Thoreson v. Alberta, 2010 ABQB 752

Court of Queen ’ s Bench of Alberta Citation: Thoreson v. Alberta, 2010 ABQB 752 Date: 20101201 Docket: 0501 02100 Registry: Calgary Between: Julie Thoreson, 360672 Alberta Ltd., and William Chow and Wai Hing Chow Plaintiffs - and - Her Majesty the Queen In Right of Alberta, as represented by the Minister of Alberta Infrastructure Defendant _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice J.T.

McCarthy _______________________________________________________ Introduction [ 1 ] On March 31, 2004 the Minister of Infrastructure (Minister) for the Province of Alberta expropriated two properties which were needed by the Province for the next leg of Stoney Trail/Ring Road and for a new interchange linking Stoney Trail and Deerfoot Trial. In July 2004, the Minister paid $835,000.00 to Julie Thoreson and 360672 Alberta Ltd. (Thoreson Plaintiffs) and $783,000.00 to Mrs. Chow as compensation for the market value of these expropriated properties.

The Plaintiffs were not satisfied with these amounts and have brought this action under

Section 36 of the Expropriation Act , R.S.A. 2000. [ 2 ] The trial was held in July of 2005. At that time, in addition to the question of market value, other issues of compensation were addressed and decided. The Plaintiffs appealed from the trial decision, and the Alberta Court of Appeal directed a new trial on the issue of market value alone. This trial is a second trial.

Background [ 3 ] These were two adjourning properties located on a partially serviced road (24 th Street) on the west side of the Deerfoot Trial. They were approximately two kilometers north of Country Hills Boulevard and two kilometers south of the Balzac overpass (144 th Avenue). Access to the two properties from Country Hills Boulevard was via 15 th Street, 128 th Avenue and 24 th Street. Access from the Balzac overpass (144 th Avenue) was via a service road (24 th Street). There was no access from Deerfoot Trial.

These two properties sat within a strip of land encircling a part of Calgary that was reserved and protected by the Government of Alberta in 1976 to accommodate future roads and utilities. This strip of land is called the “Restricted Development Area” (RDA) and was created by regulation [ Calgary Restricted Development Regulation , A.R. 212/76 ]. [ 4 ] The purpose of the RDA was to restrict development to ensure that land was available for public use.

The restrictions allowed existing private uses to continue but prohibited new construction and uses without the consent of the Minister. [Section 5(2) - Calgary Restricted Development Regulation ]. Caveats giving notice of the restrictions were registered against the titles of all affected properties. [ 5 ] A major adjustment to the boundaries of the RDA occurred in 1989, when the Government of Alberta narrowed the reserved strip of land from five miles wide to approximately one-half mile wide.

Surplus lands were then released from the development restrictions and the narrower one-half mile wide band was designated the Transportation Utility Corridor (TUC). [ 6 ] At all times the properties, which are the subject matter of this trial, remained within the RDA/TUC and as such remained subject to the development restrictions. There have been no further adjustments to the RDA/TUC since 1989. [ 7 ] When the RDA was created in 1976 the Chow and Thoreson properties were located in the Municipal District of Rocky View.

In 1989 the properties were part of an area annexed to the City of Calgary. [ 8 ] Lands that are adjacent to the Thoreson and Chow Lands but are not in the RDA/TUC are identified in the City of Calgary’s Stoney Industrial Area Structure Plan as having a future light industrial use. Thoreson Plaintiffs and Thoreson Lands [ 9 ] Thoreson Plaintiffs owned, as joint tenants, the more northerly of the two properties (Thoreson Lands). The Thoreson Lands were 17.59 acres in size. There was a 1,546 square foot one storey house with a walk-out lower level, a number of outbuildings, and an outdoor swimming pool.

The Thoreson Lands did not have municipal services (i.e., water, sewers, etc.) instead there were two wells and two septic systems. [ 10 ] There was a commercial building on the Thoreson Lands for which compensation was previously assessed, awarded and paid. The Chow Plaintiffs and Chow Lands [ 11 ] The Chow Lands were directly south of the Thoreson Lands. They were also 17.59 acres in size, with a 1,996 square foot house and some outbuildings. There were no municipal services. [ 12 ] Mrs. Chow owned the Chow Lands at the time of the expropriation.

She and her husband did not live on the lands at the time of the expropriation.

The Expropriation [ 13 ] In November of 2003, the Minister gave notice of his intention to expropriate the Chow Lands. Notice for the Thoreson Lands was given in December of 2003. [ 14 ] An inquiry was held in February 2004 and the Inquiry Officer issued his report on March 4, 2004. He was of the opinion that the taking of the Thoreson and Chow Lands was fair, sound, and reasonably necessary. [ 15 ] The Minister received the report and then issued Certificates of Approval on March 18, 2004.

These were registered at the Land Titles Office and titled passed to the Minister on March 31, 2004 which is the effective date of the expropriation. [ 16 ] Notices of possession were served on April 21, 2004.

The Plaintiff’s solicitor requested that the date upon which the Plaintiffs were to give up possession be set at March 31, 2005. [ 17 ] In their Agreed Statement of Facts, the parties agreed as follows: 4) On July 23, 2004, the Province made a statutory payment to the Thoresons in the amount of $835,000.00 for the market value of the Thoreson property in accordance with Section 31(4) of the Expropriation Act R.S.A. 2000 c.13 as amended (the Act ). 19) On July 23, 2004, the Province made a statutory payment to Wai Hing Chow in the amount of $783,000.00 for the market value of the Chow property in accordance with Section 31(4) of the Act . [ 18 ] In February of 2005, the Thoreson Plaintiffs applied to this Court to extend their possession of both the Thoreson and Chow Lands beyond March 31, 2005.

At that time an extension was granted until April 30, 2005. They returned to Court several more times and sought further extensions. Ultimately, they were required by Court Order to vacate the lands on February 7, 2006. Market Value [ 19 ] The Plaintiffs are entitled to full and fair compensation in accordance with the provisions of the Expropriation Act ( Act ). The purpose of the Act is to place the owners in the same economic position after the taking as he enjoyed before the taking occurred. K.J.

Boyd’s text Expropriation in Canada - A Practitioner’s Guide (Aurora: Canada Law Book, 1988) at 27-28 states in part as follows: The Primary purpose of compensation is to place the owners whose land has been taken in the same position financially as he was prior to the taking. On the one hand, the owner should not receive a windfall or unjust enrichment as a result of the taking. On the other hand, the owner should not be required to shoulder an economic loss for the general public benefit which is achieved as a result of the taking. ...

The result sought is to place the owner in the same economic position after the taking as he enjoyed before the taking occurred. That result is achieved through a careful analysis and quantification of the value of the parcel of land taken, injurious affection to the land which remains, and the consequential disturbance or incidental damages which result from or are likely to result from the taking. [ 20 ]

Section 42 of the Act sets out the basis for calculating the amount of compensation, as follows:

(1) When land is expropriated, the expropriating authority shall pay the owner the compensation as is determined in accordance with this Act.

(2) When land is expropriated, the compensation payable to the owner must be based on (

a) the market value of the land, (

b) the damages attributable to disturbance, (

c) the value to the owner of any element of special economic advantage to the owner arising out of or incidental to the owner's occupation of the land to the extent that no other provision is made for its inclusion, and (

d) damages for injurious affection. [ 21 ] The issues in this trial are the compensation payable to the Thoreson Plaintiffs and Mrs. Chow under · the first element of s.42(2): (

a) for the market value of the lands; and · for the value of improvements not reflected in market value. Compensation sought under the other elements has already been assessed at the previous trial, reviewed by the Court of Appeal, and where awarded, paid. The determination of compensation for business loss suffered by the Thoreson Plaintiffs is postponed by operation of the statute. [ 22 ] The parties agree that the Effective Date is March 31, 2004. This is the date at which the lands are to be valued. [ 23 ]

Section 41 of the Expropriation Act defines market value as follows:

(41) The market value of land expropriated is the amount the land might be expected to realize if sold in the open market by a willing seller to a willing buyer. [ 24 ] On the open market, the lands would be valued in their current state according to their true potential, that is, according to their highest and best use having regard to their current level of development and the current value of the future potential of the lands.

It is therefore necessary to determine the highest and best use of the subject lands before assessing their market value. [ 25 ] Four expert witnesses, two for the Plaintiffs and two for the Defendant, provided expert reports and testified at the trial about the highest and best use of the subject lands.

a) Rodney Potrie [ 26 ] Mr. Potrie is a professional planner and the owner, CEO and operational manager of Planning Protocol Inc. which he founded in 1998. He was qualified as an expert in the field of professional planning, qualified to provide opinion evidence on all aspects of

planning, including (1) opinion evidence on the appropriateness of a parcel for development potential in light of its physical characteristics and legal constraints; (2) the effects that the existence of a restricted development area designation has on a parcel of land; and (3) to opine on the likely timing and type of development that would have occurred on a parcel of land in the absence of a restricted development area designation. He prepared two reports, one for the Thoreson property, and one for the Chow property, which were entered as Exhibits 4 and 5 respectively.

b) Tony Omura [ 27 ] Mr. Omura is a professional appraiser and the sole principal of Wernick Omura Limited. He was qualified as an expert able to give opinion evidence on all aspects of real estate valuation including the valuation of urban, commercial and industrial properties. He prepared two appraisal reports, one for the Thoreson property, and one of the Chow property, and these were entered as Exhibits 12 and 13 respectively.

c) Roberto Binda [ 28 ] Mr. Binda is a professional planner. He is a senior planner, principal and branch leader for the Calgary office of Urban Systems Ltd. Mr. Binda was qualified as an expert in urban planning, design, and engineering planning for the purpose of opinion evidence on the highest and best use of the subject lands. He prepared one report for both subject lands entitled “Highest and Best Land Use Analysis - TUC (Transportation Utility Corridor) Expropriation Case: Thoreson/360672 Alberta Ltd. and Chow, which was accepted into evidence and market as “Exhibit 20".

d) Alexander Navrady [ 29 ] Mr. Navrady is a professional appraiser. He is a senior director with the Altus Group. In addition, Mr. Navrady has lectured at the Calgary Real Estate Board as part of the agent qualification course, and at the University of Calgary for the basic appraisal courses required for qualification of appraisers. He has been accepted as an expert witness on numerous occasions by both the Court of Queen’s Bench and the Land Compensation Board. He has significant experience appraising lands subject to the RDA/TUC, and appraising lands within the Stoney Industrial Area.

He was qualified at this trial as an expert in land valuation for the purposes of giving opinion evidence on the market value of the subject lands. He prepared two appraisal reports, one for the Thoreson property and one for the Chow property, which were marked as Exhibits 8 and 9, respectively. He gave a market value to the Chow property in the amount of $46,000 per acre and to the Thoreson property in the amount of $47,500. [ 30 ] The reports of two further experts for the Defendant were accepted into evidence and marked as exhibits without the authors testifying.

When the Defendant served these reports on the Plaintiffs, the Defendant also served notice under Rule 218.1(2) of its intention to enter these reports without calling the authors as witnesses to testify at trial. No objection was raised by the Plaintiffs, and accordingly, the reports were accepted into evidence without oral testimony. These two experts were as follows:

a) Robert Gibbard [ 31 ] Mr. Gibbard is a senior transportation engineer, employed by Urban Systems Ltd. He was qualified as an expert in the design and engineering of urban transportation systems for the purpose of giving opinion evidence on the existing and future transportation and access issues and constraints associated with the development of the subject lands. He did not address those same issues and constraints with regard to accepted comparables at the time of their sales. His report entitled “NE1/2 36-25-01 W5M Access Review Thoreson and Chow Parcels” was marked as Exhibit 16.

b) Elise Harlick [ 32 ] Ms. Harlick is a senior municipal engineer, also employed by Urban Systems Ltd. She was qualified as an expert in urban planning, design and engineering for the purpose of giving opinion evidence as to the potential development and engineering costs

related to providing transportation, water, sewer, and storm services to the expropriated lands. Her report, entitled “Servicing Costs Analysis” was marked as Exhibit 18. [ 33 ] Mr. Potrie and Mr. Omura for the Plaintiffs, and Mr. Binda and Mr. Navrady for the Defendant, all gave evidence about the highest and best use of the subject lands. [ 34 ] All four expert witnesses expressed the same general conclusion: the highest and best use of the subject lands is industrial or business use. Mr. Potrie also indicated the potential highway commercial use for that portion of the subject lands which fronted on the Deerfoot Trial. Their reasons included the following:

a) The subject lands would have been part of the Stoney Industrial Area Structure Plan which would have likely extended to 144 th Avenue, and included the subject lands, had the RDA/TUC not existed.

b) Proximity to the Calgary International Airport, and in particular NEF noise restrictions limit the possible uses. Residential development is not possible for these and neighbouring lands.

c) Historical uses of neighbouring properties in the area support an industrial/business use of these lands. [ 35 ] As noted above, Mr. Potrie suggested that the highest and best use for the frontage portion of the subject lands is a highway commercial use. Mr. Omura suggested that without a nearby residential base there is limited potential for retail use of the subject sites.

In my view significant commercial use including retail is not dependant on a residential base especially when thousands of vehicles per day on one of the busiest highways in Alberta are passing the subject sites. [ 36 ] Highest and best use is an indispensable concept used to select indicative sales of lands with a similar highest and best use. [ 37 ] The Defendant submits that the key issue in this trial is the selection of comparables. The problem is that unless one subjects the comparables to the same scrutiny as the subject properties, the selection of comparables will always be suspect.

Where differences in comparables are present, proper appraisals identify those differences and suggest suitable adjustments. [ 38 ] A second problem unique to the expropriation of RDA/TUC lands is that in determining the highest and best use of expropriated lands the impact of the RDA/TUC on those lands “highest and best use” must be ignored. Also comparables that might be likewise impacted must be treated with caution if not ignored all together. These principles flow from

section 45 of the Expropriation Act : In determining the value of the land, no account may be taken of

a) any anticipated or actual use of the land by the expropriating authority at any time after the expropriation;

b) any value established or claimed to be established by or by reference to any transaction or agreement involving the sale, lease or other disposition of the land, if that transaction or agreement was entered into after the commencement of expropriation proceedings;

c) any increase or decrease in the value of the land resulting from the development or the imminence of the development in respect of which the expropriation is made or from any expropriation or imminent prospect of expropriation;

d) any increase or decrease in the value of the land due to the development of other land that forms part of the development for

which the expropriated land is taken;

e) any increase or decrease in value that results from the imposition or amendment of a land use bylaw, land use classification or analogous enactment made with a view to the development under which the land is expropriated. [ 39 ] Determining compensation in an expropriation is not a “real world” evaluation. The determination of the market value of expropriated land is a hypothetical exercise since the sale is a notional sale that did not actually take place. The definition of “market value” in

section 41 (cited above) assumes a sale of the expropriated lands. [ 40 ] By virtue of

section 45 of the Act the determination of the market value of the expropriated land must be made by ignoring the RDA/TUC, i.e., one must consider in what way the subject properties would have developed were it not for the RDA/TUC designations. [ 41 ] I do not accept the evidence of the Plaintiffs’ experts that but for the RDA/TUC the subject lands would have been fully serviced and developed as of the effective date March 31, 2004. The Plaintiff’s appraiser even went so far as to opine that the entire area would have been developed with buildings by March 31, 2004.

I reject that opinion as well and I reject his valuation of $400,000.00 per acre of the subject lands as of the effective date. [ 42 ] For lands to be fully serviced and developed the following steps are needed to take unserviced and undeveloped lands such as the subject lands to “fully serviced and fully developed” industrial lots:

(1) The first step would have been to assemble the subject lands with other lands into some suitably sized parcels. It was admitted by Mr. Potrie, the planning expert of the Plaintiffs that there was minimal chance the subject lands would have developed on their own.

(2) The second step would have been to prepare and submit a Land Use Plan in order to get the land use approval from the City. This detailed plan would have included a geotechnical study, a “phase 1" study, an environmental study, and traffic studies.

(3) After the land use approval, the next step for development would have been to get subdivision approval. Professionals would have developed a “tentative plan”. This would have been reviewed and approved by City planning staff.

(4) After subdivision approval, the next step would have been to engage engineers to design the water sanitary sewers, storm waters and road systems, as well as the shallow services (natural gas, power, telecommunications). That would then have to be approved by the City.

(5) The final step for development after detailed engineering would have been to install the services for the entire development parcel. This might have been done all at once or it might have been phased. Whether it was phased and which phases came first would depend on market demand. All things being equal, it would have made more sense to develop the near lands before the farther. Rodney Potrie [ 43 ] It was Mr. Potrie’s evidence that these were the steps needed to take the subject lands to the state of being fully serviced and fully developed.

He was further of the view that these steps could not have happened before 1989, when the subject lands were annexed by the City of Calgary. This is because full municipal services (which were essential to servicing the lands) were not available until the lands were annexed. It was Mr. Potrie’s evidence that a developer would have paid all of the above noted costs of taking the subject land from raw to fully serviced and fully developed. In addition, the developer would have paid for off-site services, engineering, planning and onsite services.

A developer would also have paid acreage assessments to the City for the cost of roads, interchanges, sewage treatment plants, parks and other major infrastructure.

[ 44 ] Despite acknowledging that the development of the subject lands depended on assessing both costs and demand, the Plaintiffs’ experts did neither. This in my view constitutes a fatal flaw in their analysis and I give their evidence little weight. Specifically the suggestion that but for the RDA/TUC the subject lands would be fully developed and serviced as at March 31, 2004 is rejected.

Therefore the Plaintiffs’ appraisal of $400,000.00 per acre of the expropriated lands which assumed the full servicing and full development as of the effective date is of limited assistance to the Court in its ultimate determination of value. Rob Gibbard [ 45 ] The Defendant produced the evidence of Rob Gibbard in his “Access Review Report”. Although speculative in nature it is important because it identifies what the possible and future likely roads would have been in the Stoney Industrial Area, in the absence of the RDA/TUC. He drew the following conclusions in his report [Exhibit 16, para 2, s. 5]:

(1) The existing planned road network was developed with the understanding that the TUC and Stoney Trail would be constructed some day.

(2) Without Stoney Trail or the TUC, it is possible that the City would have planned for a similar ring road facility. The location of this other ring road would have changed the development and road patterns that exist today.

(3) Without Stoney Trail or the TUC, it is probable that an arterial or expressway road would have been planned for the 144 th Avenue alignment and it would have been planned to connect to Deerfoot Trail.

(4) Without Stoney Trail or the TUC, the Stoney Industrial Area Structure Plan would likely have been extended to 144 th Avenue with a roadway and a development pattern established for this area.

(5) Long-term access to the subject lands without Stoney Trail or the TUC would have been from the Area Structure Plan road pattern which would have directed traffic to 144 th Avenue, 128 th Avenue and Country Hills Boulevard.

(6) The possible timing for the development of the subject lands is uncertain. It is governed by utility and infrastructure timing and access timing.

(7) For the development of the subject lands to precede other development to the south, roadway improvements would be necessary. As a minimum, the City of Calgary would require the construction of a collector road cross-section (19m ROW) for the entire route between the site and the intersection of 15 th Street and Country Hills Boulevard. Traffic signals would be required at the Country Hills Boulevard/15 th Street intersection. In addition, the intersection would likely need to be relocated to the ultimate location to the west.

(8) At-grade access to Deerfoot Trail from 24 th Street to provide quicker access to the subject lands would not be permitted. It is possible that a grade-separated interchange at 144 th Avenue/Deerfoot Trial could be constructed by the developers providing access to the subject lands. [ 46 ] It is important to note that the Defendant’s planner Mr.

Binda in Exhibit 20 when dealing with future potential road access without the TUC states as follows: In terms of future potential road access without the TUC, heading north along Deerfoot Trial there was a regular pattern of interchanges and cross-street arterial or expressway roads. Without the TUC, the first interchange north of Country Hills Boulevard would have been 128 th Avenue, which could have provided access to Deerfoot Trial both northbound and southbound, and then north of 128 th Avenue

would have likely been the 144 th avenue interchange. This too would have likely been an all directional interchange. The Thoreson and Chow lands were situated between these two future potential interchanges immediately west of Deerfoot Trail, as illustrated in figure 20. With no TUC in place, 144 th Avenue may have been extended east and west of Deerfoot Trail and upgraded to an arterial expressway standard.

Also, there was a possibility that the Stoney Industrial ASP would have been extended further north to 144 th Avenue, in order to develop a roadway pattern for this entire area. [Exhibit 20, page 32-4.2.2] Elise Harlick [ 47 ] The Defendants also produced a “Servicing Cost Analysis”.

The purpose of the report was to “provide an estimate for costs of servicing the subject sites at the time that the subject sites were expropriated in 2004, in order to help determine the site development potential.” Her conclusion was that in 2004, it would have cost $18,302,310 to design and install the municipal services needed to develop the subject lands. If neighbouring lands were developed at the same time, or would be developed in the future such that they could share in the cost, the developer could recover $9,234,513 of these costs.

This leaves a net cost of $9,063,797 for developing the subject lands. [ 48 ] I agree with the Defendant’s submission that the cost of assembling the subject lands with other lands into a larger parcel and then of servicing and developing that larger parcel would have to be weighed carefully against the perceived supply and demand for similar lands. I find on the evidence before me that this would not have happened by March 31, 2004 with or without the existence of the RDA/TUC. [ 49 ] It is important to note that Ms.

Harlick in exhibit 16, page 12, number 5 states as follows: “Long-term access to the subject lands without Stoney Trail or the TUC would have been from the ASP road pattern which would have directed traffic to 144 th Avenue, 128 th Avenue and CHB (Country Hills Boulevard)” Roberto Binda [ 50 ] Mr. Binda the Defendant’s planning expert stated as follows in Exhibit 21 of these proceedings:

a) The supply of all vacant, undeveloped industrial land for the City of Calgary was 9,551 acres. Of that 9,551 acres, 5,182 acres was located in the North/Northeast sector, broken down as follows [Exhibit 21, Table 3]:

i) The supply of unserviced industrial land (i.e., long term lands) totalled 4,585 acres for the City of which 2,900 acres were in the North/Northeast sector. ii) The supply of lands for the City which had only one or two of the major services installed to the property boundary (i.e., short term lands) was 2,877 acres of which 1,582 acres were in the North/Northeast sector. iii) The supply of lands for the City with all required services installed to the property boundary (i.e., immediate land, according to the City definition) was 1,350 acres of which 700 acres were in the North/Northeast sector. Mr.

Binda concluded that there was a significant amount of fully serviced industrial land available in the north-northeast industrial area on the effective date.

b) The forecasted demand for industrial land, measured by the City as the absorption of immediate, serviced land was between 223 and 268 acres per year, of which between 75 to 95 acres was forecasted for the North/Northeast sector. The actual absorption in 2002 was 303 acres for the City, and 212 acres for the North/Northeast sector. In 2003, the actual absorption was 376 acres for the City and 146 acres for the North/Northeast. [ 51 ] Mr.

Binda further testified that had the RDA/TUC not existed several additional quarter sections including the subject lands, would have been added to the overall supply of available industrial land in the area. His overall conclusion about the timing of the development was as follows [Exhibit 20, page 46]: At the time of expropriation, there were significant vacant industrial lands available in the north/northeast industrial area.

Even with the higher than forecasted absorption rates, there were a large number of serviced and partially serviced industrial land supplies available in this area projected to last for numerous years. Given the current demand trends, the development potential for the Thoreson and Chow lands would have been 15 to 25 years from the date of expropriation. [ 52 ] In my view discussions about inventory and absorption should be treated with caution.

They ignore the fact that we live in a free market economy where an energetic and imaginative owner of land who wishes to develop may be able to convince the market that his or her land should be purchased first. Tony Omura [ 53 ] It is worth repeating that Mr. Omura, the Plaintiff appraisal expert’s estimate of value at $400,000.00 per acre is of little assistance to the Court for the simple reason that his instructions were to assume that the subject lands were fully serviced and fully developed. He therefore used fully serviced and fully developed properties as comparables.

This is a fatal flaw because as at the effective date the subject properties were not fully serviced and developed and would not have been in the absence of the RDA/TUC. Alexander Navrady [ 54 ] Mr. Navrady, the Defendant’s appraisal expert, also assessed the timing of development by analyzing the supply of and demand for industrial lands. Mr. Navrady approached the question from the perspective of sales, rather than from the perspective of absorption. His evidence was as follows:

a) The pace of industrial development lands is disciplined. The industrial market is not deep and so land developers only service a certain amount of land at any given time. Not all land can be ripe at the same time. The review of supply and demand identifies where else in the City of Calgary a proposed use may be located and accordingly, the potential to sell the lots in the lands that is proposed to be subdivided and serviced.

b) The Altus Reports [Exhibits 8 and 9, pages 15 and 16] identified that the actual sales of serviced lands for the five years prior to the effective date, fluctuated between 46 and 160 acres per annum in North Calgary. The City of Calgary for 2003 - 2007, estimated the North/Northeast area would subdivide and service between 75 and 95 acres per annum.

c) Absent the RDA, the subject lands would have been added to the supply of industrial lands in Calgary, at a location removed from services and transportation (Exhibit 8, page 17). Lands tend to develop consecutively and from the point of existing services outward.

d) If the location of a major road was at the 144 th Avenue alignment that would add acres to the supply, to the totals stated above, likely in excess of 600 acres east and west of the Deerfoot Trial.

e) It takes more than one business cycle to sell out a typical business park development in Calgary.

f) Doug McDonald confirmed that the need for industrial land depends on market demand.

g) Where demand exists, development has progressed up to and then jumped over the RDA/TUC and continued on the side furthest from the City (Exhibit 1, Tab 34).

h) The industrial lands in the Southeast area of the City are cheaper to service and tend to be cheaper lands. [ 55 ] Based on the foregoing, it was Mr. Navrady’s conclusion that the subject lands were not needed to meet the demand for industrial uses and would not be developed as industrial lands for 15-plus years. [ 56 ] Mr. Navrady, the Defendant’s appraisal expert provided a significant amount of information that was useful to this Court. He prepared and presented estimates of value of the subject properties using the direct sales comparison approach. This in my view is a more reliable approach.

He analyzed 17 sales from the period 1997 to 2005. From these he chose and relied upon eight of the sales to provide guidance as to value of the subject properties as at the effective date. He did not rely upon sales of serviced lands as comparable sales.

Rather he used comparables having a highest and best use broadly similar to the subject lands which were not serviced and are in the general vicinity of the subject lands. [ 57 ] The eight sales he analyzed occurred between February 2002 and July 2005 which were relatively contemporaneous with the effective date of the taking of the subject properties, i.e., two years before the effective date through to 15 months after the effective date. [ 58 ] In his evidence, Mr.

Navrady indicated that one of the important steps in adopting these sales was to analyze them and see if there were any positive or negative effect on each sale be the RDA/TUC. He indicated in evidence that sales 11, 12 and 13 in his report all possibly “could” have been influenced in some way by the RDA/TUC. [ 59 ] I agree with this statement but would go further. It is clear to me that sales 11 and 12 were on that part of the RDA that is now located to the north of the TUC.

This must have had a negative effect with regard to their value in that the TUC in all likelihood prevented or delayed their annexation to the city with the resulting delay of the extension of future City services and zoning. To use Mr. Navrady’s words “normal development would have progressed up to RDA/TUC and then would have had to quote “jump” the TUC”. Moreover, sale number 11 was a sale by the expropriating authority in this case, a non-arms length party in the process. In my view that alone should be enough to eliminate it as a comparable.

Furthermore sale number 12 had the same excellent access and exposure to the Deerfoot Trial that the subject properties would have had without the RDA/TUC which will be discussed below. Therefore comparables 11 and 12 north of the RDA/TUC would have been negatively affected by the RDA/TUC and should be eliminated as comparables. [ 60 ] With regard to comparable 13, this should also be rejected. If the RDA land had not existed then 128 th Avenue would have been a key access and interchange with Deerfoot Trial making comparable 13 a much more desirable and valuable location than it was at March 31, 2004. Mr.

Gibbard said in his report at page 8: “The first interchange north of CHB (Country Hills Boulevard) would still be 128 th Avenue except without the Stoney Trial constraining the 128 th Avenue interchange could be all directional providing access to and from the Deerfoot Trail northbound and southbound.” Therefore comparable sale 13 is to be eliminated because it too has been negatively impacted by the RDA/TUC.

The issues with regard to snarled access to this property from 15 th Street Northwest would be significantly reduced in the absence of the RDA/TUC because access from 128 th Avenue to Deerfoot Trail north and south would now be the primary access route. The 128 th Avenue access would significantly enhance the desirability of sale 13 which would require a significant upward adjustment in value absent the RDA/TUC.

[ 61 ] When these three sales are deleted, Mr. Navrady is left with five sales as comparables. In his chart of final weighting he gave each of these five remaining sales a 5 percent weighting and the three sales or comparables that I have deleted a total of 75 percent weighting including a 50 percent weighting for comparable or sale number 13 which he considers to be the best comparable. If each of the five remaining comparables/sales were given equal weighting, the average price for the Thoreson property would be approximately $63,000.00 per acre instead of the $47,500.00 per acre that Mr.

Navrady gave in his appraisal. [ 62 ] I agree with Mr. Navrady that sale 13 would have been the best comparable except for the fact that it has to be eliminated because it was negatively impacted by the RDA/TUC. If the RDA/TUC had not been in place, the Thoreson and Chow lands would have been reasonably comparable to sale number 13. I say “reasonably comparable” because in fact the subject properties would have been more desirable properties because of their better exposure to the Deerfoot Trail traffic. [ 63 ] With regard to the five remaining indices selected by Mr.

Navrady the unadjusted price per acre was as follows: Number 10 sale (February ‘02) $47,301 per acre (2.88 acres); Number 14 sale (April ‘05) $99,768 per acre (155 acres); Number 15 sale (July ‘05) $213,182 per acre (50.22 acres); Number 16 sale (July ‘05) $129,836 per acre (77.02 acres); Number 17 sale (July ‘05) $124,507 per acre (112.34 acres). [ 64 ] Index number 10 is a very small parcel. It was a sale of a subdivided 2.88 acre parcel from Remington Developments to Melcor Developments. It appears to be a single lot sale out of a subdivision. Mr.

Navrady indicated quite properly that less weight was placed on this sale. [ 65 ] Index number 14 is a sale of 155 acres to the Calgary Airport Authority east of the Deerfoot Trial and south of Airport Trail is a good comparable with regard to the subject lands and it indicates approximately $100,000.00 per acre. It is future industrial land with about 20 percent of the land not being developable. [ 66 ] Index number 15, a sale of 50.2 acres at $213,165 an acre is also a good comparable which is near the subject lands and needs servicing.

A downward adjustment of the purchase price would be required to reflect the fact that it is already in the revised Stoney Industrial Area Structure Plan and is subdivided. This was the sale by Melcor referred to by the Court of Appeal and a better explanation of this sale has been provided as directed by the Court of Appeal. [ 67 ] Index number 16 is a good comparable which sold for approximately $130,000 per acre.

It is not unlike the subject lands, near the subject lands and needs servicing which may happen sooner than the subject lands in that it was further down the planning track when it was sold in 2005 (already in an Area Structure Plan). However, unlike the subject lands it lacks exposure to the Deerfoot Trial. [ 68 ] Index number 17 is land that was sold for in excess of $100,000 per acre. It has no exposure to the Deerfoot Trial although it fronts on Country Hills Boulevard east of the Deerfoot Trial.

Here we have a 112 acre parcel of long term land selling in excess of $100,000.00 per acre although it is nearer to existing development. [ 69 ] Mr. Navrady based on what he says are data analyzed and a broader appreciation of the market made the following time adjustments on a monthly straight line increase: July, 2002 to December, 2003 - 1% per month; January, 2004 to December, 2004 - 2% per month; January, 2005 to July, 2005 - 3.5% per month.

[ 70 ] The adjustments result in indices number 15, 16 and 17 all of which sold in July of 2005 roughly 15 months after the effective date being discounted by 39 percent. A 39 percent increase in raw land values in the space of slightly more than a year strains credibility especially considering Mr. Navrady’s other evidence regarding the specific North-East market where he indicated that in his opinion demand and supply was far more balanced. Index 14 which sold in April of 2005 was adjusted down by 33 percent. Index number 10 which sold prior to the effective date was adjusted upwards by 27 percent.

The data that Mr. Navrady utilized in order to derive his time adjustment included paired and non-paired sales as well as a broader appreciation of the market. I regard these adjustments to be unreliable for the following reasons:

i) Pairs numbered (

a) and (

j) should be eliminated because they include indices which have previously been eliminated from consideration (i.e. indices 11, 12 and 13); ii) Index number 15 which sold for $213,165 per acre in July 2005 was originally purchased in November of 1997 for $27,995.00 per acre yet does not appear to be in the data analyzed. iii) Pairs numbered (b), (e), (g), (

h) and (

i) were non-paired sales which are less reliable than paired sales. Even if these were included they represent a relatively small number of sales to be analyzed. iv) Larger time frames (i.e. 10 years or more) in this kind of unique and complex exercise are more desirable than shorter time frames (one to two years on either side of the effective date). Thus a market which is rising or falling at a substantial percentage per month can significantly distort a time-adjusted price. For example, during the three and one-half year time period analyzed by Mr.

Navrady, land values did undoubtedly increase in the area of the subject lands. However, the same land values must have significantly decreased in the two year period in 2008-2009 and somehow this should be accounted for in this unique exercise.

v) With regard to a broader appreciation of the market, Mr. Navrady was cross-examined at trial. He was questioned about evidence given at the first trial of this matter in 2005. The questions at this trial were as follows: [ Transcript Volume 4, dated May 26, 2010 p. 759, lines 5 to 22] “Question: And would you go on to advise the Court as to the remainder of your evidence after the comment with regard to the general market overview? At about line 25, sir. Answer: So the context was: (as read) Q. The land values have escalated the past few years in response to high demand levels and very limited supply.

Is that not true – is that not true today? A. I guess in my words under this bullet, which is a general market overview, and my most specific microstatistics tend to contradict each other.” “Question: And what is the specific market? Answer: The specific market is the North East market in which my opinion is that demand and supply was far more balanced.” vi) Mr. Navrady states at page 11 of his appraisal reports that land values have increased gradually over the past few years in response to a steady level of demand.

This statement contradicts the 39 percent and 33 percent adjustments that were set out in the statistics given by Mr. Navrady with regard to indices 14 through 17. These statistics should be categorized as microstatistics.

[ 71 ] An alternative approach Mr. Navrady used in his appraisals was a serviced versus unserviced land approach. In this approach the serviced land value is adjusted assuming that the subject lands would not be right for servicing for between 10 and 15 years. In his evidence at trial he described this as an academic exercise only. However he did not state that in his appraisals. I find the 10 percent discount rate that he used in this approach to be a much more reasonable approach when dealing with the 10 to 15 year raw land rather than the relatively short monthly straight line approach that he took in his adjustment

summary. In other words Mr. Navrady’s serviced versus unserviced land analysis gave me some comfort in using a 10 percent discount rate with the resulting change in time adjustments to his adjustment

summary as follows: Index #10 - from plus 27% to plus 22% Index #14 - from minus 39% to minus 13% Index #15 - from minus 39% to minus 13% Index #16 - from minus 39% to minus 13% Index #17 - from minus 33% to minus 11% [ 72 ] Mr. Navrady’s adjustment

summary in his Thoreson appraisal report is set out as follows: Adjustment

Summary Index No. 17 16 15 14 13 12 11 10 Date Jul-05 Jul-05 Jul-05 Apr-05 Jul-04 Dec-02 Oct-02 Feb-02 Land Area (Acres) 112.34 77.02 50.20 155.36 40.53 17.59 93.70 2.88 Unadjusted Per Acre Sale Price $124,884 $129,836 $213,165 $99,768 $40,970 $34,110 $22,407 $47,301 Motivation 0% 0% 0% 0% 0% 0% 0% 0.00% Time -39.00% -39.00% -39.00% -33.00% -600% 18.00% 20.00% 27.00% Time Adjusted Value $76,179 $79,200 $130,031 $66,845 $38,512 $40,250 $26,888 $60,072 Development Timing -10% -30% -30% -40% 0% 20% 20% -30% Improvements 1.5% 2.0% 2.0% 1.0% 7.0% 5.0% 4.0% 62.0% Size 15% 10% 10% 15% 5% 0% 10% -50% Physical -15% -15% -15% 5% -15% 0% 0% -15% Location 10% 15% 15% 5% 5% 0% 15% 15% Other 0% 0% -25% 0% 0% 0% 0% 0%

Composite Adjustment 2% -18% -43% -14% 2% 25% 49% -18% Adjusted Per Acre Sale Price $77,322 $64,944 $74,117 $57,486 $39,282 $50,312 $40,064 $49,259 [ 73 ] In my view, an appropriate adjustment

summary should read as follows: Adjustment

Summary Index No. 17 16 15 14 13 12 11 10 Date Jul-05 Jul-05 Jul-05 Apr-05 Eliminated as comparables as affected by the RDA/TUC Feb-02 Land Area (Acres) 112.34 77.02 50.20 155.36 2.88 Unadjusted Per Acre Sale Price $124,884 $129,836 $213,165 $99,768 $47,301 Motivation 0% 0% 0% 0% 0% Time -13.00% -13.00% -13.00% -11.00% 22.00% Time Adjusted Value $108,649 $112,957 $185,453 $88,793 $57,707 Development Timing -10% -30% -30% -40% -30% Improvements 1.5% 2.0% 2.0% 1.0% 62.0% Size 15% 10% 10% 15% -50% Physical -15% -15% -15% 5% -15% Location 10% 15% 15% 5% 15% Other Composite Adjustment 0% 0% -25% 0% 0% 2% -18% -43% -14% -18%

Adjusted Per Acre Sale Price $110,821 $92,624 $105,708 $79,025 $47,319 [ 74 ] Therefore if each of these indices were weighted equally, the average price per acre would be $87,000.00 (rounded)and in my view this represents what a typical purchaser who purchased the property for its highest and best use would pay for the Thoreson property. Over and above this amount I would allow $25,000.00 for improvements on the Thoreson property. I agree with Mr. Navrady that $25,000.00 for an allowance for improvements not reflected in market value is a reasonable amount (i.e. $25,000.00). When the same changes in the adjustment

summary are applied to the Chow property, the average price per acre for Mrs. Chow’s property is $84,500. Alternative Approach [ 75 ] If I am wrong with regard to the above-noted analysis, I am still of the view that the price per acre for the subject properties as at the effective date should be significantly adjusted upward from the price that was given in Mr. Navrady’s report. At the trial of this matter, Mr. Navrady was again questioned about evidence that he gave at the first trial of this matter as follows: “Question: Yeah. And I’m looking at the excerpt.

I – and I haven’t – the question just starts at the – at about line – line 24. Do you see that “Q”? Answer: Yes. Question: (as read) Q. The subject property is in this unique area, this Stoney ASP area, which were talked about in terms of being valued by the City for its location, its position along the highway being north of the airport and being at the gateway of the city, these types of elements that caused it to be considered to be sort of prized industrial land, correct? And your answer was: (as read) A.

Correct.” I agree with the notion that the subject lands would have been prized lands absent the RDA/TUC and should be much closer in value to indices 14, 15, 16 and 17. [ 76 ] Mr. Navrady was also questioned about Mr. Binda’s report. Mr. Binda is the Defendant’s planning expert and the questioned to Mr.

Navrady were as follows: Question: And – and here, the planners say: (as read) “Had the Province not begun to promote the development of the TUC, the City of Calgary may have arrived at a similar notion to develop a ring road around the perimeter of the city, which would handle long-distance commuting and through traffic. The report concluded that without the TUC, the Stoney industrial ASP would have likely been extended to 144 th Avenue with a roadway and development pattern established for the area.

Further to this long-term access to the subject lands would have directed traffic to 144 th Avenue, 128 th Avenue, and Country Hills Boulevard. The time line for development of the lands was uncertain due to the unknown timing for utilities and access.” You see that?

You see that? Answer: I see that. Question: M-hm. Do you agree with it? Answer: Not – not completely. There would not be uncertainty about Country Hills Boulevard. [ 77 ] Again at the risk of being repetitive, the subject lands would have been less than a kilometre from 128 th Avenue and less than two kilometers from 144 th Avenue, two major access points to Deerfoot Trail with a service road already in existence.

In addition, the entire east property line of these lands essentially was adjacent to Deerfoot Trail and provided excellent highway frontage for the travelling public. [ 78 ] In my view these factors would result in a significant upward adjustment for the subject properties from what Mr. Navrady gave in his report resulting in a price per acre in the $87,000.00 range for the Thoreson property and $84,500.00 for the Chow property as at the effective date. Summit Marketing International letter [ 79 ] In 1991 a party who was described as an arms length third party wrote to Ms.

Thoreson expressing interest in buying her property for 1.7 million dollars. The Alberta Court of Appeal indicated that while this was only a written expression of interest which was not pursued, it was important information which should have been taken into account when determining the fair compensation for seizure of the subject lands. Mr. Omura, the Plaintiff’s appraisal expert, testified that this expression of interest pre-dated the effective date by 13 years and would be irrelevant as an indicator of value. Mr.

Navrady, the Defendant’s appraisal expert indicated that the purchase price discussed in the letter was not in keeping with the prevailing land values in area at the time and he did not believe that this piece of historical evidence had any relevance in establishing market value as at the effective date of March 31, 2004. In his text “The Law of Expropriation And Compensation in Canada” Second Edition [1992], Eric C.E.

Todd discusses at page 186 offers to purchase or sell: (iv) Offers to purchase or sell The amount set forth in an offer to purchase is an amount which, in the opinion of the offeror, is a fair price for the lands in question, from his point of view. In order to determine what weight should be attached to this sort of evidence, the person making the offer should be called as a witness so that he may be examined and cross-examined as to what factors led him to make the offer he made.

From these factors and from the expertise or knowledgeability of the witness, a tribunal will then be in a position to determine what weight should be attached to this evidence. [1] While offers received by the owner of a building may in certain cases be taken into consideration to arrive at its value, the evidence regarding such offers must be such that there is no question the offer was made, and that not only the terms and conditions that might be contained in these offers are known, but also all the circumstances indicating whether or not they are serious. [The owner’s] mere statement that a purchase offer of $58,000 was made to him is not evidence of the kind I can consider. [2] A bona fide offer to purchase is a strong circumstance of great weight in arriving at the value of the subject. [3] However, oral offers are usually regarded as unsatisfactory since they “can be made easily and casually, without any sense of responsibility, and are not capable of enforcement.” [4] Little or no weight may be given to an offer made some time before the expropriation under different market conditions or

circumstances, [5] or made after the date of expropriation with respect to land remaining after a partial taking. [6] Similarly, offers which are vague and indefinite, or made by someone who had not considered some essential fact about the property, or made on behalf of an undisclosed principal, are properly rejected or given little, if any, weight. [7] [ 80 ] Both appraisal experts for the Plaintiffs and the Defendant took this letter of expression of interest into account into their evidence. It pre-dated the effective date by 13 years and neither gave it any weight in their considerations.

I accept their evidence in this regard.

Conclusion [ 81 ] The Plaintiffs are entitled to increased compensation for the subject lands as at the effective date March 31, 2004 calculated as follows: Thoreson Lands: 17.59 acres at $87,000.00 per acre equals $1,530,330.00 plus value of improvement not reflected in market value $25,000.00 Total $1,555,330.00 Chow Lands: 17.59 acres at $84,500.00 per acre equals $1,486,355.00 Total $1,486,355.00 [ 82 ] As stated previously, the Plaintiffs received the following amounts: Thoreson Plaintiffs - $835,000.00 on July 23, 2004 and Chow Plaintiff - $783,000.00 on July 23, 1004. [ 83 ] Therefore the net amount due and owing to the Plaintiffs is as follows:

a) Thoreson Plaintiffs are awarded the following net amount: $1,555,330.00 - $835,000.00 = Total net due: $720,330.00

b) Mrs. Chow is awarded the following net amount: $1,486,355.00 - $783,000.00 = Total net due: $703,355.00

[84] Judgment is therefore granted in these amounts to the above-noted Plaintiffs. [85] Interest should be paid on these net amounts at judgment interest rates from the date that the Plaintiffs were required to vacatethe lands by Court Order which date was February 7, 2006. [86] The parties may make an appointment to speak to costs. Heard on the 17th day of May, 2010. Dated at the City of Calgary, Alberta this 1st day of December, 2010. J.T. McCarthy J.C.Q.B.A. Appearances: Douglas A. Caldwell, Q.C. , Robert Pineo and Brett H. Barclay for the Plaintiffs Sheila C.

McNaughtan, Q.C. and Tim Mavko for the Defendant [1] Youngberg v. Metro. Toronto (1970) 1 L.C.R. 282, 287 (Ont. L.C.B.); refd. to in Welsby v. Kitchener (1972) 3. L.C.R. 36, 42(Ont. L.C.B.); and Kaiser v. R. (1979) 17 L.C.R. 113, 120 (Alta. L.C.B.). [2] R. v. Beland (1972) 2 L.C.R. 355, 361 (Fed. T.D.); refd. to in Michon v. Canada (National Capital Commission) (1973) 6L.C.R. 152, 157 (Fed. T.D.) and Poirier-White v. Ottawa-Carleton (Regional Municipality) (1977) 14 L.C.R. 44, 48 (Ont. L.C.B.), vrd.(1978) 16 L.C.R. 210 (Ont. Div. Ct.). [3] Magee J.A. in Re R.C.

Episcopal Corpn. of London & Sandwich (ON CA), [1930] 4 D.L.R. 955, 65 O.L.R.514 (C.A.) refd. to in Gibbons v. Middlesex (ON CA), 2 D.L.R. (2d) 763, [1956] O.R. 217 (C.A.) and see Gremona(Village) v. Spence (1965) (AB CA), 50 D.L.R. (2d) 131 (Alta. C.A.). [4] McClernon v. Dauphin (Rural Municipality) (1956) 3. D.L.R. (2d) 110, 116, (MB CA), 18 W.W.R. 385, 64Man. R. 18 (C.A.); Heale v. St. John’s (City) [1970] 1 Nfld. & P.E.I.R. 519, 522 (Nfld. C.A.); A.M. Souter & Co. v. Hamilton (City)(1972) 2 L.C.R. 167, 173 (Ont. L.C.B.), affd. (1973) (ON CA), 5 L.C.R. 153, 1 O.R. (2d) 760 (C.A.). The Board also

excluded evidence as to offers of proposed tenants of properties in the area of the subject property (id. 174); Kaiser v. R. (1979) 17L.C.R. 113 (Alta. L.C.B.) (text cited at 120); cf. Assaf v. Toronto (City) (ON CA), [1953] 4 D.L.R. 466 at 471, 473,[1953] O.R. 595 (C.A.), (relevant to consider offers to purchase the subject property which had been made to the owner and rejected byhim.

The offers had been in writing but were not kept and oral evidence of them was given by the owner and the two offerors); Poirier-White (above note 28) (evidence of oral offer and acceptance highly probative of market value). [5] Esposito v. Edmonton (City) (1981) 23 L.C.R. 81, 91 (Alta. L.C.B.). [6] Canyon Meadows Golf & Country Club v. Calgary (City) (1976) 11 L.C.R. 23, 32 (Alta. L.C.B.); Cormier v. New Brunswick(Minister of Transportation) (1979) 17 L.C.R. 378, 382 (N.B. P.C.B.). [7] Text cited in Reiss v. Dartmouth (City) (1978) 15 L.C.R. 257, 266 (N.S. E.C.B.); see also R. v.

Crosby (1919) (CA EXC), 46 D.L.R. 528, 18 Ex. C.R. 372, refd. to in Harnack v. Hanover (1925) 27 O.W.N. 383; Halifax Relief Commn. v. Halifax(City) (1962) (NS SC), 36 D.L.R. (2d) 126, affd. (NS CA), 50 D.L.R. (2d) 69, 51 M.P.R. 9(N.S.C.A.); Zamonsky v. Sudbury (City) (1971) 1 L.C.R. 396, 297 (Ont. L.C.B.); 251236 Alberta Ltd. v. Calgary (City) (1984) 32 L.C.R.48, 58 (Alta. L.C.B.).