Tabco Timber Limited v. The Queen, [1971] SCR 361

Supreme Court of Canada

Tabco Timber Limited v. The Queen, [1971] S.C.R. 361

Date: 1970-10-06

Tabco Timber Limited, I.M. Sherwin Limited and Kennedy Holdings Ltd. (Defendants) Appellants;

and

Her Majesty The Queen (Plaintiff) Respondent.

1970: June 24, 25; 1970: October 6.

Present: Martland, Ritchie, Spence, Pigeon and Laskin JJ.

ON APPEAL FROM THE EXCHEQUER COURT OF CANADA

Expropriation—Compensation—Certain lands in Queen Charlotte Islands expropriated—Sale of other properties in same area after expropriation date and subsequent agreement of sale made by purchaser of such properties—Evidence of subsequent sales entitled to be considered in determination of value of subject land.

As a result of proceedings commenced by the Crown asking for a declaration to determine whether the amount of $30,000 offered by the Crown on the expropriation of certain lands, owned by the defendants, was sufficient and just compensation, or, if not, a declaration as to what compensation would be sufficient and just, judgment was given in the Exchequer Court of Canada fixing the value of the lands at $30,000. The parcel in question, located at the north end of Graham Island, the most northerly of the Queen Charlotte Islands, was expropriated on July 26, 1967. The trial judge adopted the rules set out in Duthoit v. Province of Manitoba, infra, for the determination of the value of the land. On appeal to this Court, the main issue was the refusal by the trial judge to give consideration, in the determination of value, to the sale by two of the defendants and others, on February 27, 1968, of other properties in the same area for $87,500 and the subsequent agreement for sale made by the purchaser of these properties, on March 26, 1969, for $215,000 (U.S.).

Held: The appeal should be allowed.

The rejected evidence was entitled to be considered in determining the value of the subject land for its best use, i.e., to a buyer seeking privacy away from a city. This evidence was of some weight in seeking to determine the potential of the expropriated

[Page 362]

lands at the time of expropriation. Its exclusion resulted in a valuation which was too low. Taking this evidence into account in conjunction with the views expressed by the trial judge on all the aspects of the case, other than this evidence, the conclusion was reached that the value of the expropriated land, as at the date of expropriation, was $40,000.

Duthoit v. Province of Manitoba (1965), 54 D.L.R. (2d) 259; varied, [1967] S.C.R. 128, referred to; Roberts and Bagwell v. The Queen, [1957] S.C.R. 28, applied.

APPEAL by the owners of certain expropriated lands from a judgment of the Exchequer Court of Canada determining the amount of compensation payable for the said lands. Appeal allowed.

R.C. Bray and R.G. Ward, for the defendants, appellants.

N.D. Mullins, Q.C., for the plaintiff, respondent.

The judgment of the Court was delivered by

MARTLAND J.—This is an appeal by the defendants from a judgment of the Exchequer Court of Canada as a result of proceedings commenced by the Crown asking for a declaration to determine whether the amount of $30,000 offered by the Crown on the expropriation of certain lands, owned by the defendants, was sufficient and just compensation, or, if not, a declaration as to what compensation would be sufficient and just. The learned trial judge fixed the value of the lands at $30,000. No interest was allowed under s. 32 of the Expropriation Act, R.S.C., 1952, c. 106. Costs were awarded to the defendants, Tabco Timber Limited and Kennedy Holdings Ltd., but were refused to the defendant, I.M. Sherwin Limited, on the ground that it was not represented by a member of the Bar.

The facts are outlined in the reasons of the learned trial judge as follows:

This proceeding is to determine the value of a parcel of land being part of Lot 6 consisting of

[Page 363]

822.66 acres, and part of Lot 10 consisting of 148.9 acres, making a total of 971.75 acres, more or less, at the north end of Graham Island, one of the Queen Charlotte Islands, expropriated July 26, 1967, by the Crown under the Expropriation Act, R.S.C. 1952, c. 106, and which the parties allege to be of various values as follows: The Crown $30,000 and the defendant owners, Tabco Timber Ltd. and Kennedy Holdings. Ltd. $100,000 and I.M. Sherwin Ltd. $200,000.

The parcel in question is north of 54 degrees north latitude on the northern end of Graham Island, the most northerly of the Queen Charlotte Islands, looks north towards a sandy beach, and beyond the beach is Dixon Entrance.

Lot 10 extends over one mile in length from west to east approximately one-quarter of a mile in depth from north to south. Lot 6 adjoins Lot 10 to the east and consists of 144 chains from west to east and in depth on the easterly boundary 62 chains; on the southwesterly corner is excepted Lot A of about 229.34 acres. The soil of the parcel is sandy and the southerly two-thirds consists of swamp. In the district there are winds from 110 to 130 miles per hour and it may be pointed out that the Beaufort scale denotes as hurricane winds of force 12, which begins at 65 nautical miles per hour. The rainfall of the area is 50 to 60 inches per year. By reason of the high winds the beach is not stable and dunes shift with the high winds. The waters to the north are too cold for swimming. No annual revenue can be derived from the parcel. Agriculture and the marketing of peat in that area have failed. The title to the parcel does not include minerals and in any event there is no evidence of minerals in that area.

The history of the parcel is as follows:

In 1960 the two defendants, Tabco Timber Ltd. and I.M. Sherwin Ltd. bought parcels including Lots 6, 7, 8, 10 and 11 and others for $52,000, a half interest to each company; those parcels had not been logged and contained standing timber. In December of 1964 the Sherwin Company conveyed a quarter interest to Kennedy Holdings Ltd. and the sworn value of the conveyance was $1,500, which value was arrived at by taking double the assessment value.

In spring of 1964 logging of the parcel (Lots 6 and 10) was completed and according to Taylor of

[Page 364]

the Tabco Timber Co. the logging was a successful operation and resulted in marketing of all merchantable timber. That was sold on export.

* * *

After the logging was finished in the spring of 1964, the lands were listed by the owners with I.M. Sherwin Ltd. for sale at the commission of 20 per cent and Taylor of the Tabco Timber Co., in charge of the logging operations, said that he had showed little interest in the sale of the parcel as he had other more important operations.

As to Lot A, which consisted of the south-westerly 229.34 acres of Lot 6, Sherwin stated that in September of 1966 he offered to give 60 acres thereof to the department and offered the balance of $100 per acre. However, there was one conveyance of all of Lot A for one entire consideration. It therefore appears the 229.34 acres in Lot A were sold to the department for approximately $74 per acre. There is evidence that the department paid such a price in that a large portion had been cleared and used as a meadow, which reduced the clearing cost to $3,000, whereas in Lots 6 and 10 the department had to pay to clear, for clearing $227,968.50 and for filling and. tamping $218,645, making a total of $446,613.50.

On September 15, 1966, the owners offered 2,100 acres (being Lots 6, 7, 8, 10 and 11) to the Crown for $100,000. This was refused.

On March 15, 1967, there was a meeting of the owners at Victoria about the failure to sell Lots 6 and 10 and Taylor and Kennedy and their respective companies wished to give a listing to Hunter of Seattle, but Sherwin refused as he wished a cash payment.

* * *

On July 10, 1967, the owners offered Lots 6 and 10 to the Crown for $61,300. In the meantime the department had H.P. Bell-Irving make an evaluation of the property in which he had arrived at the value of $30,000. Accordingly, the department informed Sherwin that the price of $61,300 offered by him was too high and the department had decided upon expropriation. In Massett, lying to the west of Lot 10, the department acquired lots for 187 houses, and others for administration and recreation buildings; these lots were conveyed by the Province of British Columbia to the Crown in the right of Canada free of any consideration.

[Page 365]

On February 27, 1968, the defendant owners sold Lots 7, 8 and 11, together with Block 79 to 89 inclusive, of Plan 946A for $87,500. These lots were so situated as to gain from every development at Massett. On March 26, 1969, the purchaser of these properties agreed to sell for $215,000 U.S. funds.

On the evidence the agriculture in the district had failed, also peat production had failed. There were no minerals in the title. The value of the Lots 6 and 10 would be ultimately to subdivide into smaller parcels and sell to people looking for rugged beauty who did not want to live near a city.

There was no possibility of selling to the inhabitants of the Queen Charlotte Islands as they were essentially in need of only enough space for one house and had not the money to afford these outlays involved in buying into the parcel in question. Therefore, the possible buyers would consist of wealthy persons who wished to get away from urban life and there were two possible real estate agents who dealt in this class of property, namely Rogers and also Hunter of Seattle, neither of whom had made any offer for the property in question. As a result, there was a limited market and a difficult market, as an immediate sale would be to a speculator who would buy to sell to a real estate agent who could decide to subdivide and market in 50 acre parcels, which would mean approximately 20 parcels with an ultimate sale to a final purchaser who could afford to pay a proportionate share of the cost of developing of the property and to build a house in keeping with the outlay for the land as well as incur the cost of travelling as he wished to the parcel in question, through Sandspit, and by road from Sandspit to Massett and then to the parcel.

There would be considerable expense in making the property suitable for residences. The cost of clearing lots in the District would run $500 to $1,000 per acre. In addition, there would be the cost of draining the swamp lands and, because of the flat lying lands and the high tides up to 26 feet, the draining required pipes with flaps at the end so that the incoming tide would not reverse the outflow. In addition to the foregoing, there would be the expense of subdividing and of marketing.

After outlining these facts, the learned trial judge adopted the rules stated by Guy J.A. in

[Page 366]

Duthoit v. Province of Manitoba[1], at p.  266, for the determination of the value of the land:

It is sufficient to say that, broadly speaking, the following rules must be observed:

1. The value to be placed on the land taken is the value to the owner, not the taker;

2. The value must be on the basis of the highest and best use of the property taken;

3. The value is the value as at the date of expropriation;

4. The appraiser must take into account the potential of the property at the time of the taking.

This statement was approved by Cartwright J. (as he then was), who delivered the reasons of this Court on the appeal in the Duthoit case[2].

The main issue on this appeal is the refusal by the learned trial judge to give consideration, in the determination of value, to the sale made by two of the appellants and others, on February 27, 1968, of Lots 7, 8 and 11, together with Block 79 to 89 inclusive, Plan 946A for $87,500 and the subsequent agreement for sale made by the purchaser of these properties, on March 26, 1969, for $215,000 (U.S.). The first of these sales represents a value of approximately $80 per acre. These sales were considered by the witness, Squarey, as being a proper basis of comparison, in value, with the subject lands.

This evidence was rejected by the learned trial judge on the basis of a statement contained in the judgment of this Court in Roberts and Bagwell v. The Queen[3].

In my view, evidence of a sale after the enactment can, in the absence of special circumstances, be relevant to the value prior to the enactment. The sale must be shown to be as free in all respects from extraneous factors such as prior sales and made within such time as the evidence shows prices not to have changed materially from those before the critical date. In other words, the mere circumstance of the sale being before or after a particular date cannot nullify the relevance of subsequent sales while the general market conditions have remained

[Page 367]

the same. The rule should allow the Court to admit evidence of such sales as it finds, in place, time and circumstances, to be logically probative of the fact to be found.

The learned trial judge, who cited the above passage, said this:

In evaluating the evidence of these experts, later sales cannot be evidence of the value of the parcel except under the special circumstances that bring the future sale within the rule of Roberts and Bagwell v. The Queen. Here, future sales cannot be taken as a comparable value for the parcel in question for the following reasons:

Bell-Irving stated that there was no demand for the land of the parcel in question in 1967, that he was there prior to the expropriation and canvassed the situation in Massett. There is evidence that over 90 per cent of land in the Queen Charlotte Islands is in the Crown and that some of the land has reverted because the owners refused to pay taxes. The opinion of Bell-Irving is confirmed by the fact that the parcel (Lots 6 and 10) was listed in the spring of 1964 and remained with Sherwin until March 1967 at a commission of 20 per cent. Sherwin, for the owners, offered all the land for Lots 6, 7, 8, 10 and 11 in September 1966 to the Crown for $100,000 and, presumably, had that offer been accepted that would have been the end of it. In July 1967 Sherwin offered Lots 6 and 10, the parcel in question for $61,300 to the Crown. He received no offer for the land and received no acceptance for any offer he had made. On the contrary he was informed the offer was too high and that the Crown would expropriate.

All attempts to sell this particular parcel had failed. Further, Rogers of Seattle and Hunter presumably would have been aware of lands available in the Queen Charlotte Islands, at least since March of 1967.

Dealing first of all with the statement from the Roberts case, it should be noted that it was not dealing with an expropriation of a parcel of land, but with a claim for injurious affection arising from the imposition of restrictive building regulations in respect of lands in the vicinity of Malton Airport. The imposition of those restrictions, while diminishing the value of lands subject to them,

[Page 368]

could also, conversely, increase the value of adjacent lands not so subject. It is in that context that the passage must be read. In so far as an expropriation of a parcel of land is concerned, the essence of it is contained in the sentence which says:

The rule should allow the Court to admit evidence of such sales as it finds, in place, time and circumstances, to be logically probative of the fact to be found.

Turning now to the reasons given for the exclusion of the evidence of subsequent sales, reliance is placed upon Bell-Irving’s statement that there was no demand for the land in 1967. He, however, canvassed the situation in Massett, and prospective purchasers were not to be found there. He, himself, had agreed that:

The best market for the property would be a speculator who would look forward to selling to an ultimate purchaser and therefore the best possible sale would be to a buyer who might want privacy away from a city with a large enough parcel to ensure his privacy.

The offers of sale made to the Crown are of no weight in determining the value, because each such offer was clearly made with a view to settlement, and was not to prejudice the appellants’ position, if not accepted.

It is my opinion that the rejected evidence was entitled to be considered in determining the value of the subject land for its best use, i.e., to a buyer seeking privacy away from a city. This evidence was of some weight in seeking to determine the potential of the expropriated lands at the time of expropriation. Its exclusion resulted in a valuation which was too low. Taking this evidence into account in conjunction with the views expressed by the learned trial judge on all the aspects of the case, other than this evidence, I have reached the conclusion that the value of the expropriated land, as at the date of expropriation, was $40,000.

In my opinion the appeal should be allowed and the judgment at trial varied so as to declare

[Page 369]

that the sum of $40,000 is the just compensation for the lands taken and by increasing the amount awarded to each appellant by one-third, together with interest thereon at the rate of 5 per cent per annum from July 26, 1967, to the date of this judgment. The appellants should recover their costs in this Court. The order as to costs in the Court below should be varied so as to award to the appellant, I.M. Sherwin Limited, though not represented at trial by counsel, such costs as may properly be taxable.

Appeal allowed with costs.

Solicitors for the defendants, appellants: MacLeod, Small & Bray, Vancouver.

Solicitor for the plaintiff, respondent: D.S. Maxwell, Ottawa.