Roeland v. Her Majesty the Queen in Right of Date:, 2012 MBCA 37

Citation: Roeland v. Her Majesty the Queen in Right of Date: 20120425 the Province of Manitoba, 2012 MBCA 37 Docket: AI 11-30-07649 IN THE COURT OF APPEAL OF MANITOBA Coram : Chief Justice Richard J. Scott Madam Justice Barbara M. Hamilton Mr. Justice Martin H. Freedman B E T W E E N : LAURENCE ROBERT ROELAND ) W. G. McFetridge ) for the Appellant (Owner) Respondent ) ) J. C. Stewart and ) U. A.

Saeed - and - ) for the Respondent ) ) Appeal heard: HER MAJESTY THE QUEEN IN RIGHT ) March 16, 2012 OF THE PROVINCE OF MANITOBA ) ) Judgment delivered: (Authority) Appellant ) April 25, 2012 SCOTT C.J.M. 1 The appellant (the Province) seeks to set aside a decision of the Land Value Appraisal Commission (the LVAC) under s. 44(1) of The Expropriation Act , C.C.S.M., c. E190 (the Act ). In August 2004, the Province expropriated a total of 31.894 acres from property owned and farmed by the respondent (the owner) near Ile des Chenes, Manitoba, in the Rural Municipality of Ritchot.

The property was expropriated for the purpose of twinning PTH No. 59. The owner occupied a total of 138 acres, held in two adjacent parcels (hereinafter the west and the east parcels), which were farmed together as a single unit. The expropriation cut diagonally across the two parcels, with only .044 acres taken from the west parcel.

For the eastern parcel, the taking left two triangular-shaped pieces of land, 18.58 acres to the east of the taking and 23.73 acres to the west, totalling, in all, 42.31 acres. 2 At the hearing before the LVAC, it was agreed by both parties’ appraisers that the subject property, though currently used for farming purposes, had a significant speculative value over and above its present use due to its close proximity to Ile des Chenes, which, in turn, is not far outside the City of Winnipeg perimeter highway system. 3 The LVAC, in its decision, had this to say about the effect of the expropriation: The taking by the [Province] has had a significant impact on the value of the remaining property.

Because the subject property has been divided in a way that leaves two small triangular parcels, the ability to develop these for either residential or commercial purposes is reduced. Prior to the taking, the subject property was strategically placed between two existing residential developments, and given its reasonably close proximity to The City of Winnipeg, had good potential for development.

Both Appraisers found that the eastern triangle had lost significant value as a result of the taking. …. 4 With respect to disturbance and injurious affection, the LVAC concluded: As is the norm when farm land is taken, we have applied the 20% fixed machinery cost which results in an additional payment of $14,033.

We have determined that an appropriate assessment of injurious affection is achieved when we take the $2,200 per acre market value minus a $1,200 per acre value for agricultural land resulting in an injurious affection of $1,000 per acre times 42.35 acres equaling $42,350. The $1,200 per acre market value was chosen because both Appraisers agreed that this was the market value of agricultural land in the area.

The 42.31 [ sic ] acres is the result of subtracting 31.85 acres from the parent parcel of 74.16 acres [one of the two connecting parcels owned and farmed by the owner that was directly affected by the expropriation] and adding the 0.04 acre taking from the western section. 5 The Province challenges: (

a) the LVAC’s determination of the market value of the land taken; (

b) the award for injurious affection; and (

c) the disturbance allowance (20 per cent fixed machinery cost) award. Standard of Review 6

Section 44 of the Act provides for an appeal to this court. Section 44(2) thereof states: Powers of Court of Appeal 44(2) An appeal under subsection (1) may be made on questions of law or fact or mixed law and fact, and The Court of Appeal may (

a) refer any matter back to the commission for determination; or (

b) make any determination that the commission has the power to make. 7 Unlike most other statutory appeal provisions relating to provincial administrative tribunals, which allow for an appeal to this court only on a question of law, with leave, the Act provides for an appeal “on questions of law or fact or mixed law and fact” without leave. Notwithstanding, it cannot be doubted that deference is due to decisions of the LVAC as a specialized administrative tribunal specifically created to determine expropriation compensation. Nor can it be doubted that the standard of review is reasonableness (see Dunsmuir v.

New Brunswick , 2008 SCC 9 , [2008] 1 S.C.R. 190, Rebel Holdings Ltd. et al. v. Division Scolaire Franco-Manitobaine , 2008 MBCA 65 at para. 144 , 228 Man.R. (2d) 157, and Russell (Town) v. Manitoba , 2011 MBCA 56 at para. 21 , 268 Man.R. (2d) 140). In Dunsmuir , Bastarache and LeBel JJ. explained the reasonableness standard as follows (at para. 47): Reasonableness is a deferential standard animated by the principle that underlies the development of the two previous standards of reasonableness: certain questions that come before administrative tribunals do not lend themselves to one specific, particular result.

Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of appreciation within the range of acceptable and rational solutions. A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process.

But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

The Valuation of the Subject Property 8 In its decision, the LVAC noted that the appraisers took “significantly different approaches to establishing market value.” The LVAC concluded that the “better way to determine market value in this case is on a per acre basis,” which was the approach used by the owner’s appraiser. 9 The LVAC “considered all comparable sales but placed differing weights on the relevance of the properties to the subject property, considering such factors as size and location.” It concluded that one property in particular (comparable No. 7), which was sold in 2003 and then again in 2008, “provided the most compelling data on the potential value of the subject property” and, after adjustments, determined that the market value of the property taken, per acre, was $2,200.

This resulted in a total award for the 31.894 acres taken of $70,167. 10 Before this court, the Province strenuously argued that the LVAC erred when it relied so heavily on comparable No. 7 in coming to its conclusion. 11 The Province argued there was no evidentiary support for the conclusion that the property values remained the same between 2003 and 2008, noting that neither appraiser relied on the 2008 resale.

It asserted that comparable No. 7 should have been disregarded and the evidence of the Province’s appraiser, which was far superior and methodologically sound, should have been accepted. 12 I do not agree. In its discussion of comparable properties, the LVAC noted:

…. Comparable No. 7 is located “kitty corner to the southwest of the subject section”. This property was presented as a 40.08 acre lot which sold in 2003 for $160,000. The [Province] argued during the hearing that this property had not been sold at “arms length” in 2003. The purchaser, it was argued, was also the seller in that he was the president of the company which purchased the property.

While no evidence was provided to the Commission that this was the case in 2003, the Commission paid attention to the fact that this property was resold in 2008 for $108,000 and placed significance to this price as a legitimate indicator of market value. 13 In reality, what this court is being asked to do is to conclude that the Province’s appraiser was the most reasonable and to substitute his opinion of market value for that of the LVAC. In effect, we are being asked to review all of the evidence and come to the conclusion that the Province’s appraiser should have been relied on. This I am not prepared to do.

The LVAC made it clear that it did not rely solely on comparable No. 7 in arriving at its conclusion. The LVAC’s conclusion is well within the boundaries of its expertise; it certainly cannot be said that the decision did not fall “within a range of possible, acceptable outcomes which are defensible in respect of the facts and law” ( Dunsmuir at para. 47 ). Injurious Affection 14 Here the Province makes two arguments. Firstly, it is said the LVAC was wrong in awarding injurious affection for both the easterly and westerly remaining portions of the east parcel, totalling, in all, 42.31 acres.

Rather, it is argued, the injurious affection ought to have been awarded only with respect to the smaller, easterly triangular-shaped parcel remaining after the expropriation and consisting of 18.58 acres, as opined by the Province’s appraiser. 15 Secondly, it is argued that the LVAC committed an error in law in failing to comply with the express directions of s. 25(2) of the Act and s. 16(2) of The Highways Protection Act , C.C.S.M., c.

H50, which collectively provide as follows: Effect of injurious affection under certain Acts 25(2) Nothing herein shall be construed as requiring the payment of compensation for the injurious affection of land, where the injurious affection is a result of the application of a provision of The Highways and Transportation Act or The Highways Protection Act and that provision expressly prohibits or denies the right to compensation, rent or other payment therefor. No compensation on creation of controlled area 16

(2) No compensation shall be paid, or is payable, to the owner of, or any person having an interest in, land within a controlled area solely by reason of the fact that the area has become a controlled area and there are restrictions on the future uses of the land and on the erection and construction of structures thereon. 16 I reject both submissions. There is ample support for the LVAC’s conclusion that injurious affection was caused to both the east and west remaining portions after the taking from the east parcel.

Indeed, without wishing to trench upon the LVAC’s field of expertise, let me simply observe it is hard to see how the LVAC could have come to any other conclusion when one considers the “before and after” reality of the east parcel.

In any event, the LVAC’s decision can hardly be said to be unreasonable. 17 As for the effect of the imposition of a controlled area with respect to the future use of the remaining portions of the east parcel, the LVAC expressly addressed this as follows in its reasons: In considering injurious affection we noted Section 25(2) of The Expropriation Act and Section 16(2) of The Highways Protection Act .

It is the Commission’s view that our decision to grant injurious affection is appropriate because the decision is not based “solely by reason of the fact that the area has become a controlled area and there are restrictions on the future uses of the land” . It is the Commission’s view that the value of the East Half of NW ¼ 33-8-4 EPM has been significantly compromised by the [Province’s] taking and therefore warrants an injurious affection award. [emphasis added] 18 This is a complete answer to the Province’s submission. 19 This aspect of the Province’s appeal is dismissed.

Disturbance Allowance/20 Per Cent Fixed Machinery Cost 20 This issue is more troubling. Relying on s. 28(2) of the Act , which reads as follows: No disturbance considered in certain cases 28(2) Where the market value of the land is determined upon the basis of a use of the land other than the existing use, the due compensation for the land shall not include compensation for any damages attributable to disturbance that would have been sustained by the owner in putting the land to that other use,

the Province argues that the owner cannot have it both ways. If the highest and best use of the expropriated land is non-farming, then a disturbance allowance, however calculated, but based on a lower, i.e., farming, use, cannot be made because to do so would constitute double recovery. 21 A disturbance allowance, the Province says, is intended to compensate for costs that will be incurred when there are partial takings of agricultural land, and the remaining lands will therefore have to absorb fixed machinery costs that would otherwise have been attributable to the land taken.

This court was advised that a policy was adopted by the LVAC approximately 30 years ago for these costs to be calculated on the basis of 20 per cent of the market value of the acres acquired. This makes good sense; however, the argument presented by the Province does not challenge the policy per se , but its applicability in the circumstances of this case. In support of its position, the Province relies on extracts from the well-known authority of Eric C.E. Todd, The Law of Expropriation and Compensation in Canada , 2d ed. (Scarborough: Carswell, 1992) at 301, 311.

Todd notes (at p. 309): When compensation for expropriated property is based on its value for a highest and best use, which is different from its existing use, the owner is not also entitled to compensation for disturbance damage. This principle, known as the rule in Horn v. Sunderland Corporation [ [1941] 1 All E.R. 480 (C.A.) ] was first enunciated and applied by the English Court of Appeal. …. 22 The owner argues that it is neither inconsistent nor double compensation in these particular circumstances for the traditional machinery (disturbance) allowance to be applied.

This is because while the “highest and best use” of the land (market value) relates to its future speculative use for commercial or residential development, at the present time, and for the foreseeable future, the remaining property will be used for farming purposes. Awarding a disturbance allowance in the usual way is therefore not double compensation. Counsel for the owner also suggest that the precise meaning of s. 28(2) of the Act is open to question. In their view, a reasonable argument can be made that the phrase “in putting the land to that other use” at the end of the

section is intended to make it clear that if a disturbance allowance is awarded, it must be anchored on the value of the farmland taken rather than on any higher or better use, such as for speculative development land.

This is precisely what the LVAC did, counsel say. 23 During the course of oral argument, the suggestion was made that since s. 28(2) of the Act has not previously been analyzed by the LVAC on a principled basis (or considered by this court), a preferable course for us to take, given the novelty of the issue, would be to send it back to the LVAC for further consideration if we were inclined to the view that there was a reasonable prospect the Province’s argument might succeed. 24 I agree that the issue should be referred back to the LVAC for determination.

In this way, the LVAC, guided by its experience and expertise, can consider the matter and, if necessary, clarify any factual issues that might arise. Any appeal that might be taken thereafter would then have the benefit of a decision at first instance, enabling this court to exercise its traditional role as an appellate tribunal. 25 In conclusion, the Province’s appeal with respect to the market value of the land taken and the award for injurious affection is dismissed. The issue with respect to the disturbance allowance is returned to the LVAC pursuant to s. 44(2) (

a) of the Act . 26 The owner will have his costs of the appeal since he has been largely successful. ___________________________ C.J.M. I agree: _____________________________ J.A. I agree: _____________________________ J.A.