Social Utility at a Cost

In a March 7, 2013 decision, the Supreme Court of Canada (SCC) granted compensation to an Ontario truck stop operator who suffered damages as a result of the government’s relocation of a highway that cost the truck stop much of its business.

For many years, the Antrim Truck Stop was a successful commercial operation alongside Highway 17 near Ottawa, with annual revenues of over $15 million and more than 100 employees. Unfortunately, that particular stretch of Highway 17 was also a veritable death trap (cited by the Supreme Court of Canada as the “Killer Highway”). In 2004, to address these safety concerns, the Ministry of Transportation built a new four-lane extension of Highway 417. The new highway alleviated some of the safety concerns for traffic coming into Ottawa, but it essentially turned Highway 17 into a “dirt road” and, for all practical purposes, devastated the Antrim Truck Stop, as motorists no longer had direct access to the Truck Stop.

To be clear, there was no expropriation of any part of the Antrim Truck Stop. The owner of the Truck Stop argued, however, that it suffered “injurious affection,” which is a type of compensable damage that occurs where there is loss suffered even though no part of the owner’s land has been expropriated. Injurious affection is expressly contemplated under Section 1(1)(b) of the Expropriations Act: (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…

Initially, the Truck Stop owner won an award for injurious affection at the Ontario Municipal Board and the Ontario Divisional Court. The Court of Appeal however, reversed the decision based on a pure “public utility” type of argument. Greatly summarized, the Court of Appeal concluded that, if there is a significant public benefit, the government can perform whatever works it deems reasonably necessary and anyone negatively impacted by such work is expected to tolerate it without compensation. A very utilitarian approach to say the least.

At the SCC, counsel for the Truck Stop argued that if the Court of Appeal test stood, then almost any legitimate public purpose will almost always trump the concerns of a few injured property owners. In effect, the Court of Appeal’s position rendered injurious affection claims available only in those (hopefully very few) cases where the public purpose was not particularly serious. The MTO’s lawyers argued that the impact of Highway 417 did not affect the Antrim Truck Stop that badly, since truckers would be used to being diverted off the main highway (even though the MTO’s own experts acknowledged that the value of the Antrim Truck Stop fell by almost a third). Counsel for the MTO also argued that, in fact, the Antrim Truck Stop, even after the construction of Highway 417, continued to operate fairly successfully, and that the owners of the Antrim Truck Stop had known about the proposed construction of Highway 417 as a controlled-access highway even before they invested in the Truck Stop.

Although the MTO was supported by the government of British Columbia, The City of Toronto, and Metrolinx, as interveners, the SCC allowed the appeal, and accepted the concept of a “balance test” discussed at the Court of Appeal, but clarified that this balance test related to whether the interference suffered by the affected owner is unreasonable, not on whether the nature of the public authority’s conduct was or was not reasonable (since, almost by definition, the public authority should almost always be reasonable and have a public utility that would always outweigh the cost to individual owners). In short, the SCC concluded that injurious affection can be determined by answering the question of whether, taking into account all of the contextual circumstances, the individual claimant has shouldered a greater share of the burden of construction than it would be reasonable to expect individuals to bear without compensation. In the case of the Antrim Truck Stop, the SCC concluded that the business diversion suffered by the Truck Stop was a significant and permanent loss that was greater a share of the burden of construction than one business owner should suffer, even though the ultimate purpose of the construction (saving lives along the Killer Highway) was a noble, virtuous and important social purpose. Even if the end justifies the means, disproportionate harm to an individual or a minority will give rise to a claim for compensation.

Of course, we are living in a time of huge infrastructure investment — public, private and P3. Some observers fear that the Antrim case opens the floodgates to injurious affection cases leaving infrastructure spending at risk. While this is certainly a risk, for a number of reasons, these authors do not see the Antrim case as serious sea change in the world of public infrastructure spending.

Although the owners of the Antrim Truck Stop ultimately won the case at the SCC, the owners had originally claimed $8 million in overall injurious affection claims, but the OMB had only awarded the owners less than $400,000, or approximately 10 days pre-2004 income from the operation of the Truck Stop. The relatively paltry award in the Antrim case ameliorates against a flood of new injurious affection claims.

The Truck Stop was also fairly unique in that the construction of Highway 417 actually altered the access routes available to and from the Truck Stop. Had Highway 417 been built as a parallel road (i.e. that did not affect access to Highway 17) or as an alternative access route altogether, perhaps kilometres away, such alternative works  would have also effectively sucked the life blood out of the Antrim Truck Stop, but would not have been a valid injurious affection claims since Section 1(1)(b) of the Expropriations Act expressly includes only losses resulting from the construction of the works, and expressly excludes losses arising from the use of the works.

Furthermore, as noted environmental lawyer Dianne Sax posits, the Antrim case does not “change the ruling in [Susan Heyes v South Coast BC], that everyone must put up with disruption due to temporary construction.” It is only permanent, material, and substantial interference with his or her property that gives rise to an injurious affection claim.

Time will tell. For the time being, the owners of the Antrim Truck Stop can savour the moment and uncork the Crystal.

You might also like

Leave A Reply

Your email address will not be published.