Case comment: Antrim Truck Centre Ltd. v. Ontario (Minister of Transportation), [2011] O.J. No. 2451 (Ont. C.A.).

16 December 2011

The Court held that in balancing the competing interests arising in the law of nuisance (which is implicitly incorporated by the ‘actionable rule’ discussed below, into the statutory definition of injurious affection where no land is taken), substantial weight must be given to the utility of the public project. Applying that standard to the facts of the case led the Court to overturn the original award and reject the claim.  Leave to appeal is being sought to the Supreme Court of Canada.  While awaiting the outcome of that appeal process, the case will provide comfort to public authorities that claims from adjacent landowners from whom no land is taken, but impacted by the project, will be reduced, and conversely landowners will be concerned that they will have to bear the burden of such changes without compensation.

Facts

Antrim Truck Centre Ltd. (“Antrim”) owned and operated for many years a successful truck stop on Highway 17 near Ottawa.  In 2004, the Ministry of Transportation (“MTO”) constructed the new Highway 417, rerouting traffic from Highway 17 for public safety purposes.  There was no taking of Antrim’s property; however, Antrim brought a claim for injurious affection under the definition in Section 1(1)(b) of the Expropriations Act which provides

(b) where the statutory authority does not acquire part of the land of an owner,

  1. such reduction in the market value of the land of the owner,  and
  2. such personal and business damages,

resulting from the construction and not the use of the works by the statutory authority, as the statutory authority would be liable for if the construction were not under the authority of a statute,

Antrim claimed approximately eight million dollars in relocation business loss damages as a result of moving the business and suffering reduced traffic from that which prevailed at the original business location.  Antrim argued that the construction impeded road access to the truck stop, reducing traffic, and therefore its business.  Access to Highway 417 was blocked east of Antrim’s property, but access remained available through Regional Road 20 from Highway 417, about two kilometres away.

Prior Decisions

The Ontario Municipal Board (“OMB”) awarded $335,000 in injurious affection damages to Antrim for market value loss, while denying all of the business relocation damages claimed.

On appeal, the Divisional Court upheld the OMB’s decision.  MTO appealed to the Ontario Court of Appeal. Antrim cross-appealed on the issue of quantification of damages.

Ontario Court of Appeal Decision

The MTO’s Appeal was granted (and the Antrim cross-appeal dismissed), as the Court ruled that the OMB erred in its application of the test for nuisance and that the Divisional Court erred in upholding the OMB’s decision.  The Court noted the applicable common law tests flowing from the statutory definition of injurious affection:

21     The board correctly observed that to succeed on a claim for injurious affection, where no land has been acquired, the following legal tests had to be met:

  1. The damage must result from an act rendered lawful by statutory powers of the person performing such act (the statutory authority rule).
  2. The damage must be such as would be actionable under the common law, but for the statutory powers (the actionable rule).
  3. The damage must be occasioned by the construction of the public work, not its use (the construction not the use rule).

St. Pierre v. Ontario (Minister of Transportation and Communications), [1987] 1 S.C.R. 906, at p. 909.

22     After acknowledging that there was no dispute that the statutory authority rule had been met, the board turned its attention to the actionable rule.

Nuisance

23     The OMB noted that Antrim sought to satisfy the actionable rule by arguing that, were it not for the MTO's statutory authority, it would have a common law claim in nuisance on the basis that the MTO's actions restricted its common law right of access. The focus of Antrim's claim in nuisance was clearly how the new highway, and the associated reconfiguration of the local road net-work, affected the access to its property.

24     With reference to the following passage from St. Pierre, the board identified the requirement that, in determining whether actionable nuisance has been established, the competing interests of the parties must be balanced:

‘All highway construction will cause disruption. Sometimes it will damage property, sometimes it will enhance its value. To fix the Minister with liability for damages to every landowner whose property interest is damaged, by reason only of the construction of a highway on neighbouring lands, would place an intolerable burden on the public purse. Highways are necessary: they cause disruption. In the balancing process inherent in the law of nuisance, their utility for the public good far outweighs the disruption and injury which is visited upon some ad-joining lands. The law of nuisance will not extend to allow for compensation in this case.’

25     The board reviewed the evidence relevant to its analysis of what it referred to as the "reasonableness of the [MTO's] actions." This review included the actual effect of the new road on access to the Antrim site, the fact that the new highway was built for safety reasons, that the MTO offered Antrim signage to identify its business from the new highway and the board's finding that the new interchange, used to access the property from Highway 417, was safe.

26     The board then turned to "contrasting the public benefits with the individual's detriment" and found that it was not satisfied that access on Highway 17 remained as before. Rather, due to its merger with an unpaved local road, Highway 17 had been reduced to a "shadow of what it was before Highway 417.

The Court of Appeal re-stated that a claim for nuisance involves a basic two-step test.  First, there must be “substantial interference.”  Second, that interference must be unreasonable.  In determining whether the interference is unreasonable, the Court must take into account 4 factors:

  1. the severity of the interference;
  2. the character of the neighbourhood;
  3. the utility of the Defendant’s conduct; and
  4. the sensitivity of the Plaintiff.

The Court of Appeal agreed with the OMB that, on the facts, there was  a substantial interference with Antrim’s property.  With the new highway, any potential customer had to drive two kilometres, so traffic was significantly reduced.  However, the Court of Appeal found that the OMB’s reasonableness analysis was flawed, and the Divisional Court failed to even evaluate the OMB’s reasonableness analysis.

Was The Interference Unreasonable ?

The Court found the OMB failed to consider the character of the neighbourhood and any abnormal sensitivity of Antrim.  The character of the neighbourhood was known by Antrim when they purchased the land.  The highway posed safety risks.  They knew a new highway would eventually be built.  They had no reason to believe the new highway would be built on the same route and no guarantee that access to their property would not be effected.  Had the OMB considered the character of the neighbourhood, the Court held that they would have found support for the reasonableness for the interference, as it was universally accepted that the existing highway was inadequate for the level of traffic on it.

On the point of abnormal sensitivity, the Court stated that Antrim did not have any abnormal sensitivity, but emphasized the importance of still performing the analysis on this point.

Utility of Conduct

Further, and most importantly to the Court, the Board failed to recognize the importance of the utility of the MTO’s conduct, as the interference was the product of “an essential public service”.  The Court of Appeal’s view was succinctly stated: “There is no debate that the actions of the MTO were not only socially beneficial, but also necessary.”

Although the MTO’s interference amounted to a “serious impairment in nuisance”, it was for the Court within what a reasonable property owner should be expected to tolerate and was the result of a project in the public interest for public safety.

“In failing to properly carry out the reasonableness analysis, the board failed to give effect to the fundamental purpose of the law of nuisance: balancing the competing rights of property owners to use their land as they wish…balanced against the public interest in the project causing that interference.”

Therefore, the Court held that in conducting that test, Antrim’s claim in nuisance was not made out when the interference was balanced with the reasonableness of the public interest which was largely premised on the public safety aspects of the project.

The Court stated:

137     The board's consideration of the utility of the new highway at p. 12 of its reasons was, in my view, insufficient. In Mandrake Management, at para. 50, this court directed that "where an essential public service is involved, the factor of the utility of the defendant's conduct must not be disregarded. Indeed, I think it must be given substantial weight" (emphasis added). The direction in Mandrake Management employs mandatory language. The board's failure to give effect to that direction constitutes, in my opinion, an error of law.

138     Given the compelling argument that the actions of the MTO were not only in the public interest but also necessary for public safety, there is good reason to believe that, had the board given the appropriate weight to this factor, the scales would have heavily tilted toward a finding that the interference was reasonable.

139     The board's near-exclusive focus on its conclusion that the interference with access was substantial, its failure to take into account the characteristics of the location and its failure to give adequate weight to the utility of the new highway, require this court to perform the analysis itself: see Mandrake Management, at para. 49.

140     When the board's factual findings are properly applied to the various elements of the reasonableness analysis, I would conclude, based on the observations made above, that the interference caused by the MTO's conduct was not unreasonable. As the board reasonably concluded, the interference amounted to a "serious impairment in nuisance". However, the interference was such that it fell within the boundaries of what the reasonable property owner in the area should be expected to tolerate and was the result of a project that served the public interest - more, was actually essential to public safety. Simply put, the highway was built to save lives. In the light of the substantial weight to be given to this factor in the circumstances, it is difficult to see how this change in the access to the Antrim property, particularly given the fact that it actually brought the Antrim truck stop in line with the access typical of Ontario truck stops, can be viewed as unreasonable.

Balancing

141     In failing to properly carry out the reasonableness analysis, the board failed to give effect to the fundamental purpose of the law of nuisance: balancing the competing rights of property owners to use their land as they wish.

142     The board did acknowledge at p. 11 of its reasons that nuisance involves a "balancing of interests":

‘The Board does not interpret the St. Pierre reasoning as to the necessity of the highway construction as argued to be obiter, but rather a finding in that case on whether on its facts and with the necessary balancing of interests was the second test of being actionable at common law met.’

143     Unfortunately, it failed to balance. Instead, after identifying factors that had been advanced by the parties as to the reasonableness of the interference, the board proceeded directly to its conclusion that the interference was substantial on the basis that access to Highway 17 was not "as before". On this alone, without contrasting the public benefit with the private detriment and without explaining how one outweighed the other, the board concluded that there was a common law claim in nuisance. With respect, this was not enough. The board was required to consider whether the interference suffered by Antrim was reasonable when balanced against the public interest in the project causing that interference. That the interference was substantial is only one element of the equation.

Notably the original decision at the OMB, however considered the issue of public safety both at the new and former locations which in the case of the former highway it recited from the MTO witness as being known as  a ‘killer highway”.  Moreover the Board member adverted expressly to the balancing of interests in the following passages:

The Board does not interpret the St. Pierre reasoning as to the necessity of highway construction as argued to be obiter, but rather a finding in that case on whether on its facts and with the necessary balancing of interests was the second test of being actionable at common law met.

44     Even though St. Pierre has been followed in Board decisions Coady v. Town of Port Hope, Duncan Travel v. Port Hope (1987) 38 L.C.R. 66 and Mid Transportation Services Ltd. v. Windsor (City), [1994] O.M.B.D. No.519 where claims for injurious affection based on nuisance were re-jected, the Board must still determine on a case by case basis whether the claim is actionable in nuisance (or other tort).

45     In the present case, the Board finds the following to be evidence of the reasonableness of the Respondent's actions.

The Board member proceeded with an extensive review of those actions and then continued his analysis:

51     The Board in contrasting the public benefits with the individual's detriment is not satisfied with the Respondent's position that access on Highway 17 remains as before…. Mr. Pawliuk's evidence is that the Ministry had to consider the environment, residents and safety in the planning process for the alignment of Highway 417. In his review of alternatives, the twining of Highway 17 was considered but the cost of constructing access from new service roads for existing residents (not from controlled access Highway 417) was a concern. The Respondent attempted to place the Claimants in other locations without success. The Respondent was helpful perhaps knowing what the impact might be on the Claimants. Mr. Pawliuk admitted to sharing the concerns of Mr. Cameron for the viability of his business and that two of the alternative designs considered by the Respondent in the planning process for Highway 417, provided direct access to the Claimant's property.

54     The Board finds that the ending of Highway 17 at Grants Side Road cannot be disguised as a continuation of a paved highway on an unpaved local road. Highway 17 remains but a shadow of what it was before Highway 417. The Respondent witness Forbes described the before and after as putting the Claimant on a service road or secondary road as opposed to a main road. That the Board finds amounts to liability but for the benefit of Statute, as serious impairment in nuisance, in the manner of Loiselle Supra.

Despite these statements, the Court as noted in it’s reasons cited above, rejected that review by the Board as an insufficient analysis and balancing of the factors, did not defer to the Board findings and proceeded to draw their own conclusions, focusing primarily upon public safety.

144     When the interference to Antrim's access, while significant but clearly far from complete, is measured against the reasonableness of the MTO's use of its land, in an area through which a highway already ran, for the purpose of protecting the public from danger, the conclusion must be that Antrim has not made out a case in nuisance.

Notably however, the Court, unlike the Board, did not advert to the potential for alternative plan designs that preserved the existing access which may have influenced the Board to conclude that there were other ways to satisfy the public safety concerns while preserving the existing access.

The Antrim decision leaves unanswered, what steps must a property owner undertake or what evidence will be required to show that the utility of the public project is outweighed by the private interest which has been substantially interfered with?  Would establishing a longer list of potential alternatives that preserved the existing access while satisfying road safety issues, have resolved the Courts’ concerns?  Public safety will always be a primary consideration in any road project, so how would that factor then be found to be outweighed by any private interest?  Is there any room left to make such claims?  Currently, leave to appeal is being sought by Antrim to the Supreme Court of Canada, where Antrim argues that the Court of Appeal focus on the utility of the public interest in a balancing test in the law of nuisance will always tilt in favour of the expropriation authority.

Commentators will watch with great interest to see if leave to appeal is granted and how the issue of balancing private and public interests in similar cases is addressed either on further appeal or in later cases.


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