Navigating a No Land Taken Claim
On November 28, 2023 the Ontario Land Tribunal released its decision in 12908 Highway 7 Inc. v HMK in right of Ontario (Minister of Transportation).
Conner Harris and Sarah Spitz represented the successful Claimant in its action for compensation for injurious affection where no land is taken.
Claims for injurious affection where no land is taken are rare and difficult to prove. This decision appears to be the first successful outcome for a claimant in a “no land taken” case in Ontario since the 2015 decision of the former Ontario Municipal Board in R Jordan Greenhouses Ltd v Grimsby (Town), 2015 CarswellOnt 2187, 114 LCR 249.
Background and Facts of the Case
The Claimant in this case was a holding company owned by Anna Maria and Pedro Nochez. The Claimant purchased 12908 Highway 7 in Halton Hills in May 2017. At the time of purchase, the Property was improved with a 1400 square foot split-level, single family residential dwelling and a 1500 square foot heated garage, with double doors. The Nochez’s intended to live on site and operate their small-scale heavy equipment repair business from the Property’s garage. At the time, the Property had two entrances—one at the north-western edge and another at the south-eastern edge, connected by a long, paved u-shaped driveway. The two entrances would allow sufficient room to bring their customers’ heavy equipment onto the Property, park the equipment, and work on pieces of equipment one at a time in the garage (para 18).
In June 2017, the Claimant was notified by the Ministry of Transportation that a contractor had been engaged to resurface Highway 7 in the vicinity and that these works had identified the need to eliminate the western access to the property. The western access was closed in November 2017 without the Claimant's consent (para 12).
The closure of the West Entrance had severe implications for the Claimant's business operations. With the loss of the western access point, large transport trucks were required to engage in potentially hazardous reversing maneuvers onto Highway 7 to exit the property. This rendered the operation of the heavy equipment repair business impossible, as trucking companies refused to deliver or pick up equipment without the convenience and safety afforded by the u-shaped driveway (para 24).
In 2019, the Claimant started a claim before what was then the Local Planning Appeal Tribunal (now the Ontario Land Tribunal) for compensation pursuant to Section 21 and Section 1(1)(a)(ii) of the Expropriations Act, RSO 1990, c. E-26 for injurious affection where no land is taken. The Claimant also sought compensation pursuant to sections 6 and 14 of the Public Transportation and Highway Improvement Act, RSO 1990, c. P.50.
The Claimant sought reimbursement for, among other things, costs to construct an internal roadway loop on their property to reinstate safe vehicle maneuverability for their business operations and the lost land value arising from the need to construct this internal loop.
The Tribunal’s “No Land Taken” Analysis and Application of the Antrim Test
Section 21 of the Expropriations Act requires that a statutory authority compensate property owners for loss or damage caused by the authority’s construction activities and/or by its works, in the form of injurious affection. The obligation to compensate property owners for damages for injurious affection can arise irrespective of whether land has been expropriated. Where no land is taken, compensation for “injurious affection” is payable for the reduction in the market value of the land of the owner; and for personal and business damages, resulting from the construction and not the use of the works undertaken by the statutory authority (para 73).
The test for injurious affection where no land is taken, as applied by the Tribunal in this case, is was set out by the Supreme Court of Canada in Antrim Truck Centre Ltd v Ontario (Minister of Transportation) [1]:
The work underlying the claim must have been carried out pursuant to statutory authority (the “statutory authority rule”);
The damage claimed must arise from the construction, and not the use, of the works (the “construction and not the use rule”); and
The actions complained of must be ones that would give rise to liability if it were not undertaken pursuant to statutory authority (the “actionability rule”).
On the first element of the test, the Tribunal found that the closure of the West entrance was done pursuant to the Respondent’s statutory authority granted by Section 6 of the Public Transportation and Highway Improvement Act, thus fulfilling the “statutory authority” rule (para 102). It rejected the Ministry’s argument that the removal of the entrance was akin to mere regulation of the entrance that did not attract compensation. Citing the Ontario Court of Appeal’s 1965 decision in Teubner v. Minister of Highways, the Tribunal agreed that the designation of lands as controlled access highways, or the refusal to issue an access permit where one is applied for, generally will not trigger an entitlement to compensation under the Act. But the situation is different when access is denied or interfered with by virtue of works undertaken by the Respondent on its own lands. In such circumstances, a claim for injurious affection where no land is taken can arise. The Tribunal found this case fell into the latter category (para 74, 89).
The Tribunal applied the test set out by the Divisional Court in City of Windsor v Larson and considered whether the works as constructed, if left unused, would nevertheless interfere with the owner’s enjoyment of the property. It concluded that the entrance closure met this threshold and therefore the second prong of the Antrim test (para 103).
Finally, the Tribunal considered the “substantial and unreasonable interference” threshold and found that the removal of access by the Respondent was sufficient to meet the third element of the Antrim test. In arriving at this conclusion, the Tribunal followed the Ontario Court of Appeal’s decision in Norway Pines Cabins Ltd v Minister of Highways for Ontario. In particular, the Tribunal relied on the statements of Laskin, J.A. (as he then was) writing for the Court that interference with access typically gives rise to a claim for compensation:
It is enough to say that where interference with access is shown, it is degree and extent relative to the abutting land go to quantum. I do not rule out the possible application of a de minimis principle in this branch of the law.
Finding that the access removal constituted a substantial and unreasonable interference, the Tribunal accepted the Claimant’s appraiser’s “cost-to-cure” analysis, which assessed the quantum of damages based on the cost of constructing an internal loop on the property to allow for proper turning of large vehicles (para 112, 115-116). The Claimant also sought compensation for the area that would be lost to constructing the internal loop. This was awarded in part by the Tribunal to account for the fact that the Claimant would still retain ownership of the land in question (para 116(d)).
The Respondent’s Arguments
In its analysis, the Tribunal rejected several legal and factual arguments from the Respondent as to why the Claimant should not be entitled to compensation. The Respondent alleged that:
The western access had been constructed illegally without a proper entrance permit and illegal uses are not compensable under the Expropriations Act;
The western access was closed because it was unsafe, which bars any claim in nuisance;
Entering the western access required permission to pass over certain Ministry-owned lands (called “brown lands”), and such permission was not acquired by predecessors in title. The Ministry argued that the “brown lands” constituted an effective One Foot Reserve that would limit access to the property absent a permit;
The commercial use of the property was illegal; and
Section 14(4)(c) of the Expropriations Act was applicable and precluded compensation for any purported illegal use.
The Tribunal rejected each of these arguments. In doing so, it found that:
the western access had been in use for in excess of 30 years, without objection by the Respondent or incident (para 88)
there was evidence that a U-Shaped driveway with two entrances onto the highway had been approved by the Ministry at some point in or around 1985, either explicitly or by implication in its comments (or lack thereof) on a development permit application submitted by a predecessor in title (para 87);
the property had been openly used for the operation of a commercial business for many years without action and had either been authorized or accepted by the Niagara Escarpment Commission, the governing planning authority (paras 93-97);
there was no notice of the “brown lands” or any other One Foot Reserve on title to the Property, and so the lands did not constitute a One Foot Reserve which would be enforceable against the Claimant (paras 82-83); and
section 14(4)(c) of the Expropriations Act had no application to the facts of the case (para 109).
The Tribunal held that there was insufficient legal and/or evidentiary basis to support the Respondent’s arguments regarding the illegality, lack of permission and unsafe nature of the driveway. The Tribunal was particularly critical of the Respondent’s (and the Niagara Escarpment Commission’s) allegations in light of what the Tribunal found were incomplete records of the history of the Subject Property. It held that the Respondent had the onus to establish that the west entrance was illegal and did not discharge that onus, in part as a result of the missing documents and records (para 95).
Key Takeaways
Reliance on Section 14(4)(c) in Injurious Affection Claims
Section14(4) of the Expropriations Act contains a framework governing the determination of market value where land is expropriated. It states:
(4) In determining the market value of land, no account shall be taken of,
(a) the special use to which the expropriating authority will put the land;
(b) 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; or
(c) any increase in the value of the land resulting from the land being put to a use that could be restrained by any court or is contrary to law or is detrimental to the health of the occupants of the land or to the public health. R.S.O. 1990, c. E.26, s. 14 (4).
In its analysis of the Respondent’s illegality arguments, the Tribunal found that section 14(4)(c) engaged only the issue of market value and was therefore not applicable to the exercise of determining whether compensation should be awarded for personal or business damages that constitute injurious affection within the meaning of the Expropriations Act (paras 109-110).
The Tribunal’s approach is supported by principles of statutory interpretation. Legislation is subject to what is known as the “presumption of implied exclusion” (Cadieux v Cloutier, 2018 ONCA 903 at para 114). That presumption is often summarized as “to express one thing is to exclude another”, meaning that when a statutory provision refers to a particular thing, but is silent with respect to other comparable things, the silence reflects an intention to exclude the unmentioned items.
In the context of section 14 of the Expropriations Act, the Claimant argued that while section 14(3) of the Act expressly extends the ambit of that specific subsection to claims for injurious affection in narrow circumstances, subsection 14(4)(c) does not. By virtue of the presumption of implied exclusion, claims for injurious affection are excluded from the scope of section 14(4)(c), as are claims pursuant to the Public Transportation and Highway Improvement Act.
The Tribunal’s approach in this case is consistent with recent case law from the Manitoba Court of Appeal, which awarded compensation to a Claimant for injurious affection arising from the loss of access to its property caused by elimination of a median cut as part of road reconstruction works. In that case, Group III Diversified Inc v Winnipeg (City) , the Court of Appeal overturned the Land Value Appraisal Commission (analogous to the Ontario Land Tribunal)’s decision on injurious affection. The basis for this was, in part, that the Commission relied on section 27(2)(d) of Manitoba’s Expropriations Act, which contains a clause mirroring section 14(4)(c) of Ontario’s Act. The Court found that while the Commission was correct in finding that the lost left turn access was illegal, section 27(2)(d) had no application to the consideration of injurious affection (para 43).
This developing line of case law appears to suggest that while the determination of market value and injurious affection may often go hand-in-hand, each are subject to a unique set of statutory considerations that must be carefully applied by lawyers and appraisers in claims under the Expropriations Act.
2. The “Belt-and-Suspenders” Approach to No Land Taken Claims
This case raised a novel issue of a Claim pursuant to sections 6 and 14 of the Public Transportation and Highway Improvement Act.
Section 14 of the Public Transportation and Highway Improvement Act provides a remedy that requires the Minister to “make due compensation” for damage resulting from the exercise of any of the powers conferred on it by section 6 of the Act. Powers conferred by section 6 include the power to enter on or alter land without permission and alter its natural or artificial features. Section 12 of the Public Transportation and Highway Improvement Act provides that rights to claim compensation under section 14 only apply where “the exercise of such power does not result in an expropriation or injurious affection”.
The Claimant argued at the hearing that the provisions of the Public Transportation and Highway Improvement Act were intended by the legislature to provide comprehensive indemnification for landowners as a "backstop” or “belt-and-suspenders” approach to the statutory scheme set out in the Expropriations Act.
While the Tribunal found it was not necessary to engage these statutory provisions as a result of its findings of injurious affection under the Expropriations Act, it will be interesting moving forward to see whether Claimants seeking compensation for injurious affection under the Expropriations Act also rely on the provisions of the Public Transportation and Highway Improvement Act as a “catch-all” in the event the Antrim test cannot be established.
Notes:
[1] Shane Rayman was counsel to the successful Appellant in Antrim Truck Centre Ltd v Ontario (Minister of Transportation).
[2] Post by Sarah Spitz with notes from Justine Bedasse