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EXPROPRIATION - Entitlement - Compensable interests - Injurious affection

Tuesday, June 16, 2020 @ 9:14 AM  

Lexis Advance® Quicklaw®
Appeal by the defendant TransLink from a summary trial arising from a class action proceeding. The summary trial judge awarded compensation to the respondent plaintiffs for injurious affection to their real property interests caused by the construction of the Canada Line on Cambie Street between November 2005 and July 2009. All three respondents operated businesses in leased premises on Cambie Street. They commenced the action in 2008 for damages for nuisance. In 2009, they filed an amended statement of claim seeking damages for injurious affection. The respondent Gautam advanced a claim for loss of value to his leasehold interest for the fiscal year 2006. Dubberley advanced a claim for loss of value to the leasehold interest for the fiscal years 2007 and 2008. Festival Cinemas advanced a claim for loss of value to the leasehold interest for the fiscal years 2007 to 2009. The judge held the respondents had established unreasonable interference that persisted beyond July 2008, one year prior to amendment of the claim. The judge concluded that the respondents were entitled to compensation for injuries sustained to the value of their leasehold interests at any point in time during the construction of the Canada Line. The judge held that no part of the respondents’ claims was barred because the damage referred to in the limitation clause was the totality of the loss that formed the claim for compensation. In his view, the damage was not complete until the unreasonable interference ended, which he found was within the limitation period for all three respondents.

HELD: Appeal allowed. The claim by Gautam was dismissed. New trial ordered on whether the appellant unreasonably interfered with the use and enjoyment of lands leased by Dubberley and Festival Cinemas after July 17, 2008, and their entitlement to compensation. The judge erred in his interpretation of the limitation period in s.42(1) of the Expropriation Act and in his analysis of unreasonable interference. There were also methodological weaknesses in his approach to the assessment of damages. The respondents could claim only in respect of the diminution in the value of their leasehold interests from July 2008 onward. The limitation provision of the Expropriation Act barred claims for damage suffered before July 2008. Therefore, Gautam’s claim was fully barred and the claims of Dubberley and Festival Cinemas were partially barred. It was not enough to find that the construction of the Canada Line caused a significant and prolonged interference for all businesses in the area. The judge effectively converted the issue of unreasonableness into a common, class‑wide issue. The judge’s analysis of unreasonable interference was subsumed entirely within his analysis on the limitation period and appeared to be directed solely at showing that unreasonable interference persisted beyond July 2008. At no point did the judge assess the unique circumstances of each business, nor did he arrive at a specific finding on when the unreasonable interference began and ended which was a critical omission. The judge’s failure to conduct an individualized assessment of unreasonable interference for each respondent and to determine when such unreasonable interference began and ended, relying on the appropriate factors, was an error requiring a new trial. There were serious flaws in the judge’s approach to assessing the impact of the construction on the market value of the plaintiffs’ leasehold interests. The evidence did not support the judge’s method for calculating reduction in market rent. The judge substantially disregarded the role of lease renewals during the construction. By substantially ignoring the mid‑construction lease renewals, the judge awarded compensation that was inconsistent with the principles underlying a claim in injurious affection. Instead of compensating Gautam and Dubberley for the loss of market value in their leasehold interests, he potentially awarded them compensation for the premium on market value that they agreed to pay.

Gautam (c.o.b. Cambie General Store) v. Canada Line Rapid Transit Inc., [2020] B.C.J. No. 790, British Columbia Court of Appeal, H. Groberman, S. Stromberg-Stein and S.A. Griffin JJ.A., May 13, 2020. Digest No. TLD-June152020003