from the engineer with respect to the Willow Street sewer main and
consider them in the section on the Willow Street sewer below.) The only invoices
that appear to us to be specifically linked to the golf course project were the
$6,000 spent in 1991 and 1992 for the graphics and brochures advertising the Sequoia
Springs Golf Community. These brochures were distributed in a number of breakfast
meetings with real estate agents in 1994 when lots in Bear Place and Fairway Village
were being sold. Wilson also used them in presentations to prospective purchasers
of lots in Fairway Village. We have no evidence that the expenditures for the
brochures had been rendered useless as a result of the highway.
onus is on the claimant to prove its damages. Unfortunately it has failed to prove
that any of these expenses would fit within sections 34 or 40 of the Act.
4.3.4(b) Environmental compliance and remediation
of the claim for wasted expenses is for the expense of complying with environmental
requirements. In order to satisfy the provincial and federal authorities' concerns
over fish habitat, Sequoia Springs had done some remedial work improving and stabilizing
watercourses and planting appropriate leave strips. The costs of this work, which
included equipment rentals, labour, and materials, was part of the compensation
 The general comments in the
preceding section apply with equal force to this subcategory of expenses, since
it seems clear to the board that this kind of work would have been equally required
for the development that was ultimately approved.
there is an additional objection to the inclusion of these costs in the claim.
The board is only empowered to award "reasonable" costs and losses which
are directly attributable to the highway or the taking, and it does not accept
that it is reasonable to charge MoTH with the cost of remedial work to repair
damage from work done in a manner that was in breach of statutory requirements.
4.3.4(c) Removal of material from the right
 As noted
above, Sequoia Springs negotiated with MoTH for the right to remove both timber
and sand from the right of way. The board was not told what was done with the
timber; presumably it was sold. The sand was largely used as a source of engineered
fill for various areas of the remainder of the property, in preparation for housing
and roads. These materials were clearly intended to benefit Sequoia Springs, and
it therefore came as a surprise to see a claim for the costs of equipment used
to cut and move the timber or remove the sand. One can only recover compensation
for reasonable costs, expenses, and financial or business losses, and we have
difficulty seeing these expenses as a reasonable claim of any kind.
4.3.4(d) Wilson's salary
Springs claims a total of $86,000 for Wilson's salary and benefits for his employment
from March 1994 to March 1995. A claim for the statutory payments Sequoia Springs
made on Wilson's behalf is also included.
board finds that Wilson was hired at a time when some golf course extension was
still anticipated. Wilson said that he assisted Brown in discussing the layout
of potential holes. However, there was no reference to any drawings or documents
that Wilson reviewed or prepared. He had no involvement in the financial side
of the development nor in the comprehensive planning process. Wilson spent much
of his time promoting the sales of lots in the Fairway Village subdivision and
he also assisted on the existing golf course. We have no basis to conclude that
his entire salary for the year was wasted.
considering all of the evidence, we are prepared to conclude that Wilson would
not have been offered the position unless there had been a genuine expectation
of some golf expansion. We also accept that Wilson may have spent some modest
amount of his time contributing to a design, despite the lack of any documents.
In recognition of those factors the board awards $10,000, the equivalent of about
two months of Wilson's salary.
$253,000 claim made for Brown's executive time is based on his evidence that during
1994 and 1995 he spent the vast majority of his time trying to make his dream
of a residential golf course development on the subject property a reality. The
amount claimed represents about 10% of the salary and management fees paid by
Sequoia Springs to Brown in 1994 and 1995, and was said to have been based on
an estimate that he spent some 3,262 hours in those two years working on this
 We accept that Brown likely
spent considerable time with respect to the taking. Although Brown has framed
his claim as time thrown away on golf course development, his claim is really
one for executive time and the well-established principle is that there must be
a financial loss to the claimant. See Pentecostal Assemblies of Canada v.
British Columbia (1999), 66 L.C.R. 275 (B.C.E.C.B.). In this case there is
no evidence of any loss to Sequoia Springs as a result of Brown's time spent on
golf course development. In any event, we note that there was no evidence of Brown's
time spent in any development work that was thrown away.
a result we deny this claim for a portion of Brown's salary.
have only awarded $10,000 for costs thrown away. Although we were given voluminous
invoices for what appears to be most, if not all, of the development work on the
subject property between 1994 and 1997, there was effectively no effort to show
causation between any of the invoices and the taking or the highway.
4.4 Delay claim
Springs claims that the highway created a lengthy delay in the development of
the subject property. It argued that the commencement of work on the CDP that
was eventually approved was delayed from some time in 1994 until June 1996. Further,
it says that the approval of the CDP was delayed from some time in 1995 until
April 1998. Once the final CDP was submitted in April 1997, Sequoia Springs attributed
the highway as the cause of several months delay between July 1997, the date of
the public meeting, and April 1998, when the plan was finally approved. According
to Reid of Lanarc Consultants the two primary reasons for delay in the approval
at this stage were negotiations with respect to cost sharing for the pedestrian
overpass and alternative secondary access, both issues related to the highway.
a result of the delay, Sequoia Springs claims damages or losses in an amount between
$520,000 and $2,937,000. Davies has taken a number of different approaches in
an attempt to quantify the delay claim. These estimates of damages for delay are
based on a number of assumptions, including the fact that, but for the taking,
preliminary approval for approximately 60 lots on the subject property would have
been obtained by March 1994. In addition, because of the highway, work on the
CDP could not proceed until May 1996. Finally, the resulting delay meant that
the development was subject to increased DCCs and loss of the mid 1990's window
of good market conditions for sale of residential lots.
first approach was to say that, as a consequence of the delay caused by the highway,
there was now a decline in housing demand and a corresponding fall in prices.
He quantified this loss as a 12% reduction in lot values. Davies provided some
estimates of the delay claim using a Development Approach summary of income and
costs for Lanarc's Plan D, the plan with a secondary access to the western remainder
through some townhouses. A 12% decrease in the revenue from land applied to Plan
D resulted in a decrease in value of the remainder of $1,940,000.
second characterization was that the delay from the highway caused a four year
delay in the development of the property: two years actual interruption and two
years due to market conditions. Using the development summary for Plan D again,
Davies estimated that the four year delay in start up (but no increase in costs)
caused a decrease in value of the remainder of $1,590,000.
third scenario was that as a result of the delay there had been an increase in
the fees and development cost charges that will be incurred from $1,908,422, assuming
a 1994 start up, to $2,517,608, assuming a 1996 start up. Davies estimated that
the increase in fees and development cost charges alone, if there was a two year
delay, resulted in a decrease in value of the remainder of $520,000.
argument, another approach to the delay claim was made. The development summary
for Plan D was reworked keeping the residual land value constant, but assuming
the 12% reduction in revenues from land and the four year delay in commencing
development. These recalculations resulted in a reduction of the developer's profit
from 20% to 9.3% and 9.4% respectively, which translated into a reduction in developer's
profit of either $2,614,686 or $2,937,910. These sums were advanced as the upper
end of the claim for disturbance damages for delay.
Springs relies on the Supreme Court of Canada's decision in Dell Holdings
as authority for awarding damages for delay.
first argument is that Sequoia Springs' delay claim is vague because it has advanced
so many different characterizations of the claim.
main submission is that the various delays identified by Sequoia Springs had little
to do with the highway. It disputes the claimant's contention that the highway
killed the first CDP submitted by Highland Engineering in July 1995. It also disputes
that it was the highway that was the sole cause of the delay between the public
meeting on the second CDP in July 1997, and the approval of this plan in April
1998. MoTH points to the feasibility study of the greenway trails which was done
during this period, with the draft feasibility report delivered to Campbell River
and Sequoia Springs only on March 5, 1998. This study included the feasibility
of the proposed trail system as well as the bridge crossing.
the highway was not the cause of the delay, MoTH suggests three alternative explanations:
i || the efforts by the developer to
maximize the yield and efficiency of the project;|
efforts by the developer to minimize its cost sharing with Campbell River;|
efforts by the developer to obtain the necessary approvals of various agencies
by addressing the environmental issues.|
any event, MoTH says that the second CDP that was submitted in April 1997 had
a higher yield than the first comprehensive plan. The April 1997 plan that was
eventually approved had 58 developable hectares, 296 single family lots, and 20
hectares of multi-family sites. The July 1995 plan had 47 developable hectares,
270 single family lots and 8.5 hectares of multi-family sites, together with a
six hectare commercial development. Since the approved plan had an increased yield,
the negotiations that led to this plan gaining approval benefitted the claimant
and cannot be claimed as a loss.
respect to quantum, although the amount of DCCs increased in December 1995, MoTH
states that the relevant Campbell River bylaw does not make the DCCs on multi-family
sites payable until a building permit is issued. This means that if Sequoia Springs
sells the serviced multi-family sites to a developer, it does not have to pay
any DCCs on these sites. Thus the estimate of costs for delay arising out of the
increase in DCCs, from $1,908,422 starting in 1994 to $2,517,608 starting in 1996,
 MoTH relies on the
Ontario Municipal Board's decision in Dell Holdings (43 L.C.R. 138) as
authority that the correct measure of damages for delay is the reduction in developer's
profit, plus holding costs, not the reduction in market value of the land.
Supreme Court of Canada's decision in Dell Holdings is authority for the
proposition that if a development is delayed by the expectation of a partial expropriation,
and if there are losses caused by that delay, then those losses may be proven
and recovered as disturbance damages. The board's first task is to decide whether
there was a delay in development in this case that arose as a result of the highway
project, and, if so, the length of that delay.
claimant argued that if it was not for the highway, it would have been able to
proceed with a CDP as early as March 1994, and that it would have taken about
one year to get approval. In fact, approval of a CDP was not obtained until April
1998. Thus the claimant urged the board to find a delay of between two and four
years. For the reasons below, the board cannot agree.
board summarizes the events during the relevant time as follows:
May 1993-mid 1994 Acquisition of the property|
property, acquired in May 1993, could not have been developed prior to adoption
of the Quinsam Local Area Plan in March 1994. This plan designates the subject
property as a comprehensive development area, under which development must be
based on a CDP, which among other things must provide for road networks and the
protection of environmentally sensitive areas.
1993, after acquisition of the property, Sequoia Springs obtained exemption of
District Lots 1392 and 1390 from the CDP requirement, allowing it to proceed immediately
with rezoning, subdivision, and development of what became the Bear Place and
Fairway Village subdivisions. Bear Place was subdivided and all 32 lots were sold
by July 1994.
 By May 1994 Sequoia
Springs knew the route of the highway through the subject property, even though
the precise dimensions of that right of way remained to be determined.
1994-July 1995 Development of the first CDP by Highland Engineering|
 During 1994 there
was extensive work on the subject property clearing brush and moving material,
including moving material from the proposed right of way and placing it as fill
elsewhere on the property. Also in about June 1994, Stephens of Highland Engineering
began work on particular aspects of site development on the subject, as well as
advising on the placement of structural fill. Highland Engineering sent a draft
CDP to Campbell River in May 1995, and submitted the formal CDP in July 1995.
It is noted that the CDP anticipated a traffic bridge over the highway which would
link the two remaining halves of the property.
this was going on, Sequoia Springs was also marketing its second subdivision,
called Fairway Village. Roughly half of the 60 lots in this subdivision were sold
in the second half of 1994, and sales continued, more slowly, in 1995 and 1996.
1995-July 1996 Consideration of the first CDP by the authorities|
 The first CDP
was never approved; indeed it was eventually withdrawn and replaced. Although
Brown would later testify that the stumbling block was the lack of secure funding
for the highway bridge, we saw no documents to that effect. It appeared that the
plan was inadequate for other reasons. There were discussions as early as September
1995 indicating that Sequoia Springs would be submitting an alternate plan. The
first CDP apparently did not satisfy the Department of Fisheries and Oceans, whose
concern was the protection of the fish-bearing streams. In June 1996, Brian Tutty,
a habitat biologist with the Department, organized a meeting of all interested
parties in which he strongly advocated a greenways concept set out in the publication
Community Greenways: Linking Communities to Country, People to Nature.
David Reid of Lanarc was an author of this book.
board finds that the environmental concerns were a major factor in the failure
of this first CDP. These concerns would have been present whether or not there
was a highway, and delays related to such concerns cannot be blamed on the highway.
1996-April 1997 Development of second CDP by Lanarc Consulants Ltd.|
 Shortly after
the meeting in which the greenways concept was introduced, Sequoia Springs retained
Reid of Lanarc Consultants to develop a CDP around this concept. Reid initiated
a stakeholder discussion group which met regularly between August 1996 and the
spring of 1997. The file on the first CDP was closed, and a second CDP, drafted
by Lanarc, was submitted in April 1997.
can be seen that it took Lanarc some nine months to develop a CDP. The board does
not regard this is as a surprising length of time given the complexities of the
property and the various interests that had to be satisfied. Nor have we been
shown that the presence of the highway, and the involvement of highway personnel
in the stakeholder meetings, materially extended the time required. The board
notes that Reid not only put together a plan which dealt with environmental concerns,
but he also was able to increase the density of development over that which had
been proposed in the first CDP. The number of single family lots increased from
270 to 296 and the area of multi-family sites increased from 8.7 hectares in five
sites to 20 hectares in nine sites. Thus his work had some particular benefit
to Sequoia Springs as well as to the other stakeholders.
second CDP proposed a pedestrian bridge over the highway, which was in keeping
with the concept of greenways, with walking trails connecting developed areas.
It was also less expensive than the road bridge which had been in the earlier
1997-July 1997 Second CDP considered by authorities|
stage is in fact quite short - the period when Campbell River was reviewing the
CDP before it went to public meeting on July 15, 1997 .
1997- April 1998 Negotiations on outstanding issues|
the public meeting, negotiations continued on a number of issues. Some of these
were related to the highway, namely the funding for the pedestrian overpass and
secondary or emergency access. Other issues were not linked to the highway including
the necessity for the proposed commercial site on the subject, funding for the
greenway trail system, and extension of the greenway system to the south. It appears
that most of these issues were resolved by late November 1997, and by March 1998
Reid had prepared a feasibility study on the greenway trail system and the pedestrian
overpass. The district of Campbell River formally approved the CDP in April 1998,
even though at that time MoTH had not yet agreed to emergency access routes from
 The question for the
board is the extent to which the highway-related issues contributed to any delay
in development. We accept that the time from submission of the second CDP to its
approval would have been shorter in the absence of the highway.
the entire delay claim, Sequoia Springs argues that, in the absence of the highway,
preliminary approval for subdivision of the subject property would have been obtainable
in 1994; there would only have been one application; and that application would
have taken approximately one year to be developed and approved.
do not find these assumptions to be realistic. Even without the highway, it is
apparent that any development of the subject property posed a number of problems
for development: it was a large property, approximately 95 hectares before the
taking (approximately 83 hectares after the taking), with differences in elevation,
ravines, and fish bearing streams. It was always going to be necessary to develop
a CDP and the OCP imposed a number of requirements for a CDP including planning
for environmentally sensitive areas. It seems to us that developing an approvable
CDP for this property was a challenging task. A CDP for such a property would
have needed many months for examination and review before any approval could be
achieved. It is, therefore, not reasonable to suggest that preliminary approval
would have been obtained in 1994, and we do not accept Davies' assumption to that
 Sequoia Springs also claimed
that the lack of certainty about the location of the right of way caused a one
year delay, from the spring of 1994 until May 1995, before any planning for development
could commence. However, Sequoia Springs had been notified in May 1994 of the
route that the right of way would follow. It is true that there were refinements
to the dimensions of the right of way after that date, but these refinements were
the subject of negotiations between MoTH and Sequoia Springs. Sequoia Springs
would benefit from those refinements in two principal ways: it would acquire sand
and gravel from the highway cutting for use elsewhere on its remainder site, and
it would reduce the width of the highway cut as a side-effect of removing these
materials. In any event, reviewing all of the evidence on the events during 1994
and early 1995, including the fact that any approvable CDP would take considerable
time to be developed, we do not accept that any uncertainty with respect to the
location of the right of way caused a delay.
CDP that was filed in 1995 was eventually abandoned, but again we do not agree
with Sequoia Springs that the abandonment was directly attributable to, or resulting
from, the construction of the highway. It appears to us that the triggering reason
for its failure was that it did not satisfy the environmental authorities. It
would, in the board's view, have failed or required major revision for similar
reasons regardless of the presence of the highway.
objections were made arising from environmental concerns, Sequoia Springs chose
to hire Reid of Lanarc Consultants Ltd., a specialist in developing environmentally
sensitive areas, and one of the authors of the book promoted by the biologist
from Fisheries and Oceans. This decision to switch consultants inevitably led
to delay, but we do not see the replacement of Highland Engineering by Lanarc
as being caused by the highway. We therefore reject Davies' assumption that planning
for a CDP could not proceed until May 1996 as a result of the highway.
can the highway be blamed for the amount of time taken by Reid to develop an approvable
site plan. Nine months does not seem excessive for a process that not only resolved
some tricky environmental questions, but also improved the overall density available
for the project.
 After considering
all of the evidence as to the development of the property, we are of the opinion
that a number of factors other than the highway took time to be addressed. Although
the Court of Appeal in Bayview Builders said that the taking or the construction
need not be the sole reason, it is still necessary to consider whether the business
loss is "directly attributable to the taking" or "result[s] from
the construction or use" of the highway. The onus is on the claimant to prove
any delay and to link it to the highway project. Sequoia Springs has not proven
that in the absence of the highway it would have filed an approvable CDP application
any sooner than it actually did in April 1997. However, after the public meeting
on the second CDP in July 1997 until approval was obtained in April 1998, much,
but not all, of the time was spent negotiating issues arising out of the highway.
We conclude that there was a eight month delay that was directly attributable
to the highway. Therefore, in the absence of the taking, approval of a CDP and
any constituent subdivision had some probability of occurring in the fall of 1997.
4.4.3(b) Quantum of damages for delay
mentioned above, Dell Holdings was argued for the principle that development
delays caused by the behaviour of an expropriating authority, both before and
during an expropriation, can cause disturbance damages. We were also invited to
look at some background information about Dell for the manner in which
such damages might be measured.
Dell, the amount of disturbance damages was not an issue before the Supreme Court
of Canada. It had been set by the Ontario Municipal Board at $500,000. The source
of that figure can be found in the Divisional Court decision (1991), 80 D.L.R.
(4th) 112, and the Ontario Municipal Board decision, from which the following
details emerge: The Ontario Municipal Board award considered two main components
of damage: extra holding costs incurred by the delay, and reduced developer profits
as a result of the delay.
- The OMB found there
was a two and a half year delay, and that it was caused by the expropriating authority.
By the date of the hearing, development of the remainder of the site had occurred,
but for one portion slated for an apartment building.
owner presented expert evidence comparing the revenue and expenses which actually
transpired with the equivalent figures that would have emerged if the expropriation
and delay had not taken place. The balance, after expenses, was monies available
for developer's profit and holding costs. The difference between the actual developer's
profit and holding costs and those estimated assuming no delay was almost $600,000.
OMB considered this evidence and indicated that because one component of the development
had not yet been built and might never be built, there was some uncertainty in
these figures. It looked for other ways of estimating the increased costs or reduced
developer profit. It made four different calculations ranging from $75,000 to
$275,000, although one of the estimates appears to be mistakenly reported as $86,000
rather than $860,000.
- The OMB came to the conclusion
that any approach was going to be based on speculative assumptions, and in the
end fixed the compensation for disturbance damages for delay at a round number
within the range under discussion - $500,000.
owner appealed the quantum, but the Divisional Court refused to intervene, saying
that as long as the OMB did not act arbitrarily, but exercised its discretion
after reviewing the evidence, its award should not be overturned.
does not therefore provide any single methodology for measuring damages for delay,
let alone a measure which bears a stamp of court approval.
do not accept the claimant's argument that a two to four year delay should be
attributed to the highway. Since we find that any delay which can properly be
related to the highway occurred in late 1997 and 1998, two of the claimant's estimations
of damages for delay are of little assistance. Because of the timing of the delay,
there is no evidence of any increase in development cost charges and fees as a
result of highway, and we reject Davies' assumption to that effect. Nor is there
any reduction in market value of the land. Davies' model depended on development
beginning in 1994 and catching the window of good market conditions in the mid
1990s. By 1997, the market had already declined. Parkhill reports that the sales
of single family dwellings declined approximately 25% in Campbell River zone 1
in 1997, compared to 1996, while the sales of single family lots declined by approximately
65%. Total MLS(r) sales volume also declined 20% in 1997 compared to 1996. While
we were given no real estate statistics for 1998, in the first seven months of
1998 the number of building permits for new residential units declined over 65%.
In fact, counsel for Sequoia Springs submitted in argument that the market had
collapsed by March 1997.
 We are
assisted by one of Davies' models for estimating the damages for delay - the model
that defers the income and expense streams for a four year delay in development
and recalculates the present value of the land. This model seems to us to measure
the damages caused by an extrinsic delay at some point in the ten year development
period. We have found a delay of only eight months attributable to the highway.
If we take the value of land after the taking, which we have found to be $4,220,000,
and apply Davies' discount rate of 8.25% for an extra eight months we obtain a
difference in land value of approximately $215,000; alternately, applying Parkhill's
discount rate of 9% the loss is approximately $235,000.
we are not convinced that the eight months delay in obtaining CDP approval has
necessarily resulted in a delay of eight months in Sequoia Springs' development
of the property. Between April 1998, when the CDP and rezoning for a small part
of the property was approved, and December 1998, when the evidence was concluded,
there was no development of the property. The reasons offered were the ongoing
depression in the Campbell River real estate market and the diversion of Brown's
attention to the construction of the new clubhouse on the existing golf course.
With the relatively poor market conditions in 1997 it seems likely that if the
CDP had been approved in August or September 1997, development may very well have
been stalled for market reasons, just as it was in April 1998. In this situation,
development would have been delayed in any event. After reviewing all of the evidence,
including the market conditions, we conclude damages for delay of $125,000.
4.5 Willow Street Sewer Extension
Springs claims the sum that it paid to Campbell River for the Willow Street sewer
extension as a cost thrown away. An invoice from Campbell River to Sequoia Springs
dated August 5, 1997, in the amount of $108,924.16 plus GST, for a total of $116,548.85
was for work on the sanitary sewer and storm drains. We have also identified amongst
the invoices claimed as costs thrown away, two Highland Engineering invoices dated
October 31, and December 31, 1996, for $1,835.50 and $1,629.75 respectively, plus
GST, for services with respect to the sewer. All three of these invoices are marked
 Once the CDP had been approved
in April 1998, the presence of the pedestrian bridge meant that the sanitary sewer
for a portion of the eastern remainder could cross the highway attached to this
bridge. At this stage it became apparent that some of the upgrading and extension
of the Willow Street sewer line was, in hindsight, no longer necessary for the
development of this area of the subject property.
issue is how much of the expense for the Willow Street sewer extension was directly
attributable to the highway. If the highway had not been built, how much would
Sequoia Springs have had to pay for storm drains and sanitary sewer connections
for this portion of the subject property? The evidence on this point is not extensive.
While Brown stated that without the highway, no work on widening Willow Street
sanitary sewer would have been necessary, Stephens reported that both the sewer
and storm drain connectors had capacity constraints downstream and would have
needed some upgrading even if there had been no highway. There was evidence from
Stephens that, during the winter of 1996/1997, an increase in housing density
was projected as a result of the second CDP and this was considered in decisions
that were being made with respect to the Willow Street sewer facilities. We prefer
Stephens' evidence on this point and accept that if there had been no highway,
Sequoia Springs would have had to expend some money for work on the storm drains
and sanitary sewers in this area. We also note that Sequoia Springs originally
claimed only part of the cost of his item: the difference between $49,000, the
quote that it obtained for some sewer work, and $109,000, the amount it was eventually
charged, or $60,000. This suggests that the claimant acknowledged that it would
have born some expense for the Willow Street sewer if there had been no highway.
After considering all the evidence, we award $65,000 of the approximately $112,000
claim for the cost of the sewer, including the two engineering invoices. No GST
is awarded on this sum since Sequoia Springs has not proved that it suffered a
loss with respect to the GST.
have awarded a total of $1,680,000 compensation to Sequoia Springs. The advance
payment made by MoTH was $1,425,000.
has requested that it be permitted to make submissions on interest once the board
has provided reasons for decision. We adjourn the issue of interest payable at
has also requested that it be permitted to make submissions on costs once the
board has provided reasons for decision. We adjourn the issue of costs at this
 The parties will have 30 days
from the issuance of these reasons to advise the registrar whether they wish to
schedule a hearing or make written submissions on the issues of interest and costs.
IT IS ORDERED THAT MoTH shall pay to Sequoia Springs West Development:
under section 40 of the Act for the market value of the land that was
acquired and the reduction in market value of the remaining land in the sum of
Compensation under section 40 of the Act for business losses in the sum of $200,000.|
awards for interest and costs are adjourned pending further submissions.|