Supreme Court of Canada
Saint John Priory of Canada Properties v. City of Saint John, [1972] S.C.R. 746
Date: 1972-03-30
Saint John Priory of Canada Properties Appellant;
and
The City of Saint John Respondent.
1971: October 12; 1972: March 30.
Present: Ritchie, Hall, Spence, Pigeon and Laskin JJ.
ON APPEAL FROM THE SUPREME COURT OF NEW BRUNSWICK, APPEAL DIVISION
Expropriation—Compensation—Property required as part of land assembly for urban renewal redevelopment scheme—Expropriation proceeding not begun until after all other required properties acquired.
The respondent municipality expropriated certain property of the appellant, a holding corporation for a charitable organization. The property was required as forming part of the land assembly necessary to erect a “City Hall Complex” on a particular parcel of land. The expropriation proceeding was not begun until the respondent had acquired by purchase or option all of the property needed for the proposed scheme save the subject property. While it had a very limited use and was not attractive to commercial users, the property was ideally located for the purposes for which it was used by the appellant.
The Land Compensation Board awarded the appellant the sum of $37,700. An appeal was taken to the Appeal Division of the Supreme Court of New Brunswick which increased the award to $45,676.10 with interest. The amount included an item of $2,676.10 awarded for damages and losses incurred by the forceful taking. On further appeal to this Court, the sole issue for determination was the amount to be paid for the property.
Held (Pigeon J. dissenting): The appeal should be allowed and the award increased to $67,676.10.
Per Ritchie, Hall, Spence and Laskin JJ.: Value to the owner is the principle upon which compensation should be awarded in a case of this kind and the amount payable is to be calculated on the highest and best use of the expropriated property. The highest and best use to which the property could be put was as part of the respondent’s urban renewal redevelopment scheme.
[Page 747]
Taking into consideration all the factors which the evidence in the record disclosed, including the evidence of the respondent’s appraiser as to prices paid or agreed to for the surrounding properties, and the realized potentiality of the lot in question in the unique situation obtaining here and the fact that the property was ideally located for the purposes for which it was used by the appellant, the latter was entitled to compensation in an amount substantially in excess of that fixed by the Appeal Division.
Per Pigeon J., dissenting: In expropriation cases it is the value to the owner, not the value to the taker which is the basis of compensation, and this rule is as applicable when the notice of expropriation is given after the project for which the expropriation is made has become known, as when it has been kept secret. In the present case there was no evidence to show that, on any basis other than value to the taker, the property expropriated was worth more than the compensation fixed by the Court of Appeal.
[Diggon-Hibben Ltd. v. The King, [1949] S.C.R. 712; Fraser v. The Queen, [1963] S.C.R. 455, followed]
APPEAL from a judgment of the Supreme Court of New Brunswick, Appeal Division, allowing the appellant’s appeal from a decision of the Land Commission Board of the Province of New Brunswick. Appeal allowed, Pigeon J. dissenting.
G.E. Beament, Q.C., and W.G. Burke-Robertson, Q.C., for the appellant.
G.T. Clark, Q.C., and D.P. Pappas, for the respondent.
The judgment of Ritchie, Hall, Spence and Laskin JJ. was delivered by
HALL J.—This is an appeal from a judgment of the Appeal Division of the Supreme Court of New Brunswick relative to the compensation payable by the respondent for certain property of the appellant taken by expropriation.
St. John Priory of Canada Properties is a corporation without share capital incorporated by special Act of the Parliament of Canada, 1914 (Can.), c. 145, as amended by 1964-65 (Can.), c. 77. Upon incorporation its name was The
[Page 748]
General Council of the Canadian Branch of the St. John Ambulance Association. At all times relevant to this appeal it has performed the function of a holding corporation for an unincorporated body, The Priory of Canada of the Most Venerable Order of the Hospital of St. John of Jerusalem and its Foundations in Canada, St. John Ambulance Brigade and St. John Ambulance Association. The amending special Act of 1964-65, while retaining the corporate entity, changed its name to St. John Priory of Canada Properties and changed all other provisions of the Act of incorporation to those appropriate to the function of a holding corporation, which function it was in fact performing. The activities of The Priory of Canada and its Foundations in the Province of New Brunswick have at all times relevant to this appeal been the primary responsibility of its Provincial Council for New Brunswick with headquarters in the City of Saint John in that Province.
The property taken and the uses to which it was being put by the appellant are as follows:
(a) It is situated approximately 100 feet north of Market Square and it has a frontage of 53.8 feet, a depth of approximately 127 feet and an area of at least 6,830 square feet as shown on City of St. John Plan, Sheet No. 2 (Exhibit 19).
(b) The main building on the property built about 1900 was of solid brick construction faced with stone at the front and consisted of four storeys and a basement. There was a brick extension at the rear and a separate unheated garage for three vehicles, both added prior to 1952.
(c) Since the acquisition of this property by the appellant in 1952, it was used continuously by the Provincial Council for New Brunswick of St. John Ambulance as its headquarters and to carry on the various activities, both provincial and local, of the St. John Ambulance Brigade and the St. John Ambulance Association for which purposes it was entirely suitable.
(d) The appellant’s property, being beneficially owned and occupied by a charitable organization, was exempt from municipal taxation.
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Hughes J. in the Appeal Division, referring to the property, said:
While the property had a very limited use and was not attractive to commercial users, it was ideally located for the purposes for which it was used by the claimant and the various organizations associated with it, and I am satisfied that it was difficult, if not impossible, to acquire suitable accommodation for the sum awarded.
The property had been acquired by the appellant in 1952 for $25,000. It was maintained in fair condition during the intervening years at a total cost of about $10,000 for a new roof, new furnaces and repairs to the heating and plumbing systems.
By resolution of the Common Council of the City of Saint John dated April 29, 1968, registered the following day in the Registry Office for Saint John County, the respondent effected the expropriation of the entire holding of the claimant, who remained in possession, however, until June 18, 1968. The property was required as forming part of the land assembly necessary to erect a “City Hall Complex” on an irregularly shaped parcel of land bound on the easterly side by Prince William Street, on the south by Market Square, on the westerly side by Dock Street, and on the north by the rear line of properties facing on Union Street, along the entire block from Dock to Prince William Streets as shown by ex. 26.
The parties being unable to agree upon the amount to be paid by the respondent for the property, the matter was referred to the Land Compensation Board of the Province of New Brunswick, being the body charged with fixing the compensation payable following expropriation proceedings. The Board, after hearing evidence, awarded the appellant the sum of $37,700. An appeal was taken to the Appeal Division which increased the award to $45,676.10 with interest at 5 per cent from June 18, 1968. The amount includes an item of $2,676.10 awarded for damages and losses incurred by the forceful taking and that item is not now in dispute. The sole issue for determination is the amount to be paid for the property. There is no cross-appeal so the altern-
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ative order asked for by the respondent in its factum at p. 12 may be ignored.
The principle upon which compensation should be awarded in a case of this kind as stated by Rand J. in Diggon-Hibben Ltd. v. The King, at p. 715, is as follows:
… The owner at the moment of expropriation is to be deemed as without title, but all else remaining the same, and the question is what would he, as a prudent man, at that moment, pay for the property rather than be ejected from it.
It should be added that the amount payable is to be calculated on the highest and best use of the expropriated property.
Neither the Board nor the Appeal Division made a finding as to the highest and best use of the subject property. The Board’s finding appears to have been made on the basis of “comparables” and the Appeal Division, accepting the valuation of Mr. de Stetcher, appears to have acted on the same basis. Mr. de Stetcher, in his evidence, stated his belief that the highest and best use of the property was the use being made of it by the appellant and that eventually it could be used for redevelopment.
Counsel at the hearing in this Court were in agreement that the highest and best use to which the property could be put was as part of the urban renewal redevelopment scheme as proposed by the consulting engineers and adopted by the respondent. There was, accordingly, error on the part of the Board and in the Appeal Division. The evidence as to value on this basis (highest and best use) was rather minimal. Barry J. in his reasons said in this regard:
While I also agree with his award, I do so with some hesitation, not because I think his award of $43,000.00 plus. the original extras allowed of $2,676.10, plus interest, is high, but because it strikes me that this court is left with practically no
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evidence directed to a valuation of the premises in accordance with the legal principles which governed the situation.
As Hughes, J.A., points out, had the whole area been expropriated, the given evidence could have been helpful, but here we have a situation where the appellant’s property was taken after a whole scheme was in the process of taking place adjacent to the expropriated premises. This factor alone would normally increase the value of the appellant’s premises substantially, but we do not know by how much. The procedure adopted by the public authority could be a very expensive one.
I personally would have been inclined to send the matter back to the Board to enable it to hear evidence in the light of the relevant law, rather than to have this court use statistics and mathematics to determine the value. However, as the majority of the court has elected to proceed on a square foot valuation basis, with which method I personally do not agree, I will not dissent.
Being of opinion that neither the award of the Board nor the amount fixed by the Appeal Division can stand, I feel that although the evidence as to value is somewhat meagre it is nevertheless sufficient upon which to arrive at a proper valuation and the Court should act on it rather than to put the parties to the expense involved in a rehearing.
As Barry J. points out, the situation here is unique. The expropriation proceeding was not begun until the respondent had acquired by purchase or option all of the property needed for the proposed scheme save the subject property. In this situation the property had acquired a realized potentiality which had to be taken into account in fixing its value as of the date of expropriation. This is a case in which the statement by Ritchie J. in Fraser v. The Queen, at p. 476:
The significance of the phrase “realized possibility” as employed in the authorities is illustrated by the following excerpt from the reasons for judgment of Lord Romer in the Indian case (Vyricherla
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Naravana Gajapatiraju (Raja) v. Revenue Divisional Officer, Vizagapatam, [1939] A.C. 302) at p. 313:
“No one can suppose in the case of land which is certain, or even likely, to be used in the immediate or reasonably near future for building purposes, but which at the valuation date is waste land or is being used for agricultural purposes, that the owner, however willing a vendor, will be content to sell the land for its value as waste or agricultural land as the case may be. It is plain that in ascertaining its value the possibility of its being used for building purposes will have to be taken into account. It is equally plain, however, that the land must not be valued as though it had already been built upon, a proposition that… is sometimes expressed by saying that it is the possibilities of the land and not its realized possibilities that must be taken into consideration.”
is applicable.
The respondent acquired eight surrounding properties in the same block as shown by ex. 26 by purchase or option as part of the redevelopment scheme before expropriating appellant’s property. It had intended acquiring another property, being Lot 5 facing on Dock Street, but decided that that lot was too expensive, having regard to the value of the building then on it. There was the evidence of Roy de Stetcher, the respondent’s expert appraiser, that Lots 7, 9, 10, 11, 12 and 22 were acquired by purchase or option prior to the expropriation as follows: Lot 7 at $0.57, Lot 9 at $16.51, Lot 10 at $44.21, Lot 11 at $42.82, Lot 12 at $25.11, and Lot 22 at $14.95 per square foot in each case. The corresponding figures for Lots 6 and 8 were not available on the square foot basis. Lot 7 acquired for $0.57 per square foot was entirely landlocked without access or right of way thereto. There were buildings on Lots 10, 11, 12 and 22 said to be more modern and valuable than appellant’s building on Lot 23. Moreover, in the price paid or agreed to for Lots 10, 11, 12 and 22, allowances were made for business interruption and other factors so it is not possible to arrive at an accurate comparison of the value of these various properties on a square foot basis but the figures and evidence given are available as an aid in arriving at relative values. Lot 22 situate immediately north of appellant’s
[Page 753]
property with a frontage of 31.7 feet as compared to 53.8 feet for Lot 23 was valued at $14.95 a square foot. It was argued that on this basis Lot 23 could be said to be worth $102,108.50, but as mentioned the evidence was that the building on Lot 22 was newer and in better shape than the appellant’s building on Lot 23.
Arriving at a valuation for a property such as the appellant’s lot in this case is not something which can be calculated to a mathematical certainty and involves the consideration of many factors. Having taken all the factors which the evidence in the record discloses, including those mentioned by Mr. de Stetcher in his evidence, and the realized potentiality of the lot in question in the unique situation obtaining here and the fact that the property was, as Hughes J.A. in his reasons said, “ideally located for the purposes for which it was used by the claimant…”, I am of opinion that the appellant is entitled to compensation in an amount substantially in excess of that fixed by the Appeal Division and I would fix the amount payable to the appellant for the property at $65,000. To this must be added the $2,676.10 not in dispute to make a total of $67,676.10.
I would accordingly allow the appeal by varying the award from $45,676.10 to $67,676.10 with interest thereon at 5 per cent from June 18, 1968, together with costs throughout.
PIGEON J. (dissenting)—I have had the advantage of reading the reasons of my brother Hall. With deference, I cannot admit the principle of the Fraser case and do not feel bound by it. In Irving Oil Company Ltd. v. The King, and in Diggon-Hibben Ltd. v. The King, it was established that in expropriation cases it is the value to the owner, not the value to the taker which is the basis of compensation. Estey J. said in the last-mentioned case (at p. 717):
It is the value to the owner and not the market value or value to the purchaser that must be determined.
[Page 754]
Locke J. said (at p. 724):
It is the value to the owner as it existed at the date of the taking and not the value to the taker which is to be determined.
I cannot accept that a distinction is to be introduced. The authorities on which those statements were based make it clear that the rule is as applicable when the notice of expropriation is given after the project for which the expropriation is made has become known, as when it has been kept secret.
In Kraft Construction Company Ltd. v. Metropolitan Corporation of Greater Winnipeg, this Court accepted the principle that in the determination of compensation, the expropriated owner should not be permitted to suffer from a dimunition in value caused by what is known as “planning blight”, due to prior expropriations of property in the immediate area and the general knowledge that further expropriations might take place. It seems to me equally unfair that an owner should obtain a windfall at the expense of an expropriating authority, by obtaining not what his property is worth in itself or for him, but what it is worth for the purposes of the project undertaken. This would work a hardship towards expropriating authorities who are obliged to make their plans known in advance or choose to do so, and favour the authorities with unlimited expropriation powers who proceed to expropriate large areas first and make plans later, with the result that sometimes they make resales at a profit (Protestant School Commissioners of Montreal v. Royal Trust Co.)
The rule in many expropriation authorizing legislations that compulsory taking is permitted only after definite plans are made and approved is, in my opinion, very desirable because the taking is thus limited to what is strictly necessary. This method should not result in obliging the expropriating authorities to pay greater compensation. To penalize authorities who proceed in this way by making them pay on the basis of what the land is worth for their project, would tend to encourage indiscriminate expropriation for avoiding this consequence.
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I am unable to discover in the record of this case any evidence that would show that, on any basis other than the value to the taker, the property expropriated is worth more than the compensation fixed by the Court of Appeal. For that reason, although I cannot find that, either in the trial Court or on appeal, compensation was assessed on a proper basis, I would dismiss the appeal with costs.
Appeal allowed with costs, PIGEON J. dissenting.
Solicitors for the appellant: Guss, Taylor & Gregory, Saint John.
Solicitors for the respondent: Drummie, Drummie, Clark & Pappas, Saint John.
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