Transit, loss, and compensation

Our column in today’s award-winning SLAW revisits the Heyes case.

“Public works often impose heavy losses on those in private property nearby. Under what circumstances should they be compensated?  That should have been the question in Heyes v. Vancouver, now Susan Heyes Inc. (Hazel & Co.) v. South Coast B.C. Transportation Authority. Alas, it was not – Heyes was decided on whether the transit builders had been at fault.”

Meanwhile, the same issue is playing out in the parallel Toronto case, Curactive Organic Skin Care v. Ontario. Following the initial success of Susan Heyes’ nuisance lawsuit against the Vancouver Canada Line, Curactive tried to launch a class action against the Toronto Transit Commission. They claim damages for  negligence, gross negligence, nuisance, and abuse of power, alleging that the TTC caused them far more disruption than was reasonable during the construction of the streetcar. The Superior Court of Justice threw out the case, giving Curactive a grace period to apply to the Ontario Municipal Board under the Expropriations Act. According to Justice Perell: “Curactive’s Statement of Claim is a claim for injurious affection, and it should be determined by the Ontario Municipal Board.” I agree.

The SLAW article continues: “Ms. Heyes’s company designed, made and sold maternity clothing in Cambie Village, Vancouver. Her business was severely disrupted during construction of the Canada Line, a regional transportation system connecting downtown Vancouver, the City of Richmond and the Vancouver International Airport. The Canada Line was built by a public-private partnership (“P3”), using federal, provincial, municipal and private funds, right through Cambie Village. Despite rosy promises of little disruption, Cambie Village was hamstrung by construction and road closures for more than three years, although none of their property was expropriated. Ms. Heyes (and allegedly her neighbours) each lost hundreds of thousands of dollars. They would have had little or no damages had the P3 used another, more expensive construction method. Should the P3 compensate her (and them)?

Ms. Heyes sought compensation in nuisance. She won $600,000 at trial, but lost it all at the Court of Appeal. The court agreed that three years of disruptions constituted a nuisance, and that Ms. Heyes had suffered heavy losses as a result. But, they held, the P3 was immune because they had statutory authority to build the Canada Line in the particular way that they did, and that Ms. Heyes’ damages were an inevitable consequence of this method.

Why is this the right question? Why should Ms. Heyes and her neighbours be left to suffer just because the P3 acted without fault? Why is fault the right benchmark for compensation when private parties suffer for the public good? Fault is irrelevant to the law of injurious affection, the usual way in which compensation is provided for damage from construction of public works. Why was it the key question for Ms. Heyes? According to Justice Sutherland, concurring in the Court of Appeal:

[182] It is not clear to me that there was the sort of right here as would support a claim in nuisance based on interference with access. Indeed the claim appears more as one sounding in injurious affection. However a claim for injurious affection could not be advanced in this case because the necessary statutory framework for such is not present.

But in the parallel class action,  (brought by other businesses in Cambie Village), Gautam v. Canada Line Rapid Transit Inc., the Supreme Court of British Columbia certified identical claims for injurious affection, precisely in case the defendants were protected from a claim in nuisance by the defence of statutory authority:

[47]   Either an owner or a lessee of property, other than a lessee of residential property under a lease having a term of less than one year, may assert a claim based on injurious affection…

[48]  The claim in respect of injurious affection may be advanced against any defendant in whom a power of expropriation has been vested by statute but not exercised. The claim may be capable of pursuit notwithstanding that the defendant is protected from a claim in nuisance by virtue of the statutory authority defence. The claim of injurious affection will therefore only be relevant if the defendants are absolved of liability for any nuisance they are found to have caused because of the protection afforded by the defence of statutory authority.

Modern law on injurious affection, the proper balance between public benefits and private costs, has been developing for nearly two centuries. It was first triggered in London during the 19th century, when massive public sewers were urgently undertaken to fight cholera, by keeping faecal matter out of drinking water.[2] There was no compensation paid then- the disruption was widely shared, everyone’s toilet contributed to the cholera problem, and everyone benefited from having it solved. Landowners who were particularly hard hit just had to bear their losses.

The public mood changed later in that century, when railroads were being built. Railroads were a public good, but not as indisputable a public good as freedom from cholera. Also, railroads were built in fewer places than sewers, so the benefits and burdens of railroads were less uniformly distributed. Compensation was first allowed for those who physically lost property to the public work, whether by sale or expropriation, including for “injurious affection” to the remaining lands. Later, compensation was also sometimes awarded to those neighbours who suffer particular damage from the construction of a public work, even if none of their own property was taken. This is called by the awkward name “injurious affection where property is not taken”, and its scope is far more controversial.

This same compromise is incorporated in the Expropriations Acts of many provinces. What about BC?

The BC Expropriations Act provides elaborate Compensation Procedures for those whose property is expropriated, in whole or in part. In fairly clear language, it provides for disturbance damages, partial takings, properties with limited markets, and frustration of leases. But it is puzzlingly indirect when it comes to injurious affection where no property has been taken:

41 (1) In this section, “injurious affection” means injurious affection caused by an expropriating authority in respect of a work or project for which the expropriating authority had the power to expropriate land.

(2) The repeal of the Expropriation Act, R.S.B.C. 1979, c. 117, and the amendments and repeals in sections 56 to 128 of the Expropriation Act, S.B.C. 1987, c. 23, are deemed not to change the law respecting injurious affection if no land of an owner is expropriated, and an owner whose land is not taken or acquired is, despite those amendments or repeals, entitled to compensation to the same extent, if any, that the owner would have been entitled to had those enactments not been amended or repealed.

(4) Without limiting any other provision of this section, the BC Transportation Financing Authority has no greater liability to compensate an owner for injurious affection than does the minister responsible for the administration of the Transportation Act.

As a result, Ms. Heyes sued in nuisance, and lost on the frustrating, and arguably irrelevant, ground that the P3 had been without fault. It is not yet clear what impact her loss will have on the Gautam class action.”

Dianne Saxe, written for SLAW