Injurious Affection Claims where No Land is Taken after Antrim: Charting a New Course?

Injurious Affection Claims where No Land is Taken after Antrim: Charting a New Course? In a unanimous decision, the Supreme Court of Canada overturned the Ontario Court of Appeal s decision and restored the order of the Ontario Municipal Board in Antrim Truck Centre Ltd. v. Her Majesty the Queen in Right of the Province of Ontario (MTO), 2013 SCC 13. The Supreme Court s decision leads us to consider the following question: is the Supreme Court charting a new course yielding potentially new outcomes in claims for injurious affection where no land is taken, or does its decision return us to the type of analysis seen in earlier cases? Prior to Antrim, in older decisions, the Ontario Municipal Board and the courts placed a particular emphasis on the permanence of the impact in injurious affection claims where no land was taken, as illustrated by the Lawson and Linden decisions discussed below. More recently, as shown in the Heyes and perhaps the Curactive Organic cases, the analysis seemed to emphasize the public utility in the project causing the harm, and the reasonableness of the authority s conduct. The Court of Appeal in Antrim followed this same path. This paper suggests that the Supreme Court s decision in Antrim represents a moderate shift in the law and will result in a focus on both the severity of the impact and the permanence or duration of the interference in an assessment of reasonableness. Based on the Supreme Court s analysis and direction, it is our view that a greater emphasis will be placed on the severity of the harm, a tacit requirement for establishing permanent harm has likely been supplanted by a lesser threshold of establishing interference for a significant duration, and the social utility of the authority s project will not be accorded overriding weight. The Supreme Court s Decision in Antrim Decisions Below The Ontario Municipal Board (the OMB ) determined that construction of a new highway by the Province of Ontario, so as to leave the claimant s truck stop stranded on a remnant road, significantly and permanently interfered with access to the landowner s property. The landowner claimed that the interference was unreasonable. The OMB awarded $393,000 as compensation for business loss and decline in market value of the land resulting from the highway construction. The Ontario Court of Appeal set aside the award made by the OMB. The Court of Appeal concluded that the interference with the lands had not been unreasonable given the important public purposes served by the highway construction. The Supreme Court characterized the Court of Appeal s decision as follows: it was reasonable for the appellant to suffer permanent interference with the use of its land that caused significant diminution of its market value in order to serve the greater public good. 1 The Supreme Court overturned the decision of the Court of Appeal and reinstated the order of the OMB. The Court found that the interference with the lands caused by the construction of the new highway inflicted significant and permanent loss on the landowner, and it was not unreasonable for the Board to conclude that an individual should not be expected to bear such a loss for the greater public good without compensation. In effect, the Supreme Court held that the logical conclusion of the Court of Appeal s decision was that, in balancing the social utility of a public works project against harm to an individual, the individual would always lose, if the two were weighed equally.

The Supreme Court s Reasoning The Supreme Court, in citing E.C.E. Todd s text, The Law of Expropriation and Compensation in Canada (2nd ed. 1992), explained injurious affection as follows: Injurious affection occurs when the defendant s activities interfere with the claimant s use or enjoyment of land. Such interference may occur where a portion of an owner s land is expropriated with negative effects on the value of the remaining property. Alternatively, it may arise where, although no land is expropriated, the lawful activities of a statutory authority on one piece of land interfere with the use or enjoyment of another property. In the Ontario legislation, the three statutory requirements for establishing an injurious affection claim where no land is taken are often described as: statutory authority, actionability, and construction and not the use, under sections 1(1)(b) and 21 of the Expropriations Act, R.S.O. 1990, c. E.26 (the Act ). The Court explained that these requirements mean: 1. the damage must result from action taken under statutory authority; 2. the action would give rise to liability but for that statutory authority; and 3. the damage must result from the construction and not the use of the works. Where these conditions are met, the Act requires that the claimant be compensated for the amount by which the affected land s market value was reduced because of the interference, and for personal and business damages. 2 The only requirement at issue in Antrim was the second test, whether the claimant could have sued successfully under the tort of private nuisance had the construction not been under statutory authority. The Court summarized the long standing tests for private nuisance as an interference with the use or enjoyment of land that is both substantial and unreasonable. The test of substantial interference is a threshold question of seriousness, and must be satisfied before considering the more difficult analysis of unreasonableness. Substantial interference is interference that is non-trivial. The Court stated: Retaining a substantial interference threshold underlines the important point that not every interference, no matter how minor or transitory, is an actionable nuisance; some interferences must be accepted as part of the normal give and take of life. it provides a means of screening out weak claims before having to confront the more complex analysis of reasonableness. 3 In assessing reasonableness, the Court articulated factors to be considered. The Court noted that the factors do not form an exhaustive checklist, and may not be relevant in all cases. Some factors that may be relevant in the reasonableness analysis are: the severity of the interference, the character of the neighbourhood, the sensitivity of the claimant, and the frequency and duration of the interference. The focus of the analysis is on whether the interference suffered by the claimant is unreasonable, not whether the nature of the authority s conduct is unreasonable. With respect to the severity of interference, the Court noted that it is clear that everyone must put up with a certain amount of temporary disruption caused by essential construction noting that a certain amount of noise and a certain amount of dust cannot be avoided, but reasonable steps can be taken to ensure that no undue inconvenience is caused to neighbours, whether from noise, dust, or other reasons. 4 On duration, the Court noted that in the Antrim case the harm was permanent. However, the Court stated the following in respect of duration of interference: Some sorts of temporary inconvenience are more obviously part of the normal give and take than are more prolonged interferences. While temporary interferences may certainly

support a claim in nuisance in some circumstances, interferences that persist for a prolonged period of time will be more likely to attract a remedy. 5 This is a particularly important consideration. The Supreme Court indicates that the harm in injurious affection claims where no land is taken is not required to be permanent. The duration of the harm will work with the other factors and will be weighed when considering reasonableness. One of the crucial points of guidance provided by the Supreme Court is how to weigh the social utility of the public authority s works against the harm suffered by the claimant. The Court s direction is summarized thus: the utility of the defendant s conduct is especially significant in claims against public authorities. Even where a public authority is involved, however, the utility of its conduct is always considered in light of the other relevant factors in the reasonableness analysis; it is not, by itself, an answer to the reasonableness inquiry. Moreover, in the reasonableness analysis, the severity of the harm and the public utility of the impugned activity are not equally weighted considerations. If they were, an important public purpose would always override even very significant harm caused by carrying it out. 6 The Court s analysis leads to the following question (which had been articulated in the wellknown Schenck 7 case decades earlier): in all the circumstances, has the claimant been required to shoulder a greater share of the burden of construction than it would be reasonable to expect individuals to bear without compensation? Put another way, in reviewing the utility of authority s project: The reasonableness analysis should favour the public authority where the harm to property interests, considered in light of its severity, the nature of the neighbourhood, its duration, the sensitivity of the plaintiff and other relevant factors, is such that the harm cannot reasonably be viewed as more than the claimant s fair share of the costs associated with providing a public benefit. 8 Cases Prior to Antrim: Shifting Considerations With this guidance from the Supreme Court of Canada in hand, it may be argued that decision making has been re-balanced, that there has been a return to the type of analysis we expected prior to Heyes and Curactive Organic, both more recent cases that involved high-profile infrastructure projects born in the current boom of significant urban transportation investment. While our selection of cases is certainly not exhaustive, we believe that the character of the four decisions discussed below is illustrative. Two particularly well-known and oft-cited decisions in Ontario provide our starting point: the Ontario Land Compensation Board s 9 decision in Larson 10 in the late 1970 s, which awarded compensation for injurious affection where no land was taken, and the 2003 Ontario Municipal Board decision, which also awarded compensation for injurious affection where no land was taken, in Linden 11 (known to practitioners as the doctor s case ). Both decisions were upheld on appeal to the Divisional Court. In Larson, the claimants owned a motel property in the City of Windsor. No land of the claimants was expropriated, although there had been considerable expropriation of lands in the general neighbourhood. An expressway was built on lands abutting the claimants property. As part of improvements in the area, Dougall Road, adjacent to the claimants lands, was widened and repaved. A raised median strip of considerable length was constructed down the centre of Dougall Road, restricting access to the motel. After reviewing the claimants evidence of injurious affection, the Board considered the law of injurious affection, no land taken, in light of the then fairly recent reform of the Act and the recommendations of the Ontario Law Reform Commission. The Board wrote:

The Ontario Law Reform Commission in its report refers to the broad considerations of the interrelationship between the state and the individual. To what extent, if any, should an individual be compensated where there has been some alleged interference with his land by an agency or Government? What rights has the owner to compensation for the effect, presumably detrimental, on his land due to works or other planned development by the public authority executed for the general benefit of the public? These broader considerations were wisely deferred to a future study by some other group or individual. Nevertheless they are of considerable importance to a public authority with potentially serious economic, social and perhaps political consequences. This Board was inferentially invited in argument for the respondent to consider the broad consequences, but the Board is of the opinion that it must confine itself to the evidence before it in this particular instance, and to the limited question as to whether or not these particular claimants have suffered damage and are entitled to compensation under the provisions of the Act. 12 The Board observed that all three of the appraisal witnesses called by both the claimants and the respondent agreed that there had been a decrease in market value due to the construction. The Board accepted this evidence and found that the overall programme of construction in all of its aspects did in fact reduce the market value of the motel property. 13 The Board s analysis focuses very much on the impact severity and duration and the nature of the claimant (a motel) and its need for access. The Board resisted the invitation to alter the outcome based on some broader consideration of the consequences of an award in such circumstances. The Board awarded market value and personal and business damages associated with the construction. 14 The Divisional Court endorsed the Board s analysis and award. In Linden, the Ontario Municipal Board awarded a tenant dentist damages arising from the construction of the Sheppard subway in the City of Toronto. The dentist testified that he never received notice of the construction from the City or the TTC. The Board found that the construction caused noise, dust and constant traffic problems, with access by street and sidewalk impaired. The dentist further testified that he lost patients because of the disturbance. The dentist moved locations in part, the Board found, due to the construction. The Board approached its analysis with the following underlying understanding of the law: At common law, the tort of nuisance requires a claimant to prove the public authority is responsible for an act indirectly causing physical injury to the land of the claimant or substantially interfering with the use or enjoyment of the land, where in all of the circumstances, this injury or interference is unreasonable. 15 The Board held that access to the claimant s property was reduced over a significant period of time, some 4 years, and that disruption took place over a prolonged period of time. During that time, the City undertook heavy construction some 20 feet away from the claimant's clinic. Prior to the commencement of the subway construction, earlier construction involved the relocation of services, including water mains, sanitary sewers, and gas, electrical telephone and communication lines, in 1995 and 1996 and continued to 1999. The Board found that the work, while necessary, was not carried out in a reasonable manner. 16 The Board awarded damages for injurious affection. The Divisional Court upheld the Board s decision. The Divisional Court set out its view of the correct approach to injurious affection, no land taken, at paragraph 5 of its decision: The approach correctly adopted by the Board was to inquire into the reasonableness of the City s conduct as its activities impacted on the Doctor s use and enjoyment of his leasehold interest. The Board was required to balance the competing interests of Dr. Linden in not having his practice disturbed against that of the City which was conducting subway construction for the benefit of the public. 17

The Divisional Court also noted that the determination of the issue of reasonableness is a uniquely fact-driven exercise. Both the Board and the Divisional Court undertook an analysis that is consistent with the Supreme Court s direction in Antrim, with perhaps greater emphasis on the conduct of the City (rather than the utility of the City s works) given the ample evidence of its unreasonable nature. The more recent cases of Heyes 18 in British Columbia and Curactive Organic 19 in Ontario arose in the context of significant public transportation infrastructure projects: the Canada Line, a regional transportation (rapid transit) system connecting downtown Vancouver, the City of Richmond and the Vancouver International Airport, in the Heyes case, and the St. Clair West streetcar line in the City of Toronto in the Curactive Organic case. In both instances, the public works involved lengthy linear undertakings, affecting or adjacent to many private properties. In Heyes, the plaintiff pursued damages arising from the disruption of her business during construction of the Canada Line. The trial judge found that bored tunnel construction was a viable and preferable option that would have minimized disruption to the plaintiff compared to the cut-and-cover method actually used. Cut-and-cover construction resulted in restrictions in vehicular and pedestrian access to the commercial area in which the plaintiff s business was situated. The trial judge allowed the claim for nuisance and rejected the defence of statutory authority asserted by the defendants. The Court of Appeal acknowledged that the trial judge had weighed the social utility of the public work against the impact to the plaintiff, and that the trial judge knew he must strike a tolerable balance. 20 However, the Court of Appeal went on to hold that the trial judge erred in essentially confining his analysis of public utility to the two construction methods and their impact on Hazel & Co. 21, and that: I am satisfied that by confining his analysis to the construction methods and their impact, the trial judge failed to fully consider the comparative public utility of the two proposals. When this is considered, it is apparent his finding that bored tunnel construction presented a viable alternative that would have adequately accommodated the public interest cannot stand. That conclusion essentially ignores the cost differential of over half a billion dollars in public funds between the two proposals, and the many aspects of the SNC-Lavalin/Serco proposal that were superior to that of RAVxpress from the perspective of social utility. 22 The Court of Appeal, however, found that this error in the judge s analysis did not justify appellate interference with the trial judge s finding of nuisance. Instead, the Court of Appeal overruled the lower court on the second primary ground of appeal: the defence of statutory authority. 23 That defence was held to be established on the basis that the nuisance was the inevitable outcome of the only practically feasible method of construction, a conclusion made by the Court of Appeal by again comparing the two proposals and, in part, the massive cost deferential. While the Court of Appeal acknowledged that the social utility of an enterprise does not uniformly trump individual harm in a nuisance analysis, it would seem that the balancing in this case was heavily influenced by the cost of one method versus another, more so than by the characteristics of the interference and other factors more focussed on the plaintiff. The decision suggests a concern about the broader consequences as described in Larson, both in terms of defining public utility and weighing it, and in terms of claims exposure. In Curactive Organic, the Ontario Court of Appeal decided the appeal on a jurisdictional point. This case involved the construction of the St. Clair streetcar line in the City of Toronto and the plaintiffs pursued alleged damages to local businesses by a proceeding commenced as a class action. The defendants argued that the case should be characterized as a claim for injurious affection where no land has been taken, and hence was within the jurisdiction of

the Board of Negotiation and the Ontario Municipal Board as set out in the Expropriations Act. The Court of Appeal agreed with the TTC s submission that: all of the claims made against the TTC come down to the allegation that the construction of the St. Clair Project took too long and unreasonably impacted on the businesses of the potential class members. Using words like negligence and gross negligence to characterize this allegation does not alter its substance. 24 While it obviously cannot be said that the Court of Appeal undertook any analysis of nuisance per se or an injurious affection claim in its decision, it is instructive that the allegations of, essentially, unreasonable conduct of a public authority causing damages to business owners, were sufficient to persuade the Court that this claim was properly characterized as an injurious affection, no land taken, type of case. The Court of Appeal upheld the motion judge s decision to dismiss the action. Conclusions The two recent cases of Heyes and Curactive Organic, and the Court of Appeal decision in Antrim, led practitioners acting for landowners to wonder whether a claimant could realistically succeed in asserting a claim for injurious affection where no land is taken in the context of large, expensive, public infrastructure projects. How could a landowner or business owner possibly succeed where the weight of the public utility or interest in the project could seemingly overwhelm the harm suffered in any particular case? The big picture social, economic and even political consequences, as alluded to in Larson, of enabling compensation for injurious affection where no land is taken and many properties are affected, seemed to weigh against the prospect of a successful claim. The Supreme Court s decision in Antrim expressly recognized this imbalance, and re-set the balancing exercise with very clear direction. Such cases will always be very fact-dependant, and hence outcomes may be unpredictable, but the tests to be met and how they are implemented have been set out without ambiguity. In our view, the Supreme Court has refocused the analysis of reasonableness on factors that were important in Larson and Linden: severity of impact, permanence or duration of impact, and, overall, whether the claimant is being asked to shoulder a greater burden than is the claimant s fair share. There is less emphasis on the reasonableness of the authority s conduct; it is still a relevant factor, but the focus is on the claimant and whether the harm is unreasonable. While claimants still face a significant onus in demonstrating that the interference complained of meets the second test of being unreasonable (assuming the claimant gets past the first test, or screen, of substantial interference), our sense is that claimants have a greater prospect of success than prior to the Supreme Court s decision in Antrim. Accordingly, public authorities would be well advised to evaluate their work programs in this new light. Cases Antrim Truck Centre Ltd. v. Ontario (Transportation), 2013 SCC 13; reversing 2011 ONCA 419, 106 O.R. (3d) 81, 104 L.C.R. 1; reversing Antrim Truck Centre Ltd. v. Ontario Transportation, 2010 ONSC 304, 100 O.R. (3d) 425, 100 L.C.R. 32, affirming Antrim Truck Centre Ltd. v. Ontario (Transportation) (2009), 96 L.C.R. 100, [2009] O.M.B.D. No. 1 (QL), 2009 CarswellOnt 290 (O.M.B.). Curactive Organic Skin Care Ltd. v. Ontario, 2012 ONCA 81, affirming Curactive Organic Skin Care Ltd. v. Ontario, 2011 ONSC 2041, 2011 CarswellOnt 2359, 102 L.C.R. 238 (Ont. S.C.J.).

Linden v. Toronto (City), [2003] O.M.B.D. No. 276 (OMB). Affirmed by 134 ACWS (3d) 729, [2004] O.J. No. 4401 (Div Ct.). Larson et. al v. City of Windsor, 1979 CarswellOnt 1727, 17 L.C.R. 349 (Ont. L.C.B.). Affirmed by Windsor (City) v. Larson, 1980 CarswellOnt 1380, 20 L.C.R. 344 (Div. Ct.). Susan Heyes Inc. (Hazel & Co.) v. South Coast B.C. Transportation Authority, 2011 BCCA 77. Legislation Expropriations Act, R.S.O. 1990, c. E.26. Secondary Sources E.C.E. Todd, The Law of Expropriation and Compensation in Canada (2nd ed. 1992). Linda D. Rainaldi ed., Remedies in Tort, vol. 3, (Toronto: Carswell, 2012, release 7). John A. Coates and Stephen F. Waqué, New Law of Expropriation, (Scarborough Ontario: Carswell, 2012 release). Klar, Lewis N. Tort Law, 5th ed. Toronto: Carswell, 2012. Murphy, John, and Christian Witting. Street on Torts, 13th ed. Oxford: Oxford University Press, 2012. 1 Antrim Truck Centre Ltd. v. Ontario (Transportation) ( Antrim ), 2013 SCC 13 at para 1. 2 Antrim at para 5. 3 Antrim at para 21. 4 Antrim at para 41. 5 Antrim at para 42. 6 Antrim at para 30. 7 Schenck v. Ontario, 131 D.L.R. (3d) 310, 20 C.C.L.T. 128, 11 C.E.L.R. 1, 1981 CarswellOnt 692, 34 O.R. (2d) 595 (Ont. H.C.J.); aff d (1984),15 D.L.R. (4th) 320, 1984 CarswellOnt 1424, 49 O.R. (2d) 556 (Ont. C.A.); aff d [1987] 2 S.C.R. 289, 79 N.R. 317, 23 O.A.C. 82. 8 Antrim at para 40. 9 The Ontario Land Compensation Board was the predecessor to the Ontario Municipal Board. 10 Larson et. al v. City of Windsor, 17 L.C.R. 349, 1979 CarswellOnt 1727 (L.C.B.); aff d sub nom Windsor (City) v. Larson 20 L.C.R. 344 (Ont. Div. Ct.) ( Larson ). 11 Linden v. Toronto (City) (2003), 79 L.C.R. 288, 2003 CarswellOnt 3901 (O.M.B.) ( Linden ); affirmed 2004 CarswellOnt 4408 (Ont. Div. Ct.). 12 Larson, O.M.B. at paras 76-77. 13 Larson, O.M.B. at para 99. 14 Larson, O.M.B at para 116. 15 Linden, O.M.B. at para 26. 16 Linden, O.M.B. at para 30. 17 Linden, Div. Ct. at para 5.

18 Susan Heyes Inc. (Hazel & Co.) v. South Coast B.C. Transportation Authority, 2011 BCCA 77 ( Heyes ) a private nuisance action, but considered informative in Ontario in respect of injurious affection, no land taken. 19 Curactive Organic Skin Care Ltd. v. Ontario, 2012 ONCA 81 ( Curactive Organic ). 20 Heyes at para 61. 21 Heyes at para 64. 22 Heyes at para 69. 23 A defence unavailable under Ontario s codification, in the Act, of injurious affection where no land is taken. 24 Curactive at para 6. AUTHOR J. Pitman Patterson T 416.367.6109 PPatterson@

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