Docket: CACV2196 Ilenna Luzny (Plaintiff) Appellant - v. -, 2013 SKCA 94

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2013 SKCA 94 Date: 2013-09-10 Between: Docket: CACV2196 Ilenna Luzny (Plaintiff) Appellant - and - The Town of Craik (Defendant) Respondent Coram: Jackson, Caldwell and Herauf JJ.A. Counsel: Ilenna Luzny on her own behalf W. Timothy Stodalka and Eric Marcotte for the respondent Appeal: From: 2011 SKQB 414 Heard: May 21, 2013 Disposition: Dismissed Written Reasons: September 10, 2013

By: The Honourable Mr. Justice Caldwell In Concurrence: The Honourable Madam Justice Jackson The Honourable Mr. Justice Herauf Caldwell J.A. [1] The appellant appeals from the decision after a hearing before a judge of the Court of Queen’s Bench (indexed as: 2011 SKQB414) wherein the judge found that land expropriated from her had a value of $20,448, and dismissed her claims for punitive damagesagainst the respondent town.

Although her appeal materials are quite disorganised and are entirely convoluted, the appellant says thejudge erred in three general ways: (1) by failing to find the expropriation of her land was invalid; (2) by improperly determining thevalue of the land expropriated from her; and (3) by failing to award her punitive damages in the circumstances of this case.

I haveconsidered her submissions, but I can find no reversible error on the part of the judge and I would, accordingly, dismiss the appeal. [2] The facts of this matter are set forth in the hearing decision (see 2011 SKQB 414, as supplemented by 2012 SKQB 25) and neednot be repeated here.

It suffices to say that the respondent expropriated certain vacant parcels of land from the appellant in unpleasantcircumstances so as to preserve a drainage ditch and roadway; and, the appellant has taken issue with the expropriation. [3] At the outset of the appeal hearing, the Court noted that s. 7(3) of The Municipal Expropriation Act, R.S.S. 1978, c. M-27,provides that a party may appeal from the judicial determination of compensation payable on an expropriation only if the party has leaveof a judge of this Court to do so.

Here, the appellant has not sought leave, but the respondent town has not objected to this failure. Wedetermined that leave should be granted nunc pro tunc in these circumstances. However, the appellant has since delivered a package ofmaterials to the Registrar of the Court, presumably to augment her submissions in the hearing. We have not received her post-hearingsubmissions and the package she delivered remains on the court file unopened, and its contents unread.

With preliminary mattersaddressed, I would turn now to the matters put in issue by this appeal. [4] The appellant’s first argument on appeal goes to the vires of the expropriation bylaw, which was not raised as an issue at thehearing. The appellant’s statement of claim had originally alleged that the respondent’s expropriation bylaw was invalid or ultra vires;however, after receiving the benefit of legal advice, the appellant amended her statement of claim to withdraw that allegation.

Moreover,and regardless of the pleadings, the appellant did not put the question of the vires of the expropriation bylaw directly in issue at thehearing. Consequently, the respondent had no notice of the necessity to lead evidence on the issue and it could be said to have beenreassured that it need not adduce such evidence by the appellant’s amendments to her statement of claim. In the result, the judge did notaddress the vires issue directly and he made no decision on it.

Given these circumstances, the issue of the vires of the expropriationbylaw has the status of an issue newly raised on appeal. [5] It is a long-standing rule that an appellate court will jealously scrutinize any suggestion that it entertain an entirely new issue onappeal (see: The “Tasmania” (Owners) v. The “City of Corinth” (Owners) (1890), 15 App. Cas. 223 [H.L.]; Lamb v. Kincaid (1907), (SCC), 38 S.C.R. 516; Ibottson v. Kushner, (SCC), [1978] 2 S.C.R. 858; R. v. Perka, (SCC), [1984] 2 S.C.R. 232; Howell v. Stagg, (SK CA), [1937] 2 W.W.R. 331 (Sask.

C.A.), and, particularly withrespect to issues which have been abandoned at the time of trial, Gray v. Cotic (SCC), [1983] 2 S.C.R. 2). This ruleexists because it is ordinarily unfair to surprise an opposing party with a new argument on appeal in circumstances where the opposingparty might have adduced additional evidence at trial if it had been aware of the issue. [6] In this case the matter is somewhat clouded in that the appellant did put the propriety of the expropriation at issue in the hearing,but only in the limited context of her claim for punitive damages.

The judge addressed the appellant’s claim concordant with the mannerin which she had framed it in these terms: [75] As pointed out by defence counsel, it appears that the allegations that the expropriation bylaw was ultra vires were withdrawnwhen the amendment was made. The issue before the court is compensation. In any event, from what I have heard in the evidence andseen in the exhibits, the defendant has complied with ss. 3 and 4. I have already commented on s. 6. In regards to s. 14, I am not of theview that

section would be applicable. In any event, even if those concerns were correct (which I do not accept), it would not lead topunitive damages. Again as I have emphasized above, the Town Council relied on the professional assistance given to them and I seenothing that would lead me to the belief that they acted in the type of fashion that the Honda, supra, case describes as warrantingpunitive damages.

So, while the appellant tendered some evidence which could pertain to the question of the vires of the expropriation bylaw, the judgeaddressed her concerns in the context in which she had confined them and found the evidence insufficient to support her claim.Moreover, it remains that the respondent was not put on notice to address the question of the vires of its expropriation bylaw at thehearing and it lead no evidence with the intention of addressing that question at the hearing. [7] As such, I would dismiss the appellant’s first ground.

Nevertheless, in as much as the appellant’s arguments before us speak tothe vires of the expropriation bylaw, I would still take her arguments into consideration in the context of her third ground of appeal,being whether the judge erred in his determination that punitive damages were not warranted in the circumstances.

[8] As to the second ground of appeal, s. 7 of The Municipal Expropriation Act calls upon a judge, following a hearing as occurredhere, to determine the amount of compensation payable to an owner for land which has been expropriated, where the amount has notbeen agreed upon by the parties.

Section 9 of The Municipal Expropriation Act sets out the basis for the award: 9 In estimating the amount to which the claimant is entitled, the judge or the arbitrators shall consider and find: (

a) the value of the land and all improvements thereon as of the date of the deposit of the plan under

section 4; and (

b) the damage, if any, to the remaining land of the claimant; and from the amount so found the judge or the arbitrators shall deduct any increased value to the remaining land of the claimant byvirtue of work done or to be done on the land taken. As is obvious, s. 9 calls for a three-stage inquiry, dealing first with the value of the land in question, then with damage to remaining land,and finally with any resulting increase in the value of remaining land.

The evidence in this matter did not call for a finding under the thirdstage of the inquiry. [9] The judge made his determination under the first stage of the inquiry, i.e., the value of the land expropriated from the appellant,on the basis of an expert’s report and testimony as to the market value of the land, which had been tendered into evidence by therespondent.

The appellant, who was represented by counsel at the hearing, failed to provide the court with any information as to themarket value of the lands expropriated from her.[1] In other words, she called no evidence to contradict the respondent expert’sassessment of the value of the expropriated land. Nevertheless, the appellant contends that the judge erred in his determination of value. [10] To assess the merits of the appellant’s second ground of appeal, it is helpful to briefly set out the basis for the determination of thevalue of expropriated land.

Saskatchewan continues to use the “value to the owner” basis, as opposed to the statutory criteria adopted byother provinces, for awarding compensation in expropriation cases. This means the determination of compensation is left largely to thejudgment of a judge, or arbitrator, as the case may be. In this respect, it is settled law in Saskatchewan that the principles which guidethat decision under s. 9 of The Municipal Expropriation Act are the same principles as apply to any other expropriation (see: Serviss v.Flett’s Springs (Rural Municipality No. 429) (1960), (SK CA), 26 D.L.R. (2d) 633 (Sask. C.A.)).

In other words, thejudge or arbitrator is to determine the value of the land to the owner as the land existed at the date of the expropriation and the valuemust include all the advantages the land possesses, both present and future. The following passage from Diggon-Hibben Ltd. v.

The King, (SCC), [1949] S.C.R. 712, at p. 715, is often quoted in explanation of the primary principle at play: “The owner at themoment of expropriation is to be deemed as without title, but all else remaining the same, and the question is what would he, as a prudentman, at that moment, pay for the property rather than be ejected from it.” [11] It is common sense that market value is the main component of expropriation compensation (see: Shamon v. Biggar (RuralMunicipality No. 347), 2003 SKQB 155, [2004] 7 W.W.R. 342).

Market value is usually determined, at least in part, by looking to thehighest and best use of the land which has been expropriated from an owner, as was done by the respondent’s expert assessor in this case.However, what the “value to owner” principle suggests is that an owner may adduce evidence in addition to evidence of market valuewith a view to establishing that expropriated land had an enhanced value to the owner.

For example, a “special value” may attach to landwhere the owner was in fact putting the expropriated land to some use to which it was especially suited and which is of economic valueto the owner, but which did not enhance the market value of the land in the eyes of a third party (see: Eric C.E.

Todd, The Law of Expropriation and Compensation in Canada, 2nd ed. (Toronto: Carswell Thomson Professional Publishing, 1992) at pp. 113-117).Similarly, provided there is sufficient evidentiary basis for it, a judge may recognise an owner as having experienced damage for whichcompensation may flow, under the head of “special adaptability” or “potential value”, by reason of a foregone potential future use of landwhich has been expropriated (see: Todd, at pp. 122-125); nevertheless, the court accepting such a proposition would take care tocalculate only the present value of the unrealised possibility (see: Haskey v.

Wadena (Town) (1982), (SKDC), 18Sask. R. 215). [12] Here, the appellant did tender some evidence to the effect that the land expropriated from her had a special value or potential valueto her.

She testified as to some enterprises she had thought of undertaking with respect to the land (e.g., police compound, aggregate (i.e.,sand, pea rock, gravel, etc.) stockpile and sales, recreation vehicle and boat rental, semi-truck rental, vehicle storage, a small restaurant,vehicle repair shop, etc.), but she provided no evidence that she had taken steps to realise any of her plans, or even to ascertain the stepsthat might be needed to further any of those plans; as such, the prospective enterprises were, on her own evidence, entirely speculativeand the judge was right to disregard them in his determination of value.

I will address this further with respect to the issue arising underthe second stage of the inquiry. [13] Nonetheless, the judge did not merely accept the respondent’s expert assessment. He undertook to critically examine theassessment of market value, with the benefit of appellant counsel’s cross-examination.

In the end, the judge concluded there was noreason to interfere with the expert’s opinion, stating that the cross-examination had not discredited the expert’s evidence in any fashion.The judge therefore, and properly so in my opinion, accepted the expert’s assessment of the value of the land which had beenexpropriated from the appellant.

In these circumstances, there is simply no merit to the suggestion that the judge somehow erred in hisdetermination of the value of the land which has been expropriated from the appellant. [14] As to the second stage of the inquiry, i.e., damage to lands remaining in the appellant’s possession, the judge concluded the landsshe still held were “not in any way affected adversely by the expropriation.” As there was simply no evidence to the contrary before him,this finding of fact is unassailable. [15] However, under the second stage of the inquiry, the judge also considered the appellant’s claim to reimbursement for the cost ofcertain fencing materials (the whereabouts of which were unknown), which the appellant said she had acquired to fence some land,which had included the land expropriated from her, but which she admitted she had not since used to improve the lands expropriatedfrom her.

In this respect, the judge concluded there was simply no basis for compensating the appellant for materials she had never used(and, presumably, still owned). I find no error in his brief analysis on this point.

[16] The appellant also sought compensation for the cost of surveying some land, which had included the land expropriated from her,under the second stage of the inquiry. The judge briefly considered her claim, but found he had no power to grant the type ofcompensation requested as it was not “damage” as contemplated by s. 9(

b) of The Municipal Expropriation Act. While I find no error inthe judge’s determination where he located it under s. 9(b), there may be some merit to an assertion that the issue is more properlylocated under the first stage of the inquiry, i.e., s. 9(a). I say this because, in my opinion, there is some strength in principle to asuggestion that an owner ought to be able to recover expenses reasonably incurred with respect to land but “thrown away” due to anexpropriation which was unforeseen by the owner at the time the expenses were incurred. Unfortunately, the appellant did not developthis bare assertion before us and, regardless, the consideration of it under s. 9(

a) would seem to be subsumed in findings made by thejudge in respect of the first stage of the inquiry, where he concluded the appellant had not provided sufficient evidentiary support for hervarious business plans: [38] The plaintiff took the witness stand but did not provide any evidence as to what the compensation should be. She related that shepaid $33,0000.00 [sic] for approximately six acres. She outlined what she had hoped that [her husband] and herself would have donewith the land.

She stated that their plan was to operate various commercial enterprises such as a repair shop for vehicles, car wash,possibly a depository of gravel that she would bring from her farm and then sell from that location, and a secured compound for wreckedvehicles.

She provided no business plan or any information as to what these enterprises might produce in terms of income for herself.She did not provide any information as to the appraised values of the subject lands. [17] Given the judge’s findings as to the evidentiary weaknesses in the appellant’s assertions with respect to her business plans, I havedifficulty concluding that the expense of surveying the lands here was reasonably incurred in the furtherance of those plans.

Indeed, theappellant’s evidence does not support a conclusion that she incurred the expense of surveying the lands in question in the reasonablefurtherance of a business objective tied to the land. Here I refer to the fact the appellant twice testified at the hearing (in directexamination as well as in re-direct) that the fact the respondent had approached her in March 2006 about obtaining an easement over thelands had caused her to abandon her business plans with respect to the land.

This evidence of hers is consistent with her examination fordiscovery testimony where she averred that the drainage ditch, which the respondent sought to protect by easement and thenexpropriation, “cut the property in half” and that she and her husband had to resolve issues with the respondent with respect to the ditch“before we could proceed with our plans…”. This evidence of the early abandonment or suspension of her business plans with respect tothe land clearly and directly contradicts her evidence to the effect that she had had the lands surveyed, over a year later in May 2007, tofurther those plans.

Moreover, while I have the full benefit of the hindsight afforded an appellate court, I am tempted to conclude that thecircumstances were such that by May 2007 the expropriation of the land was not unforeseeable.

Regardless, I need only conclude that theevidence simply did not support the appellant’s claim for reimbursement of the cost of the survey. [18] In sum, in the circumstances before the Court, given the weak evidentiary base for the appellant’s claim, I am unable to concludethat the judge committed a reversible error when he rejected the appellant’s claim for reimbursement of the cost of the survey, whetherthat occurred under s. 9(

a) or s. 9(b). [19] The final ground of appeal relates to the appellant’s claim for punitive damages. Many of the appellant’s numerous allegations inthis respect, but not all, are set forth in the judge’s reasons (see paras. 61 to 75). The judge considered these allegations, but found littleor, in some cases, no evidence had been led by the appellant with respect to the allegations. Moreover, he found the circumstances whichhad been proven did not warrant an award of punitive damages. In sum, he found her claim to have no basis, saying: [76] In short, I dismiss the plaintiff’s claim for punitive damages.

Simply put, the plaintiff has failed to establish on the evidence thatthe conduct of the defendant, via its elected officials, agents or employees, in any way comes close to type of conduct contemplated to benecessary in the Honda, supra, case to allow for the award of such extraordinary damages. [20] Punitive damages have been the subject of extensive and recent consideration by the Supreme Court of Canada. From this we knowthat an award of punitive damages will follow from an advertent wrong which is so malicious and outrageous as to be deserving ofpunishment on its own: Honda Canada v.

Keays, 2008 SCC 39, [2008] 2 S.C.R. 362, at para. 62. Moreover, such an award will onlyfollow after the most careful consideration of the circumstances and the most cautious exercise of discretion by the court: Vorvis v.Insurance Corporation of British Columbia, (SCC), [1989] 1 S.C.R. 1085, at pp. 1104-1105. The courts will only awardpunitive damages in exceptional cases and with restraint: Whiten v.

Pilot Insurance Co., 2002 SCC 18, [2002] 1 S.C.R. 595, at para. 69.Also, conduct which merits an award of punitive damages must be such that it may be characterised as “harsh, vindictive, reprehensibleand malicious” or “extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment”:Vorvis v. Insurance Corporation of British Columbia, at p. 1108. All of this is summarized in Honda Canada v. Keays, at para. 68.Given the foregoing, the judge committed no error in preferring the reasoning in Honda Canada v. Keays to that in Witherow v.

R.M. ofMoose Range No. 486 (1985), (SK KB), 41 Sask. R. 194 (Q.B.). [21] As to the matter at hand, frankly, the facts of this case demonstrate no conduct on the part of the respondent which could satisfythe high standard required for an award of punitive damages; indeed, there is a paucity of actual evidence upon which to make findings offact in that respect. While the narrative of the appellant on appeal evokes a genuine concern as to the expediency of the expropriation inthis case, her narrative cannot be confirmed by reference to the evidence adduced before the judge.

What I speak of is the appellant’scontention (and a seeming acknowledgement by the respondent) that the expropriation deprived her of more land than was necessary.This general contention is borne out to some degree by correspondence from the respondent and by the assessment report. Unfortunately,the evidence does not permit this Court to take this further and determine how much land the respondent actually needed for thepurposes identified in its expropriation bylaw. Perhaps this is why the judge seems to have accepted that the whole of the landexpropriated was required.

Regardless, what matters here on appeal is that there is simply no basis whatsoever on the evidence, or thefacts as found by the judge, to support an award of punitive damages against the respondent. I am compelled to conclude that the judge’sdecision not to award punitive damages was correct because he could have reached no other conclusion on the facts and the law. [22] In sum, I have found no reversible error in the decision of the judge in this matter.

I would, therefore, dismiss the appeal with coststo the respondent which I would fix at $2,000 and, under Rule 56 of The Court of Appeal Rules, I would order that such costs be set offagainst the compensation payable by the respondent pursuant to the judge’s order.

DATED at the City of Regina, in the Province of Saskatchewan, this 10 th day of September, A.D. 2013. “Caldwell J.A.” _____________________ Caldwell J.A. I concur. “Jackson J.A.” Jackson J.A. I concur. “Herauf J.A.” Herauf J.A.