Compensating Claims for Reduced Access a Safari through the impenetrable jungle of nuisance law and injurious affection in Ontario

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1 February 2013 Public Sector Lawyers' Section Compensating Claims for Reduced Access a Safari through the impenetrable jungle of nuisance law and injurious affection in Ontario Graham Rempe and Matthew Longo Antrim Truck Centre Ltd. v. Ontario the Facts In 1978, Jack and Gail Cameron bought a truck stop from Gail s mother on the Trans Canada Highway (Highway 17) in the Hamlet of Antrim near Ottawa, subsequently incorporated Antrim Truck Centre Ltd., and built up the business, operating a gas station, a truck leasing and repair facility, a bakery and a gift store. Over the years, the business prospered and expanded. Highway 17 at this location was a two lane highway with no medians. Left turns crossing oncoming traffic were permitted, sometimes with catastrophic results. It became known as a "killer" highway. The Ministry of Transportation ( MTO ) planned to rebuild the highway as a closed access dual carriageway. It undertook studies and consultation to determine how the final configuration, now known as Highway 417, would be built. As a result of the reconfiguration, the Antrim Truck Centre lost its convenient proximity to highway traffic, the property now being on a secondary road, 1.8 km away from the closed access highway. The evidence was that this proximity was about the norm for truck stops across the province. The highway reconstruction came as no surprise. The Camerons knew about MTO's concerns when they first purchased the operation. They assembled lands in nearby Arnprior, where they eventually moved their business as the 417 was completed. The Arnprior facilities were, in the words of the Ontario Municipal Board ( OMB ), "much better" than those at the Antrim site, with expanded services and business operations. After Highway 417 opened, the Camerons made a claim against the MTO under the Expropriations Act ("Act") based on the relocation costs for the move to Arnprior. The OMB rejected the relocation claim on the basis that, as no land had been taken from the claimants, damages of this type were not available under the Act. 1 In any event, the OMB 1 Antrim Truck Centre Ltd. v. Ottawa (City), [2009] O.M.B.D. No. 1

2 2 characterized the relocation claim as excessive noting that the Camerons had built a superior operation at Arnprior. The OMB did not leave the claimants completely empty handed, though. At the conclusion of the evidence of John Clarke, an appraiser called for MTO, the OMB questioned the witness about the effect that road closure would have on the market value of the Antrim property. The witness qualified his answer noting that he was not aware of the conditions under which the Camerons had sold the Antrim property, but he concluded that loss of favourable traffic conditions would devalue the property. The OMB awarded injurious affection damages for the loss of market value calculated from this discussion. It is this amount that has been the subject of an appeal through the Divisional Court 2, the Court of Appeal 3 and the Supreme Court of Canada (as at writing, the Supreme Court decision is under reserve). The case involves injurious affection where no land is taken. Although such claims are provided for in the Act, they are treated far more restrictively than those where land is taken. Under section 1(1)(b) of the Act, injurious affection arises when no lands are taken if the action is: a) authorized by statute, b) actionable at law (i.e. if no statutory authority defence were available), and c) arises from the construction but not the use of the work. In Antrim, there was no question that the work was authorized by statute. Whether it arose as a result of construction not use was contested, as was the issue of whether the claim was actionable. The 'Actionable' Rule It is this rule, and its invocation of the law of nuisance that is the heart of the Antrim appeal. As Justice Epstein, writing for the Court of Appeal wryly noted: While the courts have recognized that the law of nuisance is, in fact, a nuisance, it is capable of a simple definition: any activity or state of affairs causing a substantial and unreasonable interference with a claimant s land or his use or enjoyment of that land. (para. 79) This case, and the divergent reasons of the OMB and Courts, illustrate the difficulty in applying the law of nuisance in injurious affection cases where no land is taken. In grappling with the Antrim claim, the OMB referred to case law as far back as 1692, noting that although access to favourable traffic flow is non-compensable, interference with access to one s own land may be compensable. The OMB accepted that the MTO project was necessary, noting that the claimant recognized the danger of turning into their own property. Ultimately, though, the OMB based its conclusion on the harm suffered by the claimant, and concluded that the reconfigured road: ONSC Antrim Truck Centre Ltd. v. Ontario (MTO), 2011 ONCA 419, at para. 79

3 3 remains but a shadow of what it was before Highway putting the Claimant on a service road or secondary road as opposed to a main road. (p.3) The OMB concluded that this was a change in access (rather than a diversion of traffic) and therefore a serious impairment in nuisance" (p. 3) warranting compensation. The Divisional Court noted that there had been confusion in applying the law to the present case as the concepts of right of access, injurious affection and nuisance have been used interchangeably. (para. 64) The Court reviewed the case law and concluded that a nuisance may arise where a change in access following construction amounts to a substantial interference with a landowner s right to reasonable use and enjoyment of its property. (para. 87) The Court reviewed the OMB analysis and concluded: Notwithstanding the public interest in determining the appropriate alignment of the 417 and the OMB s earlier confirmation that Highway 17 needed to be changed for safety reasons, the OMB concluded that the inadequate access from the 417 to the Property constituted a serious impairment. The OMB found that this impairment establishes an actionable claim in nuisance The OMB conducted the appropriate weighing of the public and the private interest and its findings are reasonable and supported by the evidence. (paras ) The Court of Appeal disagreed as to the application of nuisance principles to the facts of the case. Justice Epstein noted that both substantial and unreasonable interference must be demonstrated to warrant compensation for nuisance, and that with respect to the unreasonableness requirement, a balancing exercise must be carried out. The balancing exercise, adopted by the Supreme Court of Canada in Tock v. St. John's Metropolitan Area Board, 4 includes consideration not only of the severity of the harm (the focus of the OMB) but also factors including the utility of the public work, the character of the neighbourhood and the sensitivity of the claimant. The Court of Appeal concluded that the OMB (and Divisional Court) had failed to properly conduct the balancing exercise by not considering the sensitivity of the claimant or the character of the neighbourhood, and, more significantly, by failing to recognize the "elevated importance of the utility of the defendant s conduct where the interference is the product of 'an essential public service'. (para. 129) The Court concluded that:...the board was required to consider whether the interference suffered by Antrim was reasonable when balanced against the public interest in the project causing that interference. That the interference was substantial is only one element of the equation. 4 [1989] S.C.J. No. 122, at para. 17

4 4 When the interference to Antrim s access, while significant but clearly far from complete, is measured against the reasonableness of the MTO s use of its land, in an area through which a highway already ran, for the purpose of protecting the public from danger, the conclusion must be that Antrim has not made out a case in nuisance. (paras ) The claimant argued before the Supreme Court of Canada that balancing, or any consideration of public utility is required only in relation to loss of amenity cases, and that in circumstances of "material" injury (for example, where access to property is said to be reduced), no such analysis is required. It also argued, for the first time, that liability rests on the basis of public as well as private nuisance. The 'Construction Not Use' Rule The MTO had argued that the alleged damage arose as a result of the use of the road network by traffic, rather than its construction. The OMB and lower Courts saw it otherwise. The claimant did not appear to have pleaded that access to the Antrim location was an issue. (OMB, p. 3) Nonetheless, the OMB concluded that the reconfiguration of the road created a physical obstruction to the claimant s access to Hwy. 17, even though the driveways into the property were untouched, and the closest road alterations were 1.5 km away. The Divisional Court and Court of Appeal adopted the OMB s conclusion. The Court of Appeal reiterated that loss of traffic is not compensable at law, however, the Court concluded that the claim was based on reduced access to the Antrim property as a result of the physical changes to Highway 17. These would force traffic to take a detour to arrive at the property. Therefore the Court concluded that it was the "completed fact of construction" rather than the use of the completed construction that resulted in the loss. This issue was not before the Supreme Court. However, this issue is of concern for public authorities in that it leaves open a very large class of claims that could be advanced on the basis that a constructed (but unused) public work could, in theory, have an effect over traffic patterns in a very large swath of surrounding area. With the equation of alteration of traffic flow to change in "access", a large number of claims and an increase in compensation payments may result. This may not be of great concern if the third, actionable test is applied as it was by the Court of Appeal. However, it could hail a major shift in the compensation payable for public works if the "actionable" test is relaxed as advocated by the appellant. The case was argued at the Supreme Court of Canada on November 14, The authors represented the City of Toronto as interveners. The intervention was to highlight the dramatic effect a change in the law would have if the OMB's decision in Antrim is transposed onto roadways in dense urban areas.

5 5 Conclusion Is the law of nuisance as it applies to injurious affection an "impenetrable jungle" and "incapable of exact definition", or is it a relatively straightforward balancing exercise as envisioned by the Court of Appeal? Public authorities and claimants will all benefit from the attention of the Supreme Court of Canada to this issue, especially if the Court takes the opportunity to address the relationship between the three elements of the injurious affection test. Note: The Toronto intervention was made with the support of the Toronto Transit Commission, the Regional Municipality of York, the Association of Municipalities of Ontario and the Federation of Canadian Municipalities. Graham Rempe graduated from Osgoode Hall Law School in 1984, and was admitted to the Ontario Bar in He was certified by the Law Society of Upper Canada as a specialist in environmental law in Graham practices exclusively in the areas of environmental and municipal law. He has been with Metro Toronto, then the amalgamated City of Toronto, since He has appeared as counsel before various courts and administrative tribunals on a broad range of environmental issues. Graham is a director of the Canadian Environmental Law Association. Matthew Longo is a solicitor in the Legal Services Division of the City of Toronto. Following his graduation from Queen's University Faculty of Law he articled with the City of Toronto and was called to the Bar in His practice focuses on land use planning and expropriation matters.