Docket: T-1013-16
Citation:
2018 FC 17
Ottawa, Ontario, January 9, 2018
PRESENT: The
Honourable Madam Justice Elliott
|
BETWEEN:
|
|
EMERA BRUNSWICK
PIPELINE
COMPANY LTD.
|
|
Appellant
(Respondent
by cross-appeal)
|
|
and
|
|
SIERRA SUPPLIES
LTD.
|
|
Respondent
(Appellant
by cross-appeal)
|
JUDGMENT AND REASONS
I.
OVERVIEW
A.
Nature of the Issues
[1]
Emera Brunswick Pipeline Company Ltd. [the
Pipeline Company] appeals the decision of a Pipeline Arbitration Committee
[PAC] appointed by the Minister of Natural Resources pursuant to section 91 of
the National Energy Board Act, RSC 1985, c N-7 [NEB Act] to
determine how much should be payable by the Pipeline Company to Sierra Supplies
Ltd. [the Landowner] in compensation for an easement granted to the Pipeline
Company [Easement] by the National Energy Board [NEB] under subsection 104(1)
of the NEB Act. A decision, order or direction of a PAC may be appealed
directly to the Federal Court on a question of law or jurisdiction: NEB Act
s 101. This requirement is separately discussed in these reasons as it
determines whether or not there is jurisdiction to hear this appeal.
[2]
After a five-day hearing, in a decision dated
May 28, 2016 [Decision], the PAC awarded the Landowner compensation of
$466,066.23 plus interest from the date of the Decision, at a rate of 4.75%,
plus costs. The Pipeline Company asks that the Court set aside the Decision and
remit it to the PAC for redetermination in accordance with the directions of this
Court. The Pipeline Company also asks for costs. By cross-appeal, the Landowner
asks that interest be awarded from the date of the taking.
[3]
The Pipeline Company alleges that the PAC
misapprehended the NEB Act and its regulations as well as the evidence
on whether a 30-metre area lying on each side of the Easement [the Safety Zone]
devalued the land and, whether the Easement and Safety Zone affect the value of
the remaining land.
[4]
They also allege that the PAC erred in its
reasons for rejecting the methodology of the Pipeline Company’s appraiser, and the
PAC did not follow the pre-agreed formula to be used to account for the value
of the temporary workroom.
[5]
The Landowner contests all but one of the
grounds of appeal and brings a cross-appeal on three grounds. The Landowner
argues that the PAC erred by calculating the value of the Easement on an
acreage of 2.44 instead of the actual agreed size of 2.5444 acres. The
Landowner asks that the Court vary the award by adding $10,296 on account of
this error.
[6]
The Landowner also argues that the PAC erred by
including the HST paid as part of the advance made to the Landowner when it deducted
the advance from the award. The Landowner asks that the Court vary the award by
adding that HST of $13,230.88 to the award due to this error.
[7]
The Landowner finally requests that the date on
which interest was calculated be set to the date of entry, instead of the date
of the Decision, or otherwise that this issue be redetermined by the PAC.
[8]
The Landowner asks that the Pipeline Company’s
appeal be dismissed with costs, except that no costs be awarded to either party
on the workroom issue given the parties’ agreement on that issue and that costs
be awarded to the Landowner on the cross-appeal.
[9]
The Pipeline Company argues that it should be
awarded costs on the cross-appeal since the part of the cross-appeal dealing
with interest is of the greatest financial magnitude.
[10]
For reasons which follow, the appeal is granted
in part and the cross-appeal is granted in part. The total amount of the
compensation award is varied to $420,246.06. The calculation details are set
out in Appendix “A”. The explanations for the changes are set out in these
reasons. The issue of the interest start date is remitted to the same Pipeline
Arbitration Committee, or, if the members are not all available then to such
differently constituted Arbitration Committee as the Minister may appoint under
the NEB Act, the PAC is to determine the date from which interest should
commence to run. Costs of the appeal are granted to the Landowner. If the
parties cannot agree on the amount of costs within thirty days of the date of
this judgment then the Landowner may have its costs assessed in accordance with
Column III of Tariff B. As the matter of interest has been remitted to the PAC
for re‑determination, costs for the cross-appeal shall be in the cause.
[11]
While the reasons of the PAC do contain errors,
there are sufficient reasonable findings to support its conclusions. The main
point of contention is whether it was reasonable for the PAC to give an award
for injurious affection. In my view, notwithstanding various errors made by the
PAC, that award is rationally supported by the evidence in the record and by
reasonable findings of the PAC.
[12]
The PAC’s determination that interest would run
from the date of the Decision, although within the provisions set out in the NEB
Act, did not set out its reasoning with respect to the date chosen. Due to
this lack of transparency and justification this Court cannot assess whether
such a start date for interest was reasonable given that the entry occurred at
an earlier date.
B.
Issues agreed upon by the Parties
[13]
Prior to the hearing, the parties were able to
agree upon and resolve three of the issues in dispute.
(1)
Size of the Easement
[14]
One such issue is the area of the Easement.
Although the PAC originally identified it as being 2.5444 acres in size, in
awarding damages it subsequently used the amount of 2.44 acres. The parties
agree that the correct size of the Easement is 2.5444 acres. They also agree
that 100% of the Easement has been taken so the award to the Landowner under
that head of damage should be 2.5444 multiplied by the value per acre.
[15]
The parties disagree however as to the value per
acre for the Property. The PAC found it is $99,000, being an amount derived by
taking the midpoint between the two values put forward by each of the
appraisers. The Landowner’s appraiser valued the land at $108,000 per acre. The
Pipeline Company appraiser valued the land at $90,000 per acre. This
disagreement will be discussed later in these reasons.
(2)
The value of the temporary workroom
[16]
The parties also agree that the value of the
temporary workroom that was used by the Pipeline Company during construction of
the Brunswick Pipeline on the Property is $3,239.78 rather than the $62,458.11
awarded by the PAC. The PAC indicated it agreed with the Landowner’s formula
for calculating this value but it inadvertently awarded 100% of the market
value rather than the temporary use value of 2.75% per year for the two years
the workroom was required.
(3)
HST in the advance payment to be added to the
landowner’s compensation
[17]
From the total compensation it found to be
payable to the Landowner, the PAC deducted the full amount of the advance
previously paid by the Pipeline Company to the Landowner. The parties agree
that the HST of $13,230.88 included as part of the advance payment should not
have been deducted from the compensation therefore it will be added back.
[18]
I have reviewed the underlying record and I am
satisfied the evidence supports the agreement between the parties with respect
to these issues. The judgment to be issued will include these corrections.
II.
BACKGROUND FACTS
[19]
The total size of the property of the Landowner on
which the Easement was granted is 10.4031 acres [the Property]. It is part of the
McAllister Industrial Park in St. John, New Brunswick. The Landowner purchased
the Property in 2003 with the intent of subdividing the land and selling it for
industrial development. The Property abuts an arterial road, which is at a
different grade; Cave Court is a smaller cul-de-sac protruding into the other
side of the Property that provides on grade access. The Landowner has the right
to build an access entrance to the Bayside Drive public road but, given grade
differences, a substantial amount of fill would be required to build it and
bedrock in the area of the pipeline would require blasting.
[20]
On June 7, 2007, the NEB granted the Pipeline
Company a Certificate of Public Convenience and Necessity in respect of a
natural gas transmission pipeline running from Canaport Liquified Natural Gas
Terminal at Mispec Point, New Brunswick to a point on the US border near St.
Stephen, New Brunswick [the Brunswick Pipeline].
[21]
The Plans, Profiles and Book of Reference in
respect of the Brunswick Pipeline, including the detailed route that would take
it through the Property, was approved by the NEB on March 14, 2008.
[22]
On March 26, 2008, the Pipeline Company applied
to the NEB for a right of entry that would grant it an easement in perpetuity
on the Property to allow it to construct and operate the Brunswick Pipeline on
the Easement and that prohibited certain activities by the Landowner both on
the Easement and within the thirty-metre Safety Zone. Some activities were
totally prohibited to the Landowner while others could only take place with the
Pipeline Company’s permission or by further order of the NEB.
[23]
The Landowner filed a written objection to the
Pipeline Company’s application, however on June 2, 2008, the NEB granted entry
by order RE-E236-2008 [the Order], which was subsequently registered in the New
Brunswick Land Titles System against the Property.
[24]
On June 23, 2008 the Pipeline Company paid
$115,006.88, including HST, to the Landowner on account of compensation for the
taking of the easement.
[25]
The parties attempted to negotiate compensation
over the next two years, but were unsuccessful. As part of the negotiations,
the Pipeline Company commissioned a report by Altus Group Limited [Altus
Report], dated June 16, 2008, with a valuation date of May 13, 2008. The report
was written by Daniel Doucet, a professional appraiser.
[26]
The Landowner commissioned its own appraisal
report by Craig Hennigar, also a professional appraiser [the Hennigar Report].
The Hennigar Report was dated July 19, 2010 but assessed the value of the
Property as of June 8, 2008.
[27]
As the parties could not agree on the
appropriate compensation, on November 8, 2010, the Landowner filed a Notice of
Arbitration requesting that the compensation be fixed by a PAC. The Pipeline
Company filed its reply on December 21, 2010. The reply included the Altus Report
as well as a Technical Review prepared by Altus that criticised the methodology
of the Hennigar Report.
[28]
After dealing with a number of preliminary
issues, the three-member PAC heard the matter from January 20-24, 2014. Three
witnesses gave evidence on behalf of the Landowner; four witnesses testified
for the Pipeline Company. In addition to the oral testimony, the PAC also
conducted a site visit at the Property.
[29]
After all the evidence was heard, the parties
made written submissions to the PAC. However, those submissions were not
included in the Appeal Book and are therefore not before the Court.
A.
Expert Evidence of the Pipeline Company at the
PAC
(1)
The Witnesses
[30]
The Pipeline Company called four witnesses: (1)
Rob McAdam, the President of the Pipeline Company at the relevant times; (2)
Rochelle Brown, who wrote an engineering expert report in response to the
report prepared for the Landowner by Stephen Perry; (3) Stephanie More, an area
manager at Spectra Energy, which is the company that operates the Brunswick
Pipeline on behalf of the Pipeline Company; (4) Daniel Mark Joseph Doucet, the
author of the Altus Report.
(2)
The Altus Report (Mr. Doucet)
[31]
The Altus Report appraised the value of the
Property before the taking at $90,000 per acre. The report found that the easement
removed 100% of the value of the Easement. It valued the taking at $229,000.
The Altus Report did not find any injurious affection to the rest of the land,
as the Pipeline Company was willing to provide crossings over the pipeline at
its own cost and would grant permission for any construction in the Safety Zone
to such an extent that the highest and best use of the Property was unaffected
by the taking.
[32]
Both appraisers based their professional
opinions on value as of mid-May (Doucet) or early June 2008 (Hennigar) when the
Easement was created. At that time the McAllister Industrial Park, in which the
Property was located, had many lots available. Mr. Doucet in his report noted
that there was only 23% occupancy.
B.
Expert Evidence of the Landowner at the PAC
(1)
The Witnesses
[33]
The Landowner’s evidence was heard first by the
PAC. Three witness were called: (1) Wesley Raymond Debly, the owner of the
Landowner company; (2) Stephen Perry, an engineer who prepared a report on the
engineering challenges and costs that would be required to blast and excavate
on the Property and to connect the Property to Bayside Drive; (3) Craig
Hennigar, the author of the Hennigar Report. Stephen Perry was not qualified by
the PAC as an expert because, at the time he wrote his report, the company he
worked for was owned by a partner in the law firm representing the Landowner.
(2)
The Hennigar Report
[34]
The Hennigar Report valued the Property before
the taking at $108,000 per acre and said that the Easement should be
compensated at 100% of property value. Mr. Hennigar determined that
because of restrictions placed on development in the Safety Zone approval may
or may not be given for development which introduced an element of risk to
prospective purchasers. They would want to discount the price as there was
other land available in the industrial park without any such restrictions.
[35]
The location of the Easement divided the
Property. The Hennigar Report divided the land outside the Easement into three
portions, referred to as Areas “A”, “B” and “C”. Two of the portions, Areas “A”
and “C”, were discounted by 50%, and then those parts of each such piece that
were within the Safety Zone were discounted by a further 50%. Effectively the
land was divided into six pieces with three pieces subject to a 50% discount,
two pieces subject to a 75% discount and one piece of Area “B”, outside the
Safety Zone, was not discounted.
[36]
The Hennigar Report found that the Property had
declined in value from $1,123,535 to $557,591, for a total loss of $565,944. Of
this loss, $274,795 was attributable to the Easement; the difference of
$291,149 was attributed to injurious affection.
III.
Applicable Legislation
[37]
There are three sections of the NEB Act
that are important in this appeal.
[38]
Section 75 of the NEB Act provides that
full compensation is to be paid to all persons who sustain damage by reason of
a pipeline company exercising powers given to it under the NEB Act:
|
Damages and compensation
75 A company shall, in the exercise of
the powers granted by this Act or a Special Act, do as little damage as
possible, and shall make full compensation in the manner provided in this Act
and in a Special Act, to all persons interested, for all damage sustained by
them by reason of the exercise of those powers.
|
Indemnisation
75 Dans l’exercice des pouvoirs qui lui sont
conférés par la présente loi ou une loi spéciale, la compagnie doit veiller à
causer le moins de dommages possibles et, selon les modalités prévues à la
présente loi et à une loi spé-ciale, indemniser pleinement tous les intéressés
des dom-mages qu’ils ont subis en raison de l’exercice de ces pouvoirs.
|
[39]
The main point of contention between the parties
involves a consideration of subsection 97(1)(d) of the NEB Act:
|
Determination of compensation
97 (1) An Arbitration Committee shall determine all compensation
matters referred to in a notice of arbitration served on it and in doing so
shall consider the following factors where applicable:
(a) the market value of the lands taken by the company;
(b) where annual or periodic payments are being made pursuant to
an agreement or an arbitration decision, changes in the market value referred
to in paragraph (a) since the agreement or decision or since the last review
and adjustment of those payments, as the case may be;
(c) the loss of use to the owner of the lands taken by the
company;
(d) the adverse effect of the taking of the lands by the company
on the remaining lands of an owner;
(e) the nuisance, inconvenience and noise that may reasonably be
expected to be caused by or arise from or in connection with the operations
of the company;
(f) the damage to lands in the area of the lands taken by the
company that might reasonably be expected to be caused by the operations of
the company;
(g) loss of or damage to livestock or other personal property or
movable affected by the operations of the company;
(h) any special difficulties in relocation of an owner or his
property; and
(i) such other factors as the Committee considers proper in the
circumstances.
Definition of market value
(2) For the purpose
of paragraph (1)(a), market value is the amount that would have been paid for
the lands if, at the time of their taking, they had been sold in the open
market by a willing seller to a willing buyer.
|
Détermination de l’indemnité
97 (1) Le comité d’arbitrage doit régler les questions d’indemnité
mentionnées dans l’avis qui lui a été signifié, et tenir compte, le cas
échéant, des éléments suivants :
a) la valeur marchande des terrains pris par la compagnie;
b) dans le cas de versements périodiques prévus par contrat ou
décision arbitrale, les changements survenus dans la valeur marchande
mentionnée à l’alinéa a) depuis la date de ceux-ci ou depuis leurs derniers
révision et rajustement, selon le cas;
c) la perte, pour leur propriétaire, de la jouissance des terrains
pris par la compagnie;
d) l’incidence nuisible que la prise des terrains peut avoir sur
le reste des terrains du propriétaire;
e) les désagréments, la gêne et le bruit qui risquent de résulter
directement ou indirectement des activités de la compagnie;
f) les dommages que les activités de la compagnie risquent de
causer aux terrains de la région;
g) les dommages aux biens meubles ou personnels, notamment au
bétail, résultant des activités de la compagnie;
h) les difficultés particulières que le
déménagement du propriétaire ou de ses biens pourrait entraîner;
i) les autres éléments dont il estime devoir tenir compte en
l’espèce.
Définition de valeur marchande
(2) Pour l’application de l’alinéa (1) a), la valeur marchande des
terrains correspond à la somme qui en aurait été obtenue si, au moment où ils
ont été pris, ils avaient été vendus sur le marché libre.
|
[40]
The Pipeline Company has alleged that the PAC
did not properly interpret s112 of the NEB Act when it considered the
impact of having to seek approval from the Pipeline Company for certain
activities in the vicinity of the pipeline:
|
Prohibition – construction or ground disturbance
112(1) It is prohibited for any person to construct a facility
across, on, along or under a pipeline or engage in an activity that causes a
ground disturbance within the prescribed area unless the construction or
activity is authorized by the orders or regulations made under subsection (5)
and done in accordance with them.
Prohibition — vehicles and mobile equipment
(2) It is prohibited for any person to operate a vehicle or mobile
equipment across a pipeline unless
(a) that operation is authorized by the orders or regulations made
under subsection (5) and done in accordance with them; or
(b) the vehicle or mobile equipment is operated within the
travelled portion of a highway or public road.
[. . .]
|
Interdiction de construire ou d’occasionner le remuement du sol
112 (1) Il est interdit à toute personne de construire une
installation au-dessus, au-dessous ou le long d’un pipeline ou d’exercer une
activité qui occasionne le remuement du sol dans la zone réglementaire, sauf
lorsque la construction ou l’activité est autorisée par les règlements pris
ou par les ordonnances rendues en vertu du paragraphe (5) et est effectuée en
conformité avec ceux-ci.
Interdiction relative aux véhicules et à l’équipement mobile
(2) Il est interdit à toute personne de faire franchir un pipeline
par un véhicule ou de l’équipement mobile, sauf lorsque cela :
a) soit est autorisé par les règlements ou ordonnances visés au
paragraphe (5) et est effectué en conformité avec ceux-ci;
b) soit se fait sur
la portion carrossable de la voie ou du chemin public.
[…]
|
[41]
When interpreting the provisions of
expropriation legislation, the Supreme Court of Canada held in Toronto Area Transit Operating Authority
v Dell Holdings Ltd, [1997] 1 S.C.R. 32, 142 DLR (4th)
206 [Dell] that:
The expropriation of
property is one of the ultimate exercises of governmental authority. To take
all or part of the person’s property constitutes a severe loss and a very
significant interference with a citizen’s private property rights. It follows
that the power of an expropriating authority should be strictly construed in
favour of those whose rights have been affected.
[. . .]
It follows that the Expropriation
Act should be read in a broad and purposive manner in order to comply with
the aim of the Act to fully compensate a land owner whose property has been
taken.
(Dell at
paras 20 and 23)
[42]
In Smith v Alliance Pipeline Ltd, 2011
SCC 7, [2011] 1 S.C.R. 160 [Smith], Mr. Justice Fish, writing for the
majority, acknowledged the Dell decision then noted that the NEB
Act is also remedial legislation and warrants an equally broad and liberal
interpretation to that of provincial expropriation statutes. He specifically
held that to interpret the NEB Act narrowly would “transform its purpose of full compensation into an unkept
legislative promise” (at para 57).
IV.
The Pipeline Arbitration Committee Decision
[43]
After reviewing the relevant provisions of the
legislative framework under which it was operating, the PAC set out six issues
it was to determine. In addition to addressing costs and interest payable on
the award, the issues were whether the Landowner was entitled to compensation under
the NEB Act and, if so, the value of damages for injurious affection and
for the land that was taken for the pipeline. The value of the temporary
workroom established on the site was also an issue to be determined.
[44]
The PAC determined that the Landowner’s whole
parcel of land was a total of 10.4 acres zoned Heavy Industrial. The Easement
and Safety Zone, also referred to as the Buffer Zone or Control Zone, together total
90 metres in width and run the length of the Property, effectively dissecting
it into three parcels, two of which are much smaller than the third parcel.
[45]
The PAC noted that the Landowner was seeking
full compensation under the NEB Act for all the issues while the
Pipeline Company would limit compensation to loss of use and value for the land
that the pipeline was upon (Easement) and said that there should be no damages awarded
for injurious affection.
[46]
After an extensive review of the facts the PAC
set out its analysis of the issues. As the claim arose from the construction
and maintenance of the Brunswick Pipeline the PAC found that globally the Landowner
was entitled to compensation under the NEB Act. It then examined each of
the other issues.
A.
Compensation for the Easement
[47]
The Easement was found by the PAC to be 2.5444
acres in size. The PAC determined that the value of the Easement was $99,000
per acre, which it multiplied by 2.44 acres to arrive at a value for the Easement
of $241,560. The parties have agreed that the size of the Easement is 2.5444
acres as originally identified by the PAC and the amount of 2.44 acres was used
erroneously in the calculation of the value of the Easement. The correct value
for the Easement, using the $99,000 per acre figure, is $251,896, a difference
of $10,336.
[48]
The PAC also noted that the Easement Agreement
contained a Special Conditions Addendum and, in addition to the Easement itself,
there was a Safety Zone of 30 metres in width on each side of the Easement.
[49]
A significant finding made by the PAC was that
given the terms of the Easement Agreement and the fact that the easement runs
in perpetuity, “the obligations and restrictions on the
Landowner are significant.” The PAC also found that there was no
guarantee that permission to build in the Safety Zone or to blast near the Easement
would be granted. This finding is a point of contention between the parties.
B.
Compensation for Injurious Affection
[50]
The PAC found that there was injurious affection
on the remainder of the property given the requirement to obtain permission to
develop it and the various obligations and restrictions imposed on the
Landowner under the Order. The Order requires the Landowner not
undertake a wide range of activities without prior written consent of the
Pipeline Company.
[51]
The PAC concluded that the total value of the
property had been reduced by $518,615.90. As it had found that the value of the
Easement was $241,560 the remaining amount of $277,055 was attributable to the
injurious affection. The PAC deducted $115,006.88 on account of the advance
that had already been paid to the Landowner and added $62,458.11 on account of
a temporary workroom occupying 0.595 acres.
[52]
The PAC erred by using the incorrect acreage
calculation for the value of the Easement. As a “before”
and “after” calculation was used the total reduction in value of
$518,615.90 is not affected by the error. If the correct value is substituted
then the amount of injurious affection is simply reduced $10,336, being the
amount by which the Easement value was understated.
C.
The Award of Interest on the Total Compensation
[53]
The Cross-Appeal challenges the interest award
made by the PAC. In the Decision the PAC noted that it had discretion to award
interest and was governed by subsections 98(4) and (5). The PAC accepted the
interest rate put forward by the parties was correct and therefore awarded interest
of 4.75% to the Landowner.
[54]
The PAC stated interest would run from the date
of the Decision until the award is paid. The PAC did not provide any reason for
choosing the date of the Decision to start interest running.
V.
ISSUES IN DISPUTE
[55]
The parties disagree with respect to five
matters; they form the issues in this appeal:
1.
The standard of review to be applied to the
Decision.
2.
The value per acre to be applied to the award.
3.
The amount, if any, to be paid for injurious
affection.
4.
The date upon which interest payable on the
award should commence.
5.
The costs to be paid on the appeal and
cross-appeal.
VI.
STANDARD OF REVIEW
[56]
The parties do not agree on the standard of
review.
A.
Positions of the Parties
[57]
The Pipeline Company argues that the standard of
review for questions of law was satisfactorily determined by the Federal Court
in Bue v Alliance Pipeline Ltd, 2006 FC 713 at para 5, 293 FTR 1 [Bue]
where the Court determined that pure questions of law were subject to a
correctness review. The Pipeline Company has phrased all of its grounds of
appeal as pure errors of law.
[58]
The Pipeline Company supports its position by
arguing that the PAC does not have a broad statutory mandate to regulate a
complex industry in the public interest like the National Energy Board. The
mandate is merely to determine how much compensation is due to a landowner.
Moreover, the Pipeline Company argues that the right of appeal without leave of
the Court on questions of law and jurisdiction should indicate that Parliament
intended these matters to be subject to a correctness review. Finally, as each
PAC is ad-hoc the Pipeline Company relies on the concurring opinion of
Justice Deschamps in Smith, where she argued that an ad hoc
tribunal like a PAC does not have any relative expertise in interpreting law as
compared to a court.
[59]
The Landowner relies on Dunsmuir v New
Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 [Dunsmuir] to argue the
standard of review is reasonableness as all of the Pipeline Company’s grounds
of appeal are actually questions of fact reviewable on a reasonableness
standard or, at most, they are questions of mixed fact and law where the legal
questions are not extricable. In the event that there is a pure question of
law, the Landowner argues that Bue has been overtaken by Dunsmuir
and Smith. While Justice Deschamps in Smith said an ad hoc
tribunal has no special expertise, the majority found that the fact that a PAC
was interpreting its home statute was a reason to presume reasonableness.
[60]
In addition, the Landowner submits that
Parliament has chosen to vest the fact-finding function with a tribunal rather
than having compensation determined by a court. While the PAC is ad-hoc,
in this instance all the members were lawyers. They can be presumed to hold
relative expertise in interpreting the statute granting the PAC its mandate.
B.
Analysis
[61]
The standard of review for all issues is
reasonableness.
[62]
Bue was
determined pre-Dunsmuir; it has been overtaken by more recent
jurisprudence from the Supreme Court of Canada. When an administrative
decision-maker such as the PAC is dealing with an interpretation of its home
statute the presumption is that the standard of review is reasonableness: Alberta
(Information and Privacy Commissioner) v Alberta Teachers' Association,
2011 SCC 61 at para 30, [2011] 3 S.C.R. 654 [Alberta Teachers]. Nothing in
the facts of this case or in the legal arguments serves to rebut the
presumption. None of the four exceptions to reasonableness are present.
[63]
The Landowner is correct to note that in Smith
eight of the nine justices who determined the case clearly found the standard
of review of the decision of a PAC is reasonableness because it is interpreting
its home statute. In Smith the Supreme Court satisfactorily addressed the
standard of review of a PAC, as an ad hoc committee, when Mr. Justice
Fish concluded that under the NEB Act an arbitration committee was
entitled to deference, including when a PAC was considering a question of law (Smith
at para 37).
[64]
While the Pipeline Company wishes to distinguish
and restrict Smith to cases involving a consideration of costs, the decision is
much broader than that – the Court made it clear that the governing factor was
that the PAC was considering its home statute. The Supreme Court also recently
re-confirmed that a statutory right of appeal does not create a new category
for which correctness is the standard of review (Edmonton (City) v Edmonton
East (Capilano) Shopping Centres Ltd, 2016 SCC 47 at paras 27 – 30, [2016]
2 SCR 293).
[65]
A decision is reasonable if the decision-making
process is justified, transparent and intelligible resulting in a determination
that falls within the range of possible, acceptable outcomes which are
defensible on the facts and law (Dunsmuir at para 47).
[66]
A reviewing court however is required to pay “respectful attention to the reasons [offered or] “which
could be offered in support of a decision”” but, the court is not given “a “carte blanche to reformulate a tribunal’s decision in a
way that casts aside an unreasonable chain of analysis in favour of the court’s
own rationale for the result”” (Alberta Teachers at para 54, citing
Petro-Canada v British Columbia (Workers’ Compensation Board ), 2009
BCCA 396 at paras 53, 56, 98 BCLR (4th) 1, in turn citing David Dyzenhaus, “The Politics of Deference: Judicial Review and Democracy”
in Michael Taggart, ed., The Province of Administrative Law (Oxford:
Hart Publishing, 1997), 279 at 286).
VII.
DID THE PAC ERR IN DETERMINING THE VALUE PER
ACRE?
[67]
The PAC found that both Mr. Hennigar and Mr.
Doucet were credible, well qualified appraisers. As the per acre value differed
between them by only $18,000 the PAC simply averaged Mr. Hennigar’s
$108,000 per acre value with Mr. Doucet’s $90,000 per acre value and found that
an equitable value was the midpoint of $99,000 per acre.
[68]
Both appraisers agreed at the hearing before the
PAC that the valuation methods would come to the same result in this scenario whether
the “before and after” approach was used or the “summation” method was employed. They also both agreed
that 100% of the value of the fee simple interest in the Easement should be
awarded to the Landowner.
[69]
While the Decision contains some misstatements
and errors which can make it difficult to read, those problems do not
necessarily affect the conclusions drawn by the PAC. For example, in reviewing
Mr. Doucet’s calculation of the market value of the Easement the PAC stated
that there was insufficient data in New Brunswick to successfully apply the
before and after approach. Mr. Doucet, as stated elsewhere by the PAC, used the
summation approach.
[70]
The Pipeline Company submits that not only did
the PAC err in referring to the wrong approach, the conclusion that there was
insufficient available data in New Brunswick was a conclusion made without any evidence
having been presented. As such it was an error of law to make that finding of
fact.
[71]
The PAC used the before and after approach to
calculate the value per acre but using the summation approach would produce the
same result. Neither the misstatement with respect to the method of calculation
nor the statement with respect to the amount of data available had any impact
on the value per acre determined by the PAC. The PAC simply accepted the values
of each appraiser and averaged them together to arrive at the value. There is
nothing inherently unreasonable in that approach given that it is the task of
the PAC to determine the value per acre and it is not required to select one of
the two figures. In Koch v Altalink Management Ltd., 2016 ABQB 678, 3
LCR (2d) 123 [Koch], the Court while sitting on appeal from a denial of
compensation for injurious affection in a surface rights case, observed that “[a]ppraising land value is as much an art, based on
experience, as it is a science” and, using the average of two appraisals
was not only reasonable, it had the additional benefit of taking advantage of
the expertise of both appraisers and the totality of the information used by
them (at para 145). That statement applies equally to this appeal.
[72]
In my view, the value per acre of $99,000 is
reasonable given the statements made by the two appraisers that using either
methodology would produce the same value; nothing turns on the misstatements
made by the PAC in their analysis of this issue.
VIII.
DID THE PAC ERR IN ITS INJURIOUS AFFECTION
ANALYSIS?
A.
Overview
[73]
Most of the grounds of appeal put forward by the
Pipeline Company relate to the award to the Landowner of $277,055 for injurious
affection. It is alleged that the PAC misconstrued and misapplied s 97(1)(d) of
the NEB Act which requires it to consider the adverse effect of the
Easement on the remaining lands of the Landowner.
[74]
The Pipeline Company submits there is no
injurious affection. It says that the PAC engaged in speculation about future
impacts but there is no actual loss to the Landowner.
[75]
The Pipeline Company also alleges that the PAC
relied on unspecified regulatory requirements to determine that the Pipeline
Company did not have discretion to approve requests for construction near the
pipeline and to erroneously conclude that blasting near the pipeline would be
absolutely prohibited. It is also submitted that the PAC misconstrued s 112 of
the NEB Act as well as the National Energy Board Pipeline
Crossing Regulations, Part I, SOR/88-528, and Part II, SOR/88-529 in
these respects.
[76]
Finally, it is alleged that the PAC failed to
consider evidence before it with respect to the process employed by the
Pipeline Company to approve requests for construction in the Safety Zone and
made factual findings without any evidence. For example, the Pipeline Company
says the PAC found that blasting is prohibited in the Easement and Safety Zone.
[77]
The Landowner submits that s 112 creates a
regulatory risk in relation to development within the Safety Zone. It relies on
a decision by Mr. Justice Rothstein, when he was on the Federal Court of Appeal,
in which he found that the requirement to obtain leave of the National Energy
Board to excavate using power-operated equipment or explosives in the Safety
Zone meant that potential purchasers of the lands might see that requirement as
a regulatory risk which might diminish the value of the land. Justice Rothstein
noted the onus was on the landowner to obtain approval. He rejected the claim
by the pipeline owner that the possible denial of permission was speculative
and that, until it occurred, there was no adverse effect on the lands (Balisky
v Canada (Minister of Natural Resources), 2003 FCA 104, 239 FTR 159 [Balisky],
leave to appeal to SCC refused, [2003] SCCA No 193 (QL), 2003 CarswellNat 3688
(WL Can)).
[78]
The Landowner submits that the PAC did not ignore
or fail to consider the evidence put forward by the Pipeline Company about
prior approvals. Rather, the PAC specifically addressed this evidence and found
it irrelevant because it was not clear that other lands for which prior
approvals had been given were similar to the Property nor was there evidence of
a consistent policy or guidelines of the Pipeline Company for granting
permission.
B.
Analysis
(1)
The Law
[79]
As previously mentioned, the Supreme Court held
in Dell and confirmed in Smith that for remedial statutes “the aim … [is] to fully compensate a land owner whose
property has been taken” (Smith at para 56, Dell at para
23). The NEB Act in s 75 provides that the Pipeline Company shall “make full compensation in the manner provided in this Act”;
s 97(1)(d) of the NEB Act then provides that compensation shall be
provided for “the adverse effect of the taking of the
lands by the company on the remaining lands of an owner”. This is the
concept of injurious affection.
[80]
There is no definition of injurious affection in
the NEB Act. The Federal Court of Appeal has noted that “[t]he principle of injurious affection flows from the
overriding objective of compensation in expropriation cases, which is to make
the expropriated owner “economically whole”” (Semiahmoo Indian Band v
Canada, [1998] 1 FC 3 at 58, 148 DLR (4th) 523 at 565 (FCA)).
[81]
As in this case there has been a partial
taking, the three criteria set out below must be met in order for the Landowner
to receive compensation: Eric C.E. Todd, The Law of Expropriation and
Compensation in Canada, 2nd ed (Scarborough, Ont: Carswell Thomson
Professional Publishing, 1992) at 335.
[82]
The first criterion is that the remaining lands
must have been held by the Landowner. That criterion has been met and is not in
dispute.
[83]
The second criterion is that the remaining lands
must have been depreciated in value by activities upon the expropriated land.
Under paragraph 84(a) of the NEB Act claims for compensation do not
apply to “claims arising out of activities of the
company unless those activities are directly related to (i) the acquisition of
the lands for the pipeline […], (ii) the construction of the pipeline, or (iii)
the inspection, maintenance or repair of the pipeline”. While at first
blush this provision appears to prevent the Landowner’s claim for injurious
affection, the Federal Court of Appeal in Balisky considered the matter
and determined that it is not an impediment:
[29] Neither the excluded nor the
included activities referred to in paragraph 84(a) have anything to do with the
effect of subsection 112(1) on landowners adjacent to a pipeline right-of-way.
Claims for compensation arising from subsection 112(1) do not arise from
activities of the company as that term is used in paragraph 84(a). They arise
by virtue of the presence or existence of the pipeline.
[30] The operations of the pipeline
company will certainly include the activities referred to in paragraph 84(a).
However, the ordinary everyday use of the pipeline, beyond construction,
maintenance, inspection and repair, also constitutes operations of the pipeline
company. Just as paragraph 84(a) cannot be read to exclude from arbitration
claims for damages arising from the ordinary operation of the pipeline, it
cannot be read to exclude from arbitration claims for compensation arising from
the effect of subsection 112(1). If section 84 has any relevance to subsection
112(1), it would be in the opening words, that arbitration applies "... in
respect of all damage caused by the pipeline of a company ...".
[31] For these reasons, I am of the
opinion that paragraph 84(a) does not preclude claims for compensation
arising from the effect of subsection 112(1) from being referred to an
Arbitration Committee.
(at paras 29-31)
[84]
The two appraisers disagree with respect to the critical
issue of whether there is compensable injurious affection.
[85]
The third criterion is also in issue: the damage
suffered must not be too remote. The Pipeline Company submits that the PAC
misapplied s 97 of the NEB Act in that there was no actual loss suffered
by the Landowner and it was pure speculation to say that there would be a
future impact. The Landowner relies on Balisky to say the regulatory
risk is not speculative.
(2)
Mr. Doucet’s Approach to Injurious Affection
[86]
The Pipeline Company’s appraiser, Mr. Doucet,
opines that there is no injurious affection. He differs from Mr. Hennigar with
respect to the question of whether any permission that may be required from the
Pipeline Company would be forthcoming. Mr. Doucet believes that any required
consent would be received during a buyer’s due diligence period. In his report
he acknowledges that the Landowner is of the opinion that the Easement severely
restricts the use of his land. However, Mr. Doucet is of the view that
buildings and other structures can be placed outside the Safety Zone. He also
believes the Safety Zone, and Easement itself, can be used for parking and
storage.
[87]
The basis for Mr. Doucet’s belief is his view
that the highest and best use of the property is for a single large industrial
site that can accommodate a large building and parking area. The building would
be positioned northeast of the Easement and the remainder of the site would be
used for parking or a laydown area.
[88]
Mr. Doucet was also aware that prior to the
creation of the Easement the Landowner had planned to subdivide the property
into nine lots. He notes that smaller lots could be placed on either side of
Cave Court and one lot could front on Old Black River Road. It is not clear how
many such lots Mr. Doucet believed could be created.
[89]
Mr. Doucet used a per acre value of $90,000 to
determine that the market value of the Easement was $229,000. As he found there
was no loss in market value to the remaining land and therefore no injurious
affection that was the amount the Pipeline Company put forward to the PAC as
being appropriate compensation.
(3)
Mr. Hennigar’s Approach to Injurious Affection
[90]
The appraiser for the Landowner, Mr. Hennigar,
took the approach that the Easement and the Safety Zone imposed restrictions on
the use of those lands that required a third party to provide permission for
various activities. The result is that the previously enjoyed full land
ownership rights are significantly reduced after the Easement was created. He
therefore based his highest and best use analysis on what he ascertained could
be done with Areas “A” and “C” without asking a third party for permission.
[91]
In addition, Mr. Hennigar noted that due to
restrictions on the Easement, it could only be crossed in a vehicle by way of a
paved road. Therefore access to the lands referred to as Area “A” was severely
restricted and might not be possible at all given conditions related to Bayside
Drive and the fact that fill would be required to raise the grade level at that
location.
[92]
Mr. Hennigar determined that in addition to the
location, topography and dimensions of the Property the highest and best use of
the remainder lands was determined by the actual dimensions of each of the
areas created when the Easement divided the Property. The setback requirements
and safety zone restrictions also affected the actual building footprint that
could be developed on Areas “A” and “C”. In Mr. Hennigar’s opinion the building
shapes that could be placed on those areas without requiring the permission of
a third party were not optimal with respect to usable yard area. He did note
though that in most cases a smaller building might be constructed. A copy of
the map from Mr. Hennigar’s report showing the three Areas, the Easement and
the Safety Zone is attached as Appendix “B”.
[93]
Mr. Hennigar looked at each of the three lot
areas and determined that only Area “B” had sufficient land available for
development while Areas “A” and “C” would best be used as an expansion for the
property owner to the south. He premised his opinion on the uncertainty of
approval which meant access to Area “A” may not be available.
[94]
With respect to the Safety Zone Mr. Hennigar
found that the restrictions on use may or may not impede future development.
While it was possible that permission would be provided for the area to be
developed he found it was also reasonable to conclude permission might be
withheld. He also observed that certain industrial land users might conduct a
business that may not be permitted in close proximity to the pipeline or may
not wish to locate close to the pipeline for reasons of safety or stigma.
[95]
The overall conclusion drawn by Mr. Hennigar,
which was accepted by the PAC, was that the uncertainty with respect to the
future use of the lands was an issue. There was no shortage of industrial zoned
land in St. John and there were no site specific features to make the lands
within the Safety Zone of greater value than other lands in McAllister
Industrial Park. His conclusion was that the reduced rights would drive a lower
value from a buyer or investor.
[96]
For Areas “A” and “C” Mr. Hennigar found the
physical size and limitations coupled with the availability of vacant land for
development in the immediate area in 2008 meant the landowner to the southwest
was the most likely purchaser. In addition, there was a significant cost to
provide fill to Area “A” if it was to be accessed from Bayside Drive. Due to
these considerations Mr. Hennigar therefore reduced them in value by 50% to a
per acre value of $54,000 based on his original calculation of $108,000 per
acre. For that part of the lands within the Safety Zone he assigned a further
50% reduction. Using those figures, the market value of the remaining lands, after
the Easement was taken is $557,591.
[97]
As both appraisers agreed that the Easement was
to have no market value, the market value of the remaining lands is the market
value of the Property after the taking. By subtracting that value of $557,591from
the before value of $1,123,535 the overall loss in market value of the Property
is $565,944 as calculated by Mr. Hennigar.
[98]
The market value of the Easement at $108,000 per
acre was $274,800. Subtracting that from the loss in value of $565,944 results
in an amount for injurious affection of $291,149 which Mr. Hennigar rounded up
to $291,150.
(4)
Was the PAC’s Treatment of Injurious Affection
Reasonable?
[99]
The PAC devoted over twenty paragraphs of the
Decision to an examination of the Safety Zone and the issue of permission to
develop within it. With respect to the question of the amount of compensation,
if any, to be paid for injurious affection, it considered the evidence of each
of the appraisers. With respect to whether permission to develop would be
granted, including for blasting within the safety zone, the two witnesses for
the Pipeline Company were also important.
(a)
The Landowner’s Obligations and Restrictions are
Significant
[100] The PAC made several findings with respect to injurious affection.
For instance it found that the Easement Agreement contains restrictions on use
by the Landowner of the Easement and the Safety Zone. In addition, it noted
that the Order gave the Pipeline Company an immediate right to enter the
Property. After noting these documents, the PAC determined that the obligations
and restrictions on the Landowner are significant.
[101] Was that a reasonable determination to have made? In my view, the
PAC’s determination is reasonable. The usual rights of the Landowner with
respect to the land on which the pipeline lies were greatly diminished when the
Order was issued and registered on title.
[102] The Easement is granted in perpetuity. In perpetuity the Pipeline
Company has rights over the entire Property in cases of emergency. It is also
permitted to pile and store rock in windrows on the Easement and to clear the
Easement of any trees, growth, buildings, structure or obstructions if they may
interfere with any of the rights granted to the Pipeline Company. This right is
exercised in the sole and absolute discretion of the Pipeline Company, albeit
acting reasonably. The same wording applies to an absolute right for the
Pipeline Company to enter on the Property to access the pipeline to construct,
operate, maintain, repair and replace it.
[103] Under the Order, the Landowner can use the Easement for any purpose except
for a lengthy list of unallowable actions and activities if, in the opinion of
the Pipeline Company, they might interfere with or damage the pipeline, impair
its operation, interfere with its maintenance or repair, obstruct access to it
or create any hazard in the operation, use and maintenance or existence of the
pipeline on the Easement.
[104] Given the broad language used to outline the list of prohibited
activities and the broad brush given to the Pipeline Company to forbid it if,
in its opinion, such activity might interfere, the PAC’s observation that
the obligations and restrictions on the Landowner are significant is completely
reasonable and logical.
(b)
The PAC Misused the word “prohibited”
[105] The Pipeline Company also takes issue with various statements made
by the PAC in the Decision, particularly its use of the word “prohibited” at paragraph 53. There, the PAC
erroneously stated that “construction is prohibited by
blasting in any pipeline vicinity”.
[106] The use of the word “prohibited” in
paragraph 53 is not internally consistent with the balance of the Decision. The
word “prohibitive” is used in reference to
construction or blasting in paragraph 48 and in paragraph 54 where the PAC said
“blasting is highly prohibitive”. Two paragraphs
later, while discussing counsel for the Landowner’s submission that blasting
would be prohibited, instead of agreeing with that submission the PAC found
that “permission to blast is prohibitive and in
perpetuity”. The written materials of the Pipeline Company set out this
quote but add “sic” after the word prohibitive,
thereby indicating it believes the word was a misspelling or error.
[107] I disagree. I am not convinced that the word “prohibitive” was used by the PAC in error rather than
the word “prohibited”. It is much more likely
that the word “prohibited”, which appears but twice
in the Decision, one being the instance where it was misused, and the other being
a re-iteration of the Landowner’s position. The word “prohibitive”
appears six times, including twice in relation to blasting and generally in
relation to planning, construction and approvals.
[108] If something is “prohibitive”, it is
not the same as being “prohibited”. The latter
is an absolute. It describes a definitive condition. The former describes a
sizeable deterrent but not a certainty. It is not a substitute for prohibited.
[109] The whole process of approval was under active discussion during the
arbitration hearing. If blasting was absolutely prohibited, as the Pipeline
Company suggests was meant by the PAC, then there would be no need for an
approval process. An enforcement process would suffice.
[110] The word “prohibitive” is also
consistent with the evidence of Mr. Hennigar. It is consistent as well with Ms.
Brown’s evidence of there being a 150 metre blasting area buffer from the
pipeline and with the overall process of seeking permission to blast bedrock.
Taken altogether they serve to make “blasting highly
prohibitive”.
(c)
The PAC Reasonably Preferred the Expert Opinion
of Mr. Hennigar
[111] The critical difference between the two appraisers was that Mr.
Doucet believed that approval would be given for construction activities
whereas Mr. Hennigar believed that the requirement for approval and the
restrictions placed on the Property by the Order, created a risk that
diminished market value.
[112] The PAC’s reasons for preferring Mr. Hennigar’s opinion on injurious
affection over that of Mr. Doucet did not turn on whether construction or
blasting was prohibited. The important factors were: (1) the perpetual
requirement to obtain permission for a wide variety of possible activities on
or in the vicinity of the pipeline; (2) the fact that in 2008 similar land
without such restrictions was commonly available.
[113] Mr. Hennigar’s professional opinion was that where “land with full rights of use and liberty to the owner was
available, a purchaser would elect to purchase [that] land for full value
rather than pay the same price for land with diminished rights”. In
other words, a purchaser would want to discount the price paid for land with
diminished rights.
[114] In my view, that basis for Mr. Hennigar’s opinion is logical and
reasonable. Mr. Hennigar’s report said land was “a
commodity” in the McAllister Industrial Park in 2008. Mr. Doucet
calculated that in 2008 there was only 23% occupancy in the McAllister Industrial Park. He also noted that there had been strong
opposition to the pipeline from various groups, including developers. It does
not appear that Mr. Doucet took those factors into account.
[115] Although the Pipeline Company suggested to the PAC that
Mr. Hennigar’s opinion was that no permission would be granted, the PAC
determined, correctly, that his opinion was only that permission would be
required.
(d)
No Unsupported Assumptions in Mr. Hennigar’s
Report
[116] The Pipeline Company submits that this is not a case of the PAC
preferring one expert over another on a rational basis. It says the
Hennigar Report made unsupported assumptions that were directly contradicted by
the evidence and by accepting that report the PAC erred.
[117] The “unsupported assumptions”
allegation arises from Mr. Doucet’s Technical Review of the Hennigar Report. He
concluded that Mr. Hennigar’s valuation was based on an assumption that the
pipeline could not be crossed, the Safety Zone was of little or no use for
development and the requirement to seek permission causes a significant
diminution in market value within the Safety Zone. Mr. Doucet disagreed with
Mr. Hennigar on all those points.
[118] Mr. Doucet’s critique centres on the fact that Mr. Hennigar never
contacted the Pipeline Company to discuss the approval process. When Mr.
Hennigar was cross-examined on that point he indicated he had a general
familiarity with the approval process under the NEB Act and did not feel
he needed to speak with the Pipeline Company. The PAC concluded that failing to
make that inquiry did not matter as Mr. Hennigar’s opinion “could not be made more effective by inquiring into the
pipeline company’s informal practices with landowners”.
[119] On reading the reports it appears that Mr. Doucet misstates
Mr. Hennigar’s opinion and the reasons that he provided in support.
Mr. Hennigar’s opinion did not rest on whether or not approval from the
Pipeline Company would be forthcoming for an activity. Mr. Hennigar opined
that the restrictions imposed by the legislation and the Order added a
requirement for the Landowner to receive permission for something that
previously he had a right to do. That diminished the rights enjoyed by the
Landowner and introduced uncertainty to prospective buyers who could not be
sure that an approval would be granted.
[120] In his initial report Mr. Hennigar clearly stated, in
discussing the Safety Zones, that the presence or absence of approval was not
determinative:
The 30 metre safety zone areas, although not
part of the full restrictions of the pipeline easement, present limitations on
their use that may or may not impede future development or land use. It was
possible that permission would ultimately be provided for these lands to be
developed, but it is also reasonable to conclude that such permission may be
withheld. It was also reasonable to conclude that certain industrial land users
may either conduct a business that may not be permitted in close proximity to
the pipeline, or that may not wish to locate close to such a public utility for
reasons of safety or stigma. Regardless of the reasons, the preceding issues
present uncertainty with respect to the future use of these lands. It was
also true that there was not a shortage of Industrial zoned land in Saint John,
nor are there site specific features that might make the lands within the
safety zones of greater value to a purchaser compared to other lands in the
McAllister Industrial Park.
The requirement for the determination of
“market value” is the sale to an arm’s length third party. It is unclear why a
profit motivated enterprise would pay the same price for land with so many
potential restrictions compared to land that might be acquired in the open
market in the same general area of McAllister Industrial Park without any of
these issues. The corollary to this is that a rational buyer or investor would demand
a restriction in price to purchase land with these uncertainties and stigma
issues that reduce or restrict the rights of the landowner. Based on this
observation, it was concluded that these lands would be interpreted to have
reduced rights and such a reduction in rights would drive a lower value than
other substitute industrial lands in the area.
[emphasis added]
Hennigar Report, July 19, 2010, pages 47 –
48.
[121] In his Technical Review Mr. Doucet also stated that the restrictions
in the Safety Zone “are far less intrusive than is
suggested” by Mr. Hennigar. Mr. Doucet explained that statement by
saying that the Landowner only needs to “notify
Brunswick Pipeline of any proposed excavating or explosive work within the
safety zone”.
[122] In both his original report and his review report Mr. Doucet
referred to the process as being one of notice, not approval. That is clearly
not accurate. At one point in his original report Mr. Doucet correctly referred
to the process as approval. The problem is that in otherwise calling it “notice” and using “notice”
to rebut Mr. Hennigar’s statement of the intrusiveness of the easement, it is
not clear whether Mr. Doucet actually believed that only notice was required to
develop in the Safety Zone or that approval was required but would be granted.
Either way, it fails to rebut Mr. Hennigar’s opinion about restrictions in the
Safety Zone.
[123] In his response to the Technical Review, Mr. Hennigar referred to
the Order which clearly states that an owner is not permitted to construct any structure
on, along or under the Easement, nor can an owner excavate using power-operated
equipment or explosives on the Easement or within 30 metres of the Easement
without prior written consent of the Pipeline Company.
[124] Mr. Doucet also pointed out in his Technical Review that the St.
John website contained a map identifying the pipeline corridor which showed
that there were “existing buildings within the safety
zones in various locations throughout Saint John.” Mr. Doucet concluded
that Mr. Hennigar’s opinion of the value of the land after the taking was
misleading because his highest and best use conclusion was arrived at without
adequately researching local market conditions.
[125] In his responding report Mr. Hennigar agreed that various buildings
were located in safety zones throughout St. John. He noted though that the
buildings existed prior to the development of the pipeline at a time when
permission to excavate would not have been required.
[126] Contrary to the submission of the Pipeline Company, there was a rational
basis for the PAC to prefer the evidence of Mr. Hennigar over Mr. Doucet. The
PAC acknowledged Mr. Doucet’s opinion but found that his assumption of the
likelihood of approval was in error. The record shows that not only did that
assumption fly in the face of the testimony of Ms. More, it is contrary to
the terms of the Order (paragraph 4(a)(v)). The PAC referred to both these
factors in the Decision.
(e)
No Evidence was Misconstrued or Ignored
[127] The Pipeline Company also says that the PAC ignored or misconstrued
evidence of the approval process and evidence that approval would be given both
for blasting and for a crossing over the Easement. This allegation is, in many
ways, the cornerstone of the appeal. The certainty of approval underscores
Mr. Doucet’s opinion on injurious affection and, if true, it removes most
of the regulatory risk found by Mr. Hennigar to be determinative of the
diminished value of the remaining lands.
[128] The PAC did not ignore or misconstrue the evidence; nor did it make
important findings in the Decision in the absence of evidence. The PAC was not
convinced there was a certainty of approval. The PAC
stated specifically that it did not accept Mr. Doucet’s opinion in light of the
testimony given by Ms. More. It reviewed and considered her testimony and that
of Ms. Brown at some length.
[129] Mr. Doucet found there was no injurious affection because he
expected the Pipeline Company would approve and pay for a crossing over the
Easement as well as give consent to any blasting required for construction
purposes in the Safety Zone. He concluded that any nuisance in terms of stigma,
noise or disturbance from operation of the pipeline would be minimal.
[130] Mr. Hennigar understood that various permissions were required for a
number of activities. He believed that there was a risk that approval might not
be received and the uncertainty which that process introduced diminished the
value of the land to a prospective purchaser. That conclusion is consistent
with Mr. Doucet’s acknowledgement of the opposition from developers to the
pipeline.
[131] In considering the Safety Zone, the PAC stated that it had taken
into account the Order, which sets out restrictions on the Easement, and the
restrictions imposed on the control area or Safety Zone. It found that “[t]here is no evidence suggesting that the pipeline
company’s prospective permissions would be granted” as there were no
contractual agreements to that effect. The concern was that there was nothing
concrete to compel the Pipeline Company to agree to a proposal.
[132] Reference was made during the arbitration hearing to a commitment
letter signed by the Pipeline Company however that letter was not in evidence
before the PAC. Mr. McAdam, the president of the Pipeline Company at the
relevant time, confirmed in cross-examination that the commitment letter was
not binding although he stated that it was a public commitment from which the
company would not resile.
[133] In arriving at the conclusion that there was no evidence that
prospective permissions would be granted the PAC considered the testimony of
Ms. More who spoke for the operator of the pipeline, Spectra Energy
[Spectra]. Ms. More told the PAC that Spectra would not preclude any
construction in the Safety Zone but would have concerns about blasting being
used as a method of construction. Ms. More believed a qualified blast engineer
would not propose anything that would be a concern but that Spectra might have
to “tweak” blasting plans to reduce the impact
to the pipeline. She indicated that approval for blasting had been given within
other Safety Zones. In the previous five years no proposals had been rejected
as Spectra had always been able to work with the proposer to resolve any
concerns.
[134] On cross-examination Ms. More testified that she “certainly wouldn’t want to imply that we – that’s it’s a
rubber stamp. We evaluate every proposal and what its potential impact could be
to the integrity of the pipeline and grant approval where we can.”
[emphasis added]
[135] The PAC found that Ms. More did not indicate whether the prior
approvals were for a similar type of property. The evidence before the PAC had
been that the approvals were for lands in other Safety Zones. It was unknown
whether those areas contained bedrock similar to the Property or only loose
farm soil.
[136] The PAC noted that in 2008 the Pipeline Company’s “record providing landowners with crossings over the pipeline
were simply unknown”. The PAC concluded that it would be “difficult for anyone to predict the pipeline company’s
position in the future in relation to this particular landowner”.
[137] The PAC had testimony that past approvals had been granted in other
Safety Zones. But, there was no evidence before the PAC that prior approvals
were given for similarly situated and geologically similar properties. There
was no evidence of any administrative policy setting out, for example, whether
some activities would be presumptively approved and others would never be
approved. The PAC noted that there was no evidence of internal decisions that
could bolster the assumption that approval would be given in future.
[138] In my view, it was not unreasonable for the PAC to observe that
there was no evidence presented to confirm that prior approvals had been given
for the same kind of property as the Landowner’s property. In any event, the
PAC relied on a critical finding in preferring Mr. Hennigar’s opinion to
that of Mr. Doucet: a purchaser would not pay as much for land with
restrictions when there is readily available land without restrictions.
IX.
DID THE PAC ERR IN DETERMINING INTEREST SHOULD
RUN FROM THE DATE OF THE DECISION?
A.
Positions of the Parties
[139] The parties agreed that the applicable rate of interest is 4.75%. It
is just the starting date for interest which is in issue.
[140] The Landowner seeks interest from the date of the Order, June 2,
2008. It points out that from that date to the date of the hearing was five
years and seven months and that it would be inequitable for the Pipeline
Company to have both possession of the property rights and the unpaid
compensation without any interest accruing.
[141] The Landowner argues that subsection 98(4) of the NEB Act
directs that the amount of interest is to be determined by reference to a Bank
of Canada rate charged for the month in which the pipeline company entered the
lands or damages first occurred. Although the PAC may award interest from a
different date, the Landowner argues that subsection 98(4), by implication,
establishes the normal date from which interest should run.
[142] The Pipeline Company submits that the cross-appeal with respect to
interest be denied. It says that the PAC has the discretion under subsection
98(5) of the NEB Act to award interest from such later date as the PAC
may specify. It distinguishes that level of broad discretion from the
requirement that the PAC consider specific factors in determining compensation.
[143] The Pipeline Company speculates that the PAC may have determined
that as the easement was compensated to 100% of the market value, although the
Landowner was not completely deprived of the use of those lands, an award of
interest from a date later than the date of the taking may have been used to
avoid overcompensating the Landowner.
B.
Analysis
[144] Generally in law, when harm is done compensation begins as of the
date of the harm. The PAC gave no indication in the Decision as to why it was
starting interest from the date of the Decision. Unfortunately, the written
submissions of the parties to the PAC are not in the record before the Court.
It is not possible therefore to look to the record for support or to draw any
inference with respect to the award of interest being from the date of the
Decision.
[145] Given the object of the NEB Act is to keep a landowner
economically whole, and section 75 of the NEB Act stipulates that full
compensation is to be made in the manner provided in the NEB Act, the
failure of the PAC to explain the date on which to start interest is not
transparent or intelligible.
[146] It is, as the Pipeline Company submits, a large amount of money if
the interest rate is to start approximately eight years before the date of the
Decision. As there were other slips of the pen in the Decision, there is a
possibility that the PAC inadvertently stated the date of the Decision would be
the date on which interest would accrue. It is also possible that the PAC
exercised its discretion and purposely chose the date of the Decision. Only the
PAC can confirm whether the intention was to start interest as of the date of
the Decision and not another date.
[147] The appropriate remedy is to remit the issue of interest to the same
Pipeline Arbitration Committee, or, if the members are not all available then
to such differently constituted Arbitration Committee as the Minister may
appoint under the NEB Act, to determine the date from which interest
should commence to run.
X.
COSTS OF THIS APPEAL and CROSS-APPEAL
[148] The Landowner has succeeded in defending the appeal and is entitled
to its costs. If the parties cannot agree on the amount of costs within thirty
days of the date of this judgment then the Landowner may have its costs
assessed in accordance with Column III of Tariff B.
[149] The result of the cross-appeal dealing with interest will be unknown
until the PAC reconsiders that issue to confirm the starting date for interest
and its reasons for that date. Once that is resolved, costs of the
cross-appeal, which shall be in the cause, are to be determined by agreement of
the parties failing which the successful party may have its costs assessed in
accordance with Column III of Tariff B.
[150] No costs are awarded for the issues that were agreed upon between
the parties prior to the hearing of the appeal and cross-appeal.
XI.
CONCLUSION
[151] The PAC found that the impact on the value of the Property must be
evaluated at the time of the taking in 2008. At that point in time, the
Pipeline Company did not yet have a track record by which prospective
purchasers could evaluate the likelihood of having development in the Safety
Zone approved. Similarly, there was no track record to enable prospective
purchasers to determine the reliability of the Pipeline Company’s commitment to
build pipeline crossings.
[152] Regardless of whether or not there was an actual risk of development
permission being denied, it was reasonable for the PAC to conclude that there
was a perception that the permission could be denied. Remembering also that
there was only 23% occupancy in the McAllister Industrial Park in 2008, such a
perception would reasonably create concern for purchasers planning on
developing the Property as the risk of the Pipeline Company being capable of
refusing approval would cause them to prefer land without this risk.
[153] The PAC explained why it accepted the Hennigar Report’s appraisal
method of valuing the injurious affection over that of the Altus Report. The
record supports the findings made by the PAC and the outcome is within the
range of possible, acceptable outcomes defensible on the facts and law. In my
view, the Dunsmuir criteria have been met.
[154] To overturn an administrative tribunal’s decision, the appealing
party must show that the conclusion was not rationally supported by any
material before it: Stelco Inc v British Steel Canada Inc, [2000] 3 FCR
282 at para 22, 20 Admin LR (3d) 159 (FCA). Even though there are some
questionable findings in the PAC’s analysis, there are other reasonable
findings that support its conclusion.
[155] The evidence of the two appraisers and the witnesses provided the
necessary evidence to support the Decision. The reasons of the PAC must be
taken as a whole in determining whether the Decision was reasonable, even if
not every single point in its reasoning meets the reasonableness test: Jarada
v Canada (Minister of Citizenship and Immigration), 2005 FC 409 at para 22,
[2005] FCJ No 506 (QL).
Email this Content