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What’s the Value of a Truck Stop Without Any Trucks? Supreme Court Addresses Nuisance Claims in Public Projects

Posted in Case Comments, Construction and Real Estate, Torts, Transportation
Martin BoodmanJulie ParlaElder Marques

In a new decision, the Supreme Court of Canada has provided guidance on when compensation might be due in cases of nuisance caused by public infrastructure projects.  The Antrim decision is relevant not only for those involved in the management of public projects, but it also shapes the more general law of nuisance, especially in relation to particularly disruptive construction projects.

Background

For 26 years, Antrim Truck Centre Ltd. operated a truck stop on Highway 17 in Eastern Ontario. Then in 2004, the Province constructed a new highway, and forever altered Highway 17. No longer could motorists access the truck stop – its business was lost and the market value of its land was permanently impacted. Antrim sought compensation from the Province based on the legal principle of “injurious affection.” And the Supreme Court granted it.  It upheld a decision of the Ontario Municipal Board (which had been overturned by the Ontario Court of Appeal), awarding Antrim $393,000.

The Supreme Court set out a legal framework for injurious affection and nuisance claims resulting from the activity of a public authority. The guidelines make one conclusion clear: whether damages are warranted is a factual question. On the upside, the decision confirms that not all interference will attract a claim for compensation; there is little threat of floodgates. On the downside, the principles are deliberately general so as to address whatever unique circumstances may arise in public projects. Other than in extreme cases – where there is, as the Court found here, “significant and permanent interference” – the precise implications of Antrim are hard to predict.  The case does raise new questions of when the costs of a public project will need to account for the risk of damages for interference to third parties.

The Legal Framework

Under the Ontario Expropriations Act, compensation is available where three criteria are made out:

  1. damages result from an action taken under statutory authority;
  2. the action would give rise to liability except for the fact that it was taken by a statutory authority; and
  3. the damage results from the construction rather than the ultimate use of the work.

The decision focuses on the second criterion.

The “actionability” of the public authority’s conduct is a matter of applying the law of private nuisance. A claim in private nuisance requires interference with the use or enjoyment of land that is both substantial and unreasonable. But what does that mean?

The Balance: “Give and Take” vs. a Disproportionate Burden

The Court refrained from identifying indicators or thresholds for substantial interference, which clearly are fact specific, and instead simply confirmed that the interference must be “non-trivial.”

The criterion of unreasonableness is a balancing act, namely, weighing the gravity of the interference against the utility of the public authority’s conduct. As noted in an earlier Monitor post when the Supreme Court granted leave to appeal Antrim, the question of what “balancing” means in the context of public projects was at the heart of the appeal.  In its decision, the Supreme Court was clear that the public utility of a project is not given any special or even equal weight. The Court recognized that to balance the public good as against individual harm, without looking at all relevant factors, would always tip the scales in favour of the public purpose. For that reason, the fact that there is public utility in the Province’s actions cannot by itself answer the reasonableness inquiry. “Reasonableness” must ask whether a private citizen should bear the brunt of the interference, not whether it was reasonable for the work to be undertaken:

If [the acts of a public authority are] simply put in the balance with the private interest, public utility will generally outweigh even very significant interferences with the claimant’s land. That sort of simple balancing of public utility against private harm undercuts the purpose of providing compensation for injurious affection. That purpose is to ensure that individual members of the public do not have to bear a disproportionate share of the cost of procuring the public benefit. This purpose is fulfilled, however, if the focus of the reasonableness analysis is kept on whether it is reasonable for the individual to bear the interference without compensation, not on whether it was reasonable for the statutory authority to undertake the work. In short, the question is whether the damage flowing from the interference should be properly viewed as a cost of “running the system” and therefore borne by the public generally, or as the type of interference that should properly be accepted by an individual as part of the cost of living in organized society.  (para. 38)

The Court ultimately described the distinction as between “on one hand, interferences that constitute the “give and take” expected of everyone and, on the other, interferences that impose a disproportionate burden on individuals.”

Of course, not every interference, even if substantial, will automatically be unreasonable. The Court’s test considers the severity of the interference, the nature of the neighbourhood, the duration, and sensitivity of the plaintiff – all of which may support the conclusion we are dealing with nothing more than the plaintiff’s “fair share” of the costs associated with providing a public benefit. Key too is the public authority’s reasonable efforts to reduce the impact of its works on its neighbours. An important lesson of Antrim is that those efforts count in the balance, and parties managing major public projects will benefit if they have considered how best to mitigate interference on third parties.

The Court in Antrim ordered compensation because the construction of the provincial highway effectively closed the route on which the claimant’s truck stop was located. The interference was clearly substantial and unreasonable because it permanently ended Antrim’s business and reduced the market value of its land. For less extreme types of interference, the Court’s guidelines will provide less certainty as to the right to compensation, which will remain highly fact-specific.

Case Information

Antrim Truck Centre Ltd. v. Ontario (Transportation), 2013 SCC 13

Supreme Court Docket: 34413

Date of Decision: March 7, 2013