E.C.B. Number 8/91/210

[1] The claimant, Pay Less Gas Co. (1972) Ltd. ("Pay Less") was the registered owner of lands (the "subject lands") adjacent to the Trans-Canada Highway ("the TCH") in Mill Bay, British Columbia, from which, until late September 1990, it operated an older style service station. Pay Less designated the outlet as "Station 48" in its chain of service stations located on Vancouver Island. The claimant, Shell Canada Products Ltd. ("Shell"), was the registered owner of a head lease on the subject lands having a term of 15 years commencing July 1, 1989.

[2] In the course of a project to widen and realign the TCH through Mill Bay in 1990 and 1991, the respondent, Her Majesty the Queen in Right of the Province of British Columbia as represented by the Minister of Transportation and Highways (the "Ministry"), required a large portion of the subject lands. As a result, Station 48 closed on September 30, 1990, and was soon after demolished. Pay Less and the Ministry concluded agreements for the acquisition of the subject lands on October 26, 1990, pursuant to section 3 of the Expropriation Act, S.B.C. 1987, c. 23, now R.S.B.C. 1996, c. 125 (the "Act"). Those agreements left open to the claimants the option to pursue claims for compensation before the board as if the subject lands had been expropriated. As a matter of stylistic convenience, the board in this decision has frequently referred to the Ministry's acquisition using the terms "expropriation" or "taking". References throughout these reasons to sections of the Act are to the sections in the 1996 revision unless otherwise indicated.

[3] During 1990, Pay Less purchased other lands beside the TCH in Mill Bay and proceeded to build a modern, much larger and more diverse service station outlet. The Ministry has referred to it as the "Taj Mahal" of gas stations. It began operation on November 7, 1992, and was designated as "Station 88" within the Pay Less chain. From the time of closure of Station 48 until the opening of Station 88, Pay Less was left without a market presence in the Mill Bay area.

[4] The two claimants filed with the board an application for determination of compensation which was twice amended in advance of the compensation hearing. At the outset of the hearing, the parties advised the board that they had reached agreement with respect to Shell's claim, which was for loss of revenue and potential revenue for the remaining term of its head lease with Pay Less at Station 48.

[5] Pay Less, however, continued to assert its own claims, seeking compensation for what it described as the Ministry's "partial taking" of a vacant lot which formed part of the subject lands as well as for disturbance damages "as represented by equivalent reinstatement of the old station on the relocated site", and disturbance damages in the nature of business losses and soft costs. In total, the Pay Less claim as finally amended amounts to $2,056,815.98.

[6] In its reply to the claim, the Ministry in effect denies that Pay Less is entitled to compensation for reinstatement of its facility in Mill Bay and says that many of the costs, expenses or losses claimed are therefore unrecoverable or, in the alternative, are excessive and unreasonable. Its position is that the business carried on at Station 48 was terminated rather than being relocated, and that Pay Less founded a new and different business at Station 88. According to the Ministry, Pay Less is entitled to be compensated simply for the market value of its interest in the subject lands on which Station 48 was situated and for a termination allowance equalling, at most, the value of the goodwill of the business at that location.

[7] The Ministry has made a series of advance payments to Pay Less on account of compensation totalling $729,098.13. However, at the compensation hearing, the Ministry alleged an overpayment. It says that the maximum amount to which Pay Less should be entitled is $554,250, comprising $457,000 for the subject lands taken and $79,250 for disturbance damages in the nature of lost goodwill.

[8] The compensation hearing in this matter was held in Vancouver, B.C. It proceeded from time to time for a total of 16 days during which 17 witnesses testified, nine having been called by Pay Less and eight by the Ministry. Counsel for the parties eventually elected to conclude by way of written final submissions, which proved to be thorough and lengthy.

[9] Based upon its review of the amended pleadings as well as the oral and documentary evidence adduced, the board makes the following background findings and observations in this matter.

[10] The claimant Pay Less is an incorporated British Columbia company. For 17 years it was owned and managed by the Vandekerkhove family. In late April, 1989, all of the shares in Pay Less were acquired by a company known as Whitehorn Industries Inc. The leveraged buy-out was facilitated by Shell through a complicated business arrangement the details of which are described in L.O.M. Western Securities Ltd. v. Whitehorn Industries Inc., Supreme Court of British Columbia, July 10, 1991, Vancouver Registry C894874, a judgment provided to the board by the Ministry at the outset of the hearing. Pay Less operated under the new ownership from July 1, 1989 until September, 1993, when it was taken over by Shell.

[11] The main business of Pay Less through these years was the retailing of petroleum products principally on Vancouver Island. Greg Sikora, who at the time of the expropriation was its manager of real estate and development, testified that Pay Less was seen as an "oddity" in the industry, growing in size and market share despite the presence of major oil companies. This success was achieved in part, he said, through the prudent acquisition of "discount-looking type outlets" and by fostering community loyalty to the company.

[12] By the late 1980s, Pay Less was operating a chain of 50 retail gas stations, all but two of which were located on Vancouver Island, and all but eight of which the company owned outright. At that time Pay Less enjoyed an estimated 31% share of the retail gasoline market on Vancouver Island. Ancillary to its sale of gas, Pay Less also operated, at various stations within the chain, 31 retail propane outlets, 28 convenience stores, 14 laundromats and 28 car wash facilities. A division of the company was engaged in the fuel oil distribution business and, through one wholly-owned subsidiary, Pay Less owned a tank farm and storage facility on the Island known as "Bare Point". Its assets also included some other commercial real estate properties.

[13] Mr. Sikora gave evidence that the new Pay Less owners in 1989 provided what he termed a "strategic direction" to upgrade the ancillary facilities at their service stations to help maintain the company's market position as well as to increase revenues directly and indirectly through such ancillary sales. Under cross-examination, he described major renovations or expansions which had taken place at a number of Pay Less outlets on Vancouver Island during his time as manager of real estate and development between 1989 and 1993. He also acknowledged that there had been no major upgrade to Station 48 at Mill Bay from the time of his first involvement with Pay Less in 1987 to the time of the taking in 1990.

[14] At the time of the Ministry's acquisition, Pay Less was the registered owner in fee simple of three separate parcels which together comprise the subject lands. The legal descriptions of those parcels are as follows:

[15] The first lot, which will be referred to as "Lot 1", was an irregularly shaped parcel comprising 5,895 square feet (547.6 sq. m.) and was improved with the gas station facility identified as Station 48. The second lot, to be referred to as "Pt. Lot 2", was a narrow triangular parcel of 4,188 square feet (389.1 sq. m.) which adjoined Lot 1 to the north. It was unimproved except for a small propane facility and fronted onto a service road connecting with Lot 1. Viewed together, these two lots were situated at the northwest corner of the TCH and Deloume Road and formed what has been referred to in these proceedings as the "improved site". The third lot was an unimproved irregular parcel comprising 9,907 square feet (920.4 sq. m.) situated across Deloume Road at the southwest corner of the same intersection and has been referred to as the "vacant site". The parties are agreed that the subject lands totalled 19,990 square feet (1,857.1 sq. m.).

[16] Deloume Road provides one of two main signalized accesses off the TCH into the community of Mill Bay, the other being Shawnigan-Mill Bay Road, roughly a half mile to the north of the subject lands. Mill Bay is a small but growing community approximately 26 miles (42 km.) north of the City of Victoria and 11 miles (18 km.) south of the City of Duncan within the Cowichan Valley Regional District (the "CVRD").

[17] Topographically, Lot 1 was at grade level with the TCH and Deloume Road and sloped gently toward the west and north while Pt. Lot 2 sloped more steeply to the north. The vacant site was also at grade level with Deloume Road, sloping upward at its southeastern boundary. Prior to the taking, there was direct access off the TCH into the improved site for southbound traffic. Northbound traffic could access the improved site by way of a signalized left turn lane at the intersection. The improved site enjoyed good visual exposure to traffic approaching from the south on the TCH, but somewhat restricted exposure to traffic approaching from the north because of a rock bluff.

[18] For many years prior to the taking, all three lots comprising the subject lands were zoned R-3 (Urban Residential) by the CVRD. Permitted uses under that designation included single family residential dwellings, horticulture, home crafts, bed and breakfast accommodations and daycare or nursery schools accessory to residences. The commercial use of the improved site as a service station pre-dated this zoning and had the status of a legal non-conforming use. As will be seen later in these reasons when discussing market value and particularly business loss, the parties strongly disagree as to the importance they say the board should attach to this non-conforming status.

[19] Another relevant aspect of the CVRD zoning requirements related to minimum parcel size. For parcels zoned either for urban residential or commercial use, which were served by a community water system but not a community sewer system, the zoning bylaw imposed a minimum size of 18,030 square feet (1,675 sq. m.). Neither the improved site comprising Lot 1 and Pt. Lot 2 nor the vacant site was connected to a community sewer system, and therefore none of these parcels conformed to the minimum parcel size under the bylaw. The effect of this further non-conformity also looms as an issue when considering the potential for rezoning either the improved site or the vacant site to commercial use.

[20] The evidence before the board suggests that the service station facility on the improved site had been constructed in the late 1940s. It had operated under various oil company flags, including BA, Phillips 66, Guzzler and Cash n Co-op. In January, 1983, the registered owners had leased the site to a company known as Island Petrol-West Ltd. for a term of five years with one five-year option to renew. In November, 1985, Pay Less took an assignment of the lease and began operating the service station, now designated Station 48, under its corporate banner. There was no formal indication that Pay Less exercised its renewal option at the expiration of the initial term of the lease on December 31, 1987. However, in June, 1988, Pay Less purchased the whole of the subject lands. Land title documents reflect that the price paid was $180,000 for the improved site and $65,000 for the vacant site, making a total of $245,000.

[21] The improvements at Station 48 included an older two-storey building comprising 1,920 square feet of space on the main floor and 1,810 square feet on the second floor for a total of 3,730 square feet. The main floor portion was of concrete block construction and housed the office and sales area, including an area used for the sale of a limited range of convenience items, as well as two 2-piece washrooms and some storage space. There were also two repair bays which occupied roughly half of the main floor area but which, in the years leading up to the expropriation, were in disuse. The second floor was of wood frame construction and contained three apartment suites. These, however, had outdated finishings and, at least by 1989, were vacant, boarded up and evidently in some disrepair. There had been little updating to the building over the years except for exterior painting and trim detail. The appraisal descriptions and photographs of the building entered into evidence during the hearing are consistent with Mr. Sikora's characterization of its appearance as "rustic".

[22] The gas station improvements at Station 48 included one pump island with two dual fuel pumps (ie. four dispensers) for normal retail gas sales as well as one single dispenser for marked gas. These pumps, in turn, were supplied by two 22,500 litre underground fuel storage tanks and one 4,000 or 4,500 litre underground marked fuel storage tank. No evidence was provided as to the age of any of the underground tanks. The pump island had a concrete apron and approaches but no canopy. An approximately 4,000 litre propane tank, dispenser and scales area was situated to the north of the building. A portion of the propane facility was situated on Pt. Lot 2 near the service road but much of it actually extended outside the boundaries of the improved site onto the highway right-of-way. The encroachment of this facility and its non-conforming status became issues at the hearing with respect to the compensation to which Pay Less was entitled for loss of its propane business.

[23] Station 48 was serviced by a septic tank and field. There was a great deal of speculation and argument but no definitive evidence at the hearing as to whether they were situated on the improved site or on the vacant site across Deloume Road. Insofar as their possible location bears on compensation issues to be determined, the board defers consideration of the question until later in this decision.

[24] Another matter of contention at the hearing was whether the non-fuel related sales of convenience items from Station 48 could properly be characterized as constituting a small convenience store ("C-store") outlet and, if so, whether that C-store could have been expanded given its non-conforming status under the zoning bylaw. Suffice it to say at this point that the evidence points to an extremely modest operation. Mr. Sikora recalled that, during the period of his first involvement with Pay Less in 1987 and 1988, the products offered for sale, apart from ancillary oil products, antifreeze and the like, were confined primarily to cigarettes and soft drinks. He said that in 1989, under the new Pay Less ownership, the range of products was somewhat increased. Coolers were installed for the sale of milk and juice and a few shelves or racks were put in place to sell bread, candies and chocolate bars and possibly magazines.

[25] The sales performance of Station 48 as a retail gasoline outlet while under the Pay Less banner from late 1985 until the station closed on September 30, 1990 appears to have been reasonably consistent. The business valuators retained by the respective parties relied on the same sales data which are set out in their expert reports. These disclose that the volumes of gasoline pumped at Station 48 on a full calendar year basis totalled 2,393,104 litres in 1986, declining only slightly in each subsequent year to 2,289,572 litres in 1987, 2,225,853 litres in 1988, and 2,213,210 litres in 1989. During the final nine months of operation in calendar 1990 the sales volume totalled 1,695,400 litres which, on an annualized basis, would suggest an increase over the preceding two years. However, since the performance of Station 48 during these final months has resulted in significantly different projections by the two business valuators, the board defers any further comment to its analysis of business loss. Business data regarding the sale of propane and of convenience items are incomplete over the period and may also more usefully be dealt with later in this decision.

[26] Station 48 was one of three older-style service stations operating along the TCH in the vicinity of Mill Bay during the years leading up to the expropriation. Regional planning considerations limited to three the number of service stations in the area and all three evidently enjoyed respectable sales performances.

[27] Nearest to the subject lands was a station situated just across the highway, at the southeast intersection of the TCH and Deloume Road, which operated under the independent banner of "Save-on-Gas". The business carried on included retail sales of gas, a restaurant and a convenience store. The annual volumes of gasoline pumped at this station in the late 1980s were evidently increasing but cannot be stated with any degree of certainty based on the evidence. According to an appraisal of the station prepared in April, 1990, they were between 2.0 and 2.2 million litres, whereas subsequent evidence assembled by the business valuator retained by Pay Less in this matter suggested they were in the order of only 1.3 million litres in 1987, increasing to 1.86 million litres in 1989, with projected sales of about 2.2 million litres in 1990. However, in August, 1990, the Ministry agreed to purchase the Save-on-Gas property and business in connection with the same highway project and, like Station 48, this station closed its doors at the end of September, 1990. The relevance of the Ministry's purchase of the Save-on-Gas outlet to the valuation of Station 48 and other compensation issues in these proceedings is seriously disputed by the parties.

[28] The other service station in the vicinity known as "Mill Bay Shell" was situated a short distance to the north of the subject lands at the southwest corner of the intersection of the TCH and Shawnigan-Mill Bay Road. Mill Bay Shell comprised a single pump island for the retail sale of gas and diesel as well as a convenience store. It formed part of a larger parcel of land on which a shopping centre development known as "Pioneer Square" was located. Fuel sales at Mill Bay Shell were clearly increasing in the late 1980s, from 2,099,700 litres in 1986 to 3,021,475 litres in 1989 and 2,951,400 litres for the first 11 months of 1990. Like Station 48, Mill Bay Shell lay in the path of highway widening and redesign. It ceased operations at the end of November, 1990, and was formally expropriated in January, 1991.

[29] Mill Bay Shell has already been the subject of two compensation hearings before the board resulting in reported decisions: Nikka Developments Ltd. v. British Columbia (Minister of Transportation and Highways) (1994), 53 L.C.R. 120, which determined the market rent for the service station, and Meyer v. British Columbia (Minister of Transportation and Highways) (1995), 55 L.C.R. 94, which determined the value of the loss through expropriation of the lease operator's business at the station.

[30] The closure of Station 48 and the other two facilities in its immediate vicinity during the fall of 1990 left Mill Bay without a gas station until April, 1992. At that time Petro Canada opened for business a newly constructed and diverse service station at a large site it had acquired in March, 1990 on the west side of the TCH. It was located some distance north of the former sites of both Station 48 and Mill Bay Shell, at the southwest corner of the TCH and Kilmalu Road. The new Petro Canada facility sold both gasoline and propane, contained service bays and a car wash, and had a restaurant and C-store plus a small strip plaza. One of the heads under which Pay Less has claimed compensation in these proceedings is for the loss of part of its propane market to Petro Canada.

[31] For a number of years prior to 1990 the Ministry had been contemplating a realignment and widening of the TCH from two to four lanes through Mill Bay as part of a much larger development which came to be known as the "Vancouver Island Highway Project". However, it was evidently only by the fall of 1989 that the Ministry's plans had proceeded to the point where it began to share them with the public and enter into discussions with the owners of affected properties.

[32] Mr. Sikora, when he rejoined Pay Less in September, 1989, recalled that there was already talk of expropriation which the company felt might impact Station 48. He testified that he met, probably in early October, with two local representatives of the Ministry - Virginia Currie, the co-ordinator of property acquisitions, and Greg Mertton, a regional property appraiser - to try to ascertain the scope and timing of the Ministry's plans. He said he was left with the impression that the project would be going ahead but the timing was vague. As the result of a further meeting a month or so later between these Ministry representatives and one of the principals of Pay Less, the company gained the further impression that the project might proceed within 12 to 18 months.

[33] Ms. Currie was also called to testify at the hearing. She confirmed that such meetings had taken place but could not recall what timing was discussed. She recalled having conversations with Dennis Coates, Q.C., the legal counsel for Pay Less, probably about three or four months before the station closed, concerning when the Ministry would require possession.

[34] The actual construction of the highway project through Mill Bay in the immediate vicinity of Station 48 began in late June, 1990. From that time, access to the station was sometimes impeded and this resulted in reduced gasoline sales during the final months of operation. Moreover, construction engineers for the Ministry expressed concern about the potential hazard involved in undertaking blasting and excavation work in near proximity to the propane storage tank and recommended its relocation or removal. In consequence Pay Less closed its propane facility and removed the tank on July 16, 1990. Ultimately, according to Mr. Sikora, Pay Less received only about two weeks' notice from the Ministry prior to agreeing to close and vacate the whole of its premises at Station 48 on September 30, 1990.

[35] Some weeks after Pay Less actually gave up possession, the parties entered into two separate agreements identical in form, both dated October 26, 1990, to transfer or dedicate land pursuant to section 3 of the Act. One agreement was for the transfer of all of Lot 1 and Pt. Lot 2 (the improved site) and the other was for the transfer of a portion only of Lot 2 (the vacant site). They required the Ministry to make advance payments in accordance with what is now section 20 of the Act.

[36] The evidence before the board concerning the calculation and making of the advance payments was not entirely clear. It appears that the earlier payments were based upon separate appraisal reports for the improved site and the vacant site prepared for the Ministry by a qualified appraiser, Richard W. Gordon of the firm D.R. Coell & Associates Inc., in December, 1989. Mr. Gordon estimated the market value of the improved site, including the real estate, fixtures, equipment, business and goodwill, at $650,000. He estimated the market value of the whole of the vacant site at $100,000. From the evidence of Ms. Currie, however, the Ministry's earlier advance payments appear to have proceeded on extrapolations from these numbers which took into account the possibility that the business at Station 48 on the improved site would be relocated and the fact that only a portion of the vacant site was being acquired. The evidence leads the board to conclude that the Ministry made an initial advance payment of $450,000 on account of compensation in January, 1991, a second advance payment of $204,521 in April, 1991, and a third advance payment of $40,685 in May, 1991, for a total of $695,206. The Ministry also made a number of payments on account of professional costs incurred by Pay Less. Long after the compensation hearing ended, the parties advised the board that, of the professional costs paid, $33,892.13 were properly categorized as advance payments of disturbance damages. There were a series of six such payments between March 14, 1991 and November 29, 1994. Overall the advance payments therefore total $729,098.13. The board will have more to say concerning the amount, timing and allocation of the advance payments when it turns later in this decision to consider the matters of interest and costs payable under the Act.

[37] From at least the fall of 1989 when Pay Less first learned that an expropriation affecting Station 48 was likely to take place, the claimant company began to explore the possibility of establishing itself at another site in the Mill Bay area. Mr. Sikora testified that an initial survey of the Mill Bay market led company officials to conclude that the intersection of the TCH and Deloume Road continued to be the most viable location.

[38] Accordingly, Pay Less at first attempted to negotiate a purchase agreement with Grant Garnett, the owner of the lands immediately adjacent to the west of the improved site which, if acquired, might have offered continued frontage onto the TCH at the northwest intersection with Deloume Road. However, Mr. Garnett, who was also the ground landlord of the nearby Pioneer Square shopping development and of Mill Bay Shell, evidently had his own plans for development of the property. He also had contractual relations with Shell and was concurrently engaged in discussions with the Ministry regarding the possible realignment of the highway insofar as it affected Mill Bay Shell and the shopping centre. After what Mr. Sikora described as a four to six month period of negotiation, Pay Less concluded that Mr. Garnett was not prepared to sell.

[39] Having failed in its first choice, and concluding that acquisition of the Save-on-Gas site across the road would not be suitable, Mr. Sikora said Pay Less then turned its attention to putting together a land assembly at the southwest intersection of the TCH and Deloume Road comprising its own vacant site together with the property adjacent to the south. It was this land assembly which ultimately provided the location for Station 88, but putting it together involved numerous complications.

[40] On May 10, 1990, Pay Less entered into a form of agreement with James Decker and Christine Forbes, the registered owners of the adjacent property to the south (identified as the "DF property"). The DF property was a long and narrow mainly rectangular parcel comprising 3.82 acres (1.55 ha.). The owners were veterinarians and operated a veterinary clinic on the site which was also zoned for that purpose. They agreed to sell their property to Pay Less for the sum of $300,000 on the condition that Pay Less acquire another parcel immediately adjacent to theirs to the west (identified as the "Jones property"), construct for them at its own cost a new veterinary clinic on that property, have it rezoned for veterinary use, and sell it to them as improved and rezoned for $150,000. All of this had to be achieved without any interruption to their veterinary practice. Pay Less also stipulated conditions precedent to its completion of the purchase, including among other things conducting a feasibility study, obtaining rezoning of the DF property to permit the operation of a retail gas bar, convenience store and car wash, and obtaining from the Ministry satisfactory road access to and from the site. On June 6, 1990, Pay Less entered into a similar conditional agreement to purchase the Jones property for the sum of $140,000.

[41] There followed a somewhat protracted period during which Pay Less went through the process of obtaining the approvals it required to be able to satisfy its commitments to the veterinarians and to develop Station 88 on its new site. On June 15, 1990, it applied to the CVRD to amend the Official Settlement Plan and the zoning by-law to permit the proposed new uses. This necessitated a public hearing process and consultation with various referral agencies, including the Ministry of Transportation and Highways as well as the Ministry of the Environment. The required amendments were finally adopted on February 13, 1991. However, the CVRD now designated the proposed Station 88 site as part of a development permit area and required Pay Less to make application for such a permit. Pay Less complied on September 13, 1991 and the development permit, dated November 26, 1991, was finally signed on February 6, 1992.

[42] Following lengthy negotiations, Pay Less and the Ministry were ultimately able to reach agreement concerning highway access to and from the proposed Station 88 site. There would be no direct access from the TCH but rather two access points off Deloume Road. However, the Ministry from the outset expressed other concerns about waste water treatment and disposal from the site in so far as they might affect drainage onto or underneath the highway. There were also environmental concerns arising from the proximity of the proposed Station 88 development to an open watercourse known as "Wheelbarrow Creek." As a condition to providing its approval of the proposed development, the Ministry required that a full drainage study be undertaken. Accordingly, in June, 1990, Pay Less retained an environmental engineering firm, NovaTec Consultants Inc. ("NovaTec"), to carry out a feasibility study addressing the question. Its report was provided to Pay Less in August of that year. The ultimate result of these findings, Mr. Sikora said, was a decision to construct an elaborate sewage disposal and drainage system.

[43] Other developments wholly unexpected appear to have impeded the start of construction of Station 88. For one, the new veterinary clinic constructed on the Jones property caught fire just as it was about to open, delaying the relocation of the veterinarians by some two to three months while repairs were completed. For another, it was discovered that a two foot strip of land between the DF property and the Jones property had escheated to the Crown in early 1991, requiring an Order in Council to rectify the situation.

[44] While sitework appears to have proceeded somewhat earlier, the actual construction of Station 88 began in late May, 1992, and took between four and five months to complete. The board was not provided with the precise figure of the total costs incurred by Pay Less in creating its new facility, but according to its business valuation expert, they were in the order of $3.0 million. Station 88 opened for business on November 7, 1992.

[45] The new Pay Less outlet designated Station 88 was on an entirely different scale from that of Station 48. First, the site area itself created by the land assembly of the vacant site with the DF property was vastly larger than that from which Station 48 had operated. Although portions of both the properties comprising the assembly were acquired by the Ministry for highway widening purposes, their combined total area after the taking has been calculated to be 111,078 square feet or 2.55 acres. This is in contrast to the improved site at Station 48 which comprised 10,083 square feet or which, when combined with the vacant site across Deloume Road, comprised 19,990 square feet.

[46] Second, the building constructed on the site was much larger. Whereas the two-storey structure at Station 48 comprised 3,730 square feet of floor space, 1,920 square feet of which was on the ground floor, Station 88 consisted of a ground floor service centre comprising 8,140 square feet and provision for a restaurant building, later constructed, of 2,190 square feet, or 10,330 square feet in total.

[47] Third, the fuel-related facilities at Station 88 far surpassed those at Station 48. There was a double as compared to a single pump island, 20 nozzles as compared with five for the dispensing of gas and diesel, and four 22,500 litre fibreglass tanks as well as one 45,000 litre fibreglass tank for underground gasoline storage at Station 88, nearly three times the underground capacity at Station 48. The fuel pumps at Station 88 were covered by a canopy whereas those at Station 48 had none. The size of the propane tank at Station 88 was not specifically identified, but a comparison of photographs showing propane tanks at the old and the new facility lead to the observation that the tank at Station 88 was probably considerably larger.

[48] Fourth, the other amenities available at Station 88 were far more varied than those at Station 48. They included a laundromat, a car wash, and a sani-dump station. In time, they came to include a restaurant as well. Whatever may be determined with respect to the presence or absence of an existing C-store at Station 48, it is clear that the C-store created at Station 88, in purpose built space of between 2,000 and 2,900 square feet, bore little resemblance to what had gone before.

[49] Finally, the sewage disposal system put in place at Station 88 had a much larger capacity and, presumably, greater technical sophistication than the septic tank and field which serviced Station 48.

[50] The sales performance of Station 88 as a retail gasoline outlet, after the initial start-up period, appears to reflect in large part its enhanced fuel-related facilities. The sales data disclose that approximately 3,402,000 litres of gasoline were pumped in the period from January 27 to December 31, 1993, and approximately 3,686,500 litres in the period from January 1 to November 30, 1994. According to the business valuation expert retained by Pay Less, these numbers on an annualized basis indicate estimated actual volumes approaching 3.7 million litres in calendar year 1993 and 4.0 million litres in calendar year 1994. By comparison, Station 48 in its last years, excluding 1990, experienced sales volumes of between roughly 2.2 million and 2.4 million litres.

[51] As revised in light of the evidence received during the hearing, the amounts claimed by Pay Less fall under the following heads of compensation:

•	Market value of that portion of the vacant site acquired by the Ministry, as valued by D.R. Coell & Associates Inc. in an appraisal report dated February 21, 1992:	$ 59,000.00
•	Disturbance damages as represented by the equivalent reinstatement of Station 48 on the relocated site of Station 88:	1,353,574.31
•	Disturbance damages in the nature of business losses for the period from January 1, 1990 to December 31, 1992, resulting from loss of gasoline, propane and convenience store sales at Station 48:	415,000.00
•	Disturbance damages in the nature of business losses subsequent to December 31, 1992, resulting from the loss of the propane market to Petro-Canada:	91,000.00
•	Disturbance damages in the nature of business losses subsequent to December 31, 1992, resulting from a loss in gasoline and convenience store sales during the start-up period at Station 88:	53,000.00
•	Disturbance damages in the nature of soft costs, including legal and consulting fees relating to the relocation, aerial photography, and executive time for Mr. Sikora:	85,241.67
	Total:	$ 2,056,815.98

[52] The threshold issue for determination by the board in this case is whether the business carried on by Pay Less at Station 48 was permanently shut down by the Ministry's acquisition of the subject lands or whether the business was relocated to Station 88.

[53] If, as the Ministry maintains, it was not feasible to relocate Station 48 in the Mill Bay area, the next issue becomes the compensation to which Pay Less is entitled under the Act for the market value of its interest in the subject lands which the Ministry acquired, any reduction in market value to the remaining lands, and disturbance damages, including an additional amount not exceeding the value of the the goodwill of the old business.

[54] If, however, as Pay Less maintains, the business at Station 48 was relocated to Station 88, the next issue becomes instead the proper basis upon which Pay Less is to be compensated on account both of its loss of Station 48 (including both the improved site and a portion of the vacant site) and its costs, expenses and losses in relocating to Station 88. Subsumed within this general issue are a number of questions, including:

[55] The significance of this threshold issue arises out of certain provisions in the Act affecting the determination of compensation where land from which a business is being conducted is expropriated. The basic formula for compensation in section 31(1) requires the board to award as compensation to an owner the market value of the owner's estate or interest in the expropriated land plus reasonable damages for disturbance where the market value is based on its existing use at the date of expropriation. Section 34 deals with disturbance damages generally, and provides as follows:

[56] With particular reference to sections 34(1)(b) and 34(3), Pay Less submits that the Act recognizes and supports the relocation of an expropriated owner's business. The fact is, it says, that before the expropriation there was a Pay Less gas station at the corner of the TCH and Deloume Road and that after the expropriation there was a Pay Less gas station essentially at the same corner, albeit access to the highway was no longer direct. In its submission, common sense would indicate that this constituted a relocation.

[57] Pay Less says that it had no independent desire to move from Station 48 for the foreseeable future. It would have preferred to continue to operate this older style service station, sell between 2.2 and 2.6 million litres of gasoline a year, and profit from the minimal expenses that were attached to the income stream at that location. While the site as it stood in 1990 was constrained legally and physically from undergoing any major redevelopment, Pay Less maintains nevertheless that there would have been scope over the years for expansion of its ancillary facilities and nothing to preclude later acquisition of the adjoining land to the west, if necessary, in order to grow and diversify. According to Pay Less, there was no evidence to suggest that, but for the expropriation, it would have shut down Station 48.

[58] However, faced with the prospect of expropriation, Pay Less says it had to take reasonable steps to maintain its market presence in the Mill Bay area. Station 48 represented a significant link in its chain of service stations along the TCH on Vancouver Island. Therefore, as details of the Ministry's highway expansion and realignment project became known, Pay Less says it was forced to explore several relocation options in Mill Bay. As described earlier, these included consideration of the Garnett property adjoining to the west, the Save-on-Gas property across the highway, and finally the DF property in conjunction with whatever remained of the vacant site after the partial taking. Clearly, the remainder of the vacant site on its own was too small to accommodate a relocated service station.

[59] Pay Less called as a witness James S. McIlmoyle who testified about, among other things, the difficulties which faced oil companies seeking to relocate service stations in the Mill Bay area that were affected by the highway development. Mr. McIlmoyle, now an independent consultant, was for many years a senior manager for Shell and, from 1985 to 1992, was responsible for the market development and property management of all Shell service station locations on Vancouver Island. He provided a detailed recap of the efforts made from the fall of 1989, first, to determine how the proposed highway expansion and realignment would likely impact Mill Bay Shell, and second, to find a site to which the service station could relocate within Mill Bay.

[60] As Mr. McIlmoyle described it, Shell's relocation efforts were made difficult by the limited number of alternative sites with the necessary physical attributes in terms of topography and soil conditions capable of supporting a service station operation as well as with such commercial attributes as highway exposure and suitable access. They were further complicated by planning considerations imposed by the CVRD which precluded the use of certain corner locations and limited the number of service stations overall for the Mill Bay area. By the late spring of 1990, Petro Canada had already acquired its new service station site at the southwest corner of Kilmalu Road and the TCH, and Pay Less was in the process of putting together its land assembly and making applications for approval of what ultimately became Station 88. Save-on-Gas, he said, had also optioned other locations in the area for the possible relocation of its own outlet in Mill Bay. By at least the spring of 1992, according to Mr. McIlmoyle's evidence, Shell concluded that it was not feasible to relocate Mill Bay Shell.

[61] Pay Less acknowledges the difficulties that were attendant on any effort to relocate in Mill Bay, but its counsel, Mr. Coates, also argues that in the present instance relocation became feasible through the land assembly and approvals it was able to obtain. Although other facilities were added, making Station 88 a much larger and more diversified outlet, Pay Less says the essential core of the service station business at Station 48 was nevertheless maintained. Had Pay Less constructed Station 88 under a different brand name, rather than simply allocating to it a different number, it might have been possible to argue that there was no relocation. But, since it did not do this, Mr. Coates submits that Pay Less was relying on its goodwill at Station 48 in creating what it characterizes as a relocated outlet.

[62] The Ministry submits that it was not feasible to relocate Station 48 in Mill Bay. Its counsel, Mr. Hincks, refers to the evidence of both Mr. Sikora and Mr. McIlmoyle as supporting the Ministry's case that there was simply nothing similar to the Station 48 site in Mill Bay to either purchase or lease. Relying on section 34(4) of the Act, he therefore argues that what Pay Less is entitled to, over and above the market value of the lands and premises which Pay Less owned and from which Station 48 conducted its business, is a "termination allowance" not exceeding the value of the goodwill of Station 48. The Ministry's evidence is that goodwill value for Station 48 was in the range of $38,500 to $120,000.

[63] The Ministry points to what it describes as the "manifest and major changes" between the business conducted at Station 48 and that which was put in place at the newly constructed Station 88. In light of these changes, Mr. Hincks argues that a more accurate description of what happened is that, while Station 48 was shut down in consequence of the taking, Station 88 was actually designed and built as the result of an independent business decision by Pay Less.

[64] The Ministry concedes that the threat of expropriation undoubtedly played some role in the decision to put together a land assembly and build Station 88. However, it says the limitations and risks associated with Station 48 such as its age, constrained size and non-conforming uses, and the retail gasoline market trend toward larger stations, as described by Mr. McIlmoyle in his evidence, must have played an important role in that decision. In effect, the Ministry argues, Pay Less recognized that the relocation of Station 48 would have been necessary at some point even in the absence of expropriation.

[65] On the question of causation, Mr. Hincks cited in support of the Ministry's position the board's decision in Bayview Builders Supply (1972) Ltd. v. British Columbia (Minister of Transportation and Highways) (1996), 59 L.C.R. 263. There the board rejected the owner's claim for the future costs of relocating a building on the grounds that any such reconfiguration was not made necessary solely by the highway construction and works but would have been necessary at some point in any event.

[66] The Ministry submits that the intent of providing for business relocation under the Act is to enable the expropriated owner to preserve the goodwill of the old business. Accordingly, whether it is feasible to relocate at all must be judged by whether the costs associated with relocation are reasonable in relation to that objective. Although the decision by Pay Less to establish Station 88 in Mill Bay may have had the incidental effect of preserving whatever goodwill was associated with Station 48, the Ministry asserts that the steps taken in this instance do not necessarily constitute a relocation for the purposes of section 34.

[67] Since in the Ministry's submission there was no relocation, any disturbance damages claimed relating to the establishment of Station 88 should not be recoverable under the Act since they were not, pursuant to section 34(1), either costs, expenses or losses directly attributable to the disturbance caused by the expropriation, or reasonable costs of relocating on other land. Rather, they were costs caused by the independent business decision of Pay Less to establish a new and manifestly different business venture.

[68] From its review of the evidence and the law, the board is satisfied that the decision by Pay Less to create Station 88 was directly attributable to the taking and that the business carried on at Station 48 under the Pay Less banner was relocated to the new facility.

[69] It would not be quite correct to say that Pay Less had not considered establishing a new outlet prior to when it formally became aware of the Ministry's highway expansion and realignment plans in the fall of 1989. Mr. Sikora testified to his understanding that there had been vague discussions between Mr. Vandekerhove, the president of Pay Less, and its general counsel, Mr. Holt, around the possibility of acquiring a new site in Mill Bay as early as 1987 or 1988. However, he characterized these discussions as being motivated by the competitive desire to keep abreast of alternative sites in an area where the alternatives were few. It appears from Mr. McIlmoyle's evidence that Shell was also considering alternatives in the area, perhaps from as early as 1985.

[70] There was no evidence of active efforts by Pay Less to acquire an alternative site prior to the fall of 1989, even though highway expansion and the corresponding threat of expropriation had long been rumoured. At that point and for a considerable period thereafter, the timing and alignment of the Ministry's highway project through Mill Bay, and consequently its precise impact on Station 48, remained unclear. Nevertheless, as the board sees it, all of the steps taken by Pay Less after 1989 to acquire other property in Mill Bay related to its reasonable apprehension of the demise of Station 48 in the near future because of the highway expansion.

[71] Even if other business considerations of Pay Less entered into the calculation to find additional alternative land and construct a new service station, it is not the law that the decision to do so must be caused solely by the Ministry's plans or actions in order to be directly attributable to them. Since the final submissions in this matter were received, the British Columbia Court of Appeal, on appeal from the board's decision in the Bayview Builders case, has overturned the board's determination on the question of causation (reported at 66 L.C.R. 176). The board will have more to say concerning the Court of Appeal's judgment in the context of discussing Pay Less' claim for equivalent reinstatement.

[72] The board accepts from the evidence that there were no other available locations bordering the TCH in Mill Bay nearly comparable to the improved site on which Station 48 was situated. However, the feasibility of relocation for the purposes of section 34 of the Act does not, in the board's view, depend upon the expropriated owner being able to find a closely comparable site in the immediate vicinity. The Ministry offered no authority for any such proposition.

[73] The more pertinent question is whether the decision by Pay Less to create a facility on the grand scale, with the additional amenities which Station 88 possesses, constitutes an entirely new business venture rather than a continuation of the old. The board has already contrasted the larger and more diversified nature of the business conducted from Station 88 with that which was carried on at Station 48. Nevertheless, in the board's view, the core of the business at Station 88 remained that of a gas station outlet which continued to operate in close proximity to its previous location and under the Pay Less banner. Clearly, issues of reasonableness and betterment enter the picture when considering the disturbance damages to which Pay Less should be entitled in consequence of its creation of Station 88. These considerations do not, however, have the effect of altering the board's finding on the threshold issue before it that the business of Station 48 was relocated to Station 88.

[74] The largest single component of the Pay Less claim for compensation falls under the heading of "disturbance damages as represented by the equivalent reinstatement of Station 48 on the relocated site of Station 88". This claim is largely based upon a report dated November 3, 1992, prepared for Pay Less by Mario Pavlakovic, a qualified appraiser who at the time was a principal of the real estate appraisal firm, Interwest Property Services (1991) Ltd. ("Interwest"). It is entitled a "Reinstatement Value Report" and it purports to estimate the reinstatement value of a replacement property with utility equivalent to that of the property comprising Station 48. Mr. Pavlakovic eschews undertaking any market valuation of the Station 48 site. At p. 34 of his report, after reviewing four primary approaches to the valuation of property, he states:

Mr. Pavlakovic's estimate of that reinstatement value in his report is $1,347,000. As indicated earlier, the amount ultimately claimed by Pay Less under this head of disturbance damage at the compensation hearing was adjusted to $1,353,574.31.

[75] It will assist the board's discussion of the equivalent reinstatement approach to compensation advanced by Pay Less if certain provisions of the Act are first set out.

[76] Section 30(1) provides that every owner of land that is expropriated is entitled to compensation "to be determined in accordance with this Act."

[77] The basic formula which governs the board's determination is found in section 31. The portions of that section which are or may be germane to the present matter state:

[79] The board has previously set out the provisions in section 34 which deal with disturbance damages generally, but it is perhaps useful here to reiterate that under section 34(1) an owner whose land is expropriated is entitled to disturbance damages consisting of "(a) reasonable costs, expenses and financial losses that are directly attributable to the disturbance caused to the owner by the expropriation" and "(b) reasonable costs of relocating on other land, including reasonable moving, legal and survey costs that are necessarily incurred in acquiring a similar interest or estate in the other land."

[80] In the case of partial takings, section 40 as recently amended provides that the owner is entitled to compensation for the market value of the owner's estate or interest in the expropriated land and, to the extent directly attributable to the taking or resulting from the construction or use of the works for which the land is acquired, the reduction in the market value of the remaining land as well as reasonable personal and business losses.

[81] The only express reference to "equivalent reinstatement" under the Act is found in section 35. That section provides:

[82] The question for the board's determination is whether, in light of all the foregoing provisions, Pay Less is also entitled to compensation on some principle of equivalent reinstatement.

[83] Pay Less asserts that its claim for equivalent reinstatement is not founded on section 35, which deals only with compensation for land taken in a non-market situation. However, it says, the presence of that provision in the Act does not preclude the board from awarding compensation for disturbance damages on the principle of equivalent reinstatement where there is a market for the expropriated land but the taking has, as in the present case, necessarily resulted in a relocation of the business.

[84] In support of this proposition, Mr. Coates refers to basic principles of compensation recognized to apply in expropriation matters. He cites, for example, the following passage from the 1971 Report on Expropriation of the Law Reform Commission of British Columbia, at p. 122:

[85] The same principle is noted by E.C.E. Todd, The Law of Expropriation and Compensation in Canada, 2nd ed. (Scarborough, Ont.: Carswell, 1992), at pp. 109-110:

[86] Pay Less submits there is a difference in meaning between the way in which the term "equivalent reinstatement" is used in the Act and the way in which it is applied by Mr. Pavlakovic in the appraisal context. In the Act, as Mr. Coates put it, the term means "to reinstate to the identical business", whereas in appraisal use the term is intended to take into account any betterment and to adjust for that factor. Here, it is argued, Mr. Pavlakovic was simply using the term as a measure of disturbance damages in recognition of the principle of economic reinstatement. Whereas the overall cost of creating Station 88 was perhaps in the order of $3.0 million, the reinstatement value of the replacement property having utility equivalent to that of the property comprising Station 48 is said by Pay Less to amount to far less - approximately $1.35 million.

[87] Pay Less also cites a number of decided cases for the proposition that gas stations, because of the very nature of the business, are entitled to separate careful consideration under the laws of expropriation, and that they are not the same as other types of businesses when valued for expropriation purposes: City of Montreal v. Shell Canada Ltd. (1978), 14 L.C.R. 323 (Que. C.A.), C.A. Spencer Ltd. v. City of Laval (1987), 38 L.C.R. 203 (Que. C.A.), and Irving Oil Co. Ltd. v. The King, [1946] 4 D.L.R. 625 (S.C.C.).

[88] In the City of Montreal case, the corporate owner of an expropriated service station replaced the expropriated property with a much larger site comprising several parcels of land. The parties agreed that the expropriated site had a value of $69,700. The Quebec Expropriation Tribunal held that the new larger site was economically comparable to the expropriated one and awarded compensation of nearly $312,000 based on the cost of equivalent reinstatement. In so deciding, the Tribunal found that the service station constituted a business which operated under special conditions and ought to receive the same treatment as a hospital or a school. The question before the Quebec Court of Appeal was whether the Tribunal erred in applying the doctrine of reinstatement. In dismissing the appeal, the Court observed at p. 327:

[89] The Ministry asserts that this is not a case to which the principle of equivalent reinstatement applies. On the evidence it clearly falls outside the intended scope of section 35 of the Act. That section provides for compensation on a deemed market value equal to the cost of equivalent reinstatement where the land is being used for purposes for which there is no general demand or market. In determining the reasonable cost of equivalent reinstatement under that section, depreciation of improvements on the expropriated property are not taken into account and therefore betterment by building new for old is expressly allowed. The Ministry says the land uses contemplated by section 35 are non profit uses, and this special provision may therefore recognize the social utility in building new for old in such circumstances.

[90] As a matter of statutory construction, Mr. Hincks submits that the inclusion of the term "equivalent reinstatement" solely in section 35 leads to the conclusion that the legislature did not intend that it be applied elsewhere under the Act: "expressio unius est exclusio alterius". It would be wrong to construe or to calculate disturbance damages in other situations in a way that gave rise to the same compensation as equivalent reinstatement under section 35. If that were intended to be the case, he says, there would be no need for section 35.

[91] Although Pay Less denies that it has brought its claim under section 35, the Ministry contends that its appraiser's reinstatement value report, in advancing no opinion on the market value of Station 48 and failing to take into account depreciation of the equivalent part of Station 48 in Station 88, arrives at exactly the result that would follow from the application of section 35. In the Ministry's submission, Mr. Pavlakovic's repeated reference to reinstatement value has no foundation in appraisal terminology.

[92] Mr. Hincks responds that the decided cases upon which Pay Less has relied for the proposition that it is entitled to compensation on the basis of equivalent reinstatement or the real costs to replace its business are inapplicable since they were decided under the old subjective "value to owner" concept rather than the objectively based market value scheme embodied in the Act. Furthermore, the City of Montreal case, he respectfully submits, was wrongly decided and was expressly not followed in the C.A. Spencer case before the Quebec Court of Appeal, the next case cited by Pay Less.

[93] In the Ministry's submission, there are two other decided cases which bear more resemblance to the present claim. In Reed Vaughan Ltd. v. Ministry of Housing (1984), 30 L.C.R. 369 (Ont. M.B.), the owners operated a legally non-conforming window and door manufacturing business on property in Pickering, Ontario. The property was expropriated and the owners purchased industrially zoned replacement property in Newmarket, Ontario, from which they commenced business under a new name. The owners also operated a lumber business out of Metropolitan Toronto. They alleged that it had been their intention to relocate the lumber business to the expropriated property. In consequence of the expropriation, they had instead purchased a second property in Pickering for the purpose of relocating that business. Before the Board they claimed for the market value of the lands taken, the additional cost of the relocation lands, the depreciated costs of the replacement buildings and other improvements, and disturbance damages arising out of the costs of moving and dislocation.

[94] The Ontario Board in Reed Vaughan rejected the claims for the additional cost of the relocation lands and the depreciated cost of replacement improvements. Its award was based solely on the market value of the expropriated property together with disturbance damages in the nature of moving expenses and an allowance for executive time.

[95] In Bartle & Gibson Co. Ltd. v. Edmonton (City) (1992), 48 L.C.R. 1 (Alta. L.C.B.), the expropriating authority acquired the lands and business premises of a local heating wholesaler. The wholesaler obtained superior replacement property already improved with business premises and, as well, built a warehouse addition. It then made a claim for the entire cost of acquisition of the property and the construction of new and renovation of existing premises on the property.

[96] The Alberta Board refused to accept that claim on the ground that it involved improvement as well as replacement, and this conclusion drove it to calculate an award based on what replacement cost would have been. The Board first determined the market value of the expropriated lands in the sum of $1.0 million. It then used the costs of constructing a "hypothetical warehouse" to determine the amount of compensation to which the business owner was entitled. In doing so, the Board said, the capital cost of acquiring a new site and the depreciated capital cost of constructing the hypothetical warehouse (including financing costs) in the total sum of approximately $1.6 million took the place of compensation for market value of the expropriated lands. The Board considered that the compensation payable calculated in this manner was "based on" the market value of the expropriated lands and the damages attributable to disturbance as required by the applicable sections of the statute. The Board's award of compensation was largely upheld on appeal by the Alberta Court of Appeal (reported at 58 L.C.R. 36).

[97] The Ministry acknowledges that the approach used by the Alberta Board in its decision in Bartle & Gibson is similar in some respects to the calculations embodied in the reinstatement value report for Pay Less provided by Mr. Pavlakovic. However, in Mr. Hinck's submission, the Alberta decision is a much more careful attempt to identify in the replacement property qualities very similar to the expropriated premises and to make appropriate allowances, for example, in respect of depreciation. Even so, Mr. Hincks argues that such an approach is not a proper method of determining compensation in the present case. First, he says, there is no basis for compensation calculated in this manner in the Act and, second, as Ministry's counsel endeavoured to demonstrate in argument, the method is unreliable because of its sensitivity to any changes in the underlying assumptions.

[98] The board readily accepts that the primary purpose of compensation is to place an owner whose land is acquired by an expropriating authority for public purposes in the same position financially as the owner enjoyed prior to the taking. The owner should neither be required to shoulder an economic loss for the general public benefit nor receive a windfall or unjust enrichment as a result of the taking. This is the basis of the principle of "economic reinstatement" or "full indemnification" long recognized in the law of expropriation and implicitly embodied in reform legislation. As the former chair of the Alberta Land Compensation Board, Kenneth J. Boyd, expressed it in his book, Expropriation in Canada - A Practitioner's Guide (Aurora, Ont.: Canada Law Book, 1988), at p. 28:

[99] Mr. Boyd's stated formula for achieving economic reinstatement is consistent with the basic formula set out in section 31 of the Act, which requires the board to award compensation for the market value of the expropriated land as defined in section 32 (including the value of any special economic advantage not already recognized in the market value determined in accordance with section 32), plus reasonable damages for disturbance (including under section 34 the reasonable costs, expenses and financial losses directly attributable to the disturbance and the reasonable costs of relocating on other land). Where only part of the land is expropriated, section 40 further addresses compensation for reduction in market value to the remaining land (otherwise known as "injurious affection") and reasonable personal and business losses.

[100] The departure by Pay Less from the prescribed statutory formula by ignoring the market value of the expropriated Station 48 and, in effect, casting the land valuation portion of its claim instead as a disturbance damage claim founded on the concept of reinstatement value is unconvincing. There was no evidence before the board to support the proposition that a reinstatement value approach is a recognized appraisal technique. Use of the term "equivalent reinstatement" outside the specialized context in which it occurs in section 35, in the board's view, introduces confusion and leads to skewed analysis with the result that Pay Less would stand to be compensated in a manner quite different from what the Act requires. The board agrees with the Ministry that the maxim "expressio unius" applies in these circumstances.

[101] The cases cited by Pay Less which appear to treat service stations as a special category when determining proper compensation are problematic. In the first place, as the Ministry points out, they are all cases decided under the "value to owner" concept rather than the notional market value concept defined in the Act. In Nikka Developments, where the board was tasked with determining market rent for Mill Bay Shell, the expropriated owner urged the board to adopt the "value to owner" principle as it applied to a leasehold interest. The board declined to do so, stating at p. 133 (53 L.C.R.):

[102] This is not to say that cases decided under the former principle are entirely inapplicable here. Counsel for Pay Less in his written submissions quotes Professor Todd, The Law of Expropriation, at pp. 6-7, to the effect that

[103] In the second place, none except the City of Montreal case actually adopts an equivalent reinstatement approach. There the Quebec Court of Appeal held that the Expropriation Tribunal's finding that the service station business was entitled to be treated like a hospital or school to be a question of mixed fact and law and declined to interfere. The applicable provisions of the Quebec legislation were not discussed in the appellate judgment.

[104] In C.A. Spencer, where the expropriated owner was a wholesaler of hardwood, the same Court observed that compensation by equivalent reinstatement was an uncommon way of compensating an expropriated party and that, normally, compensation would only be to the extent of the "intrinsic value" of the expropriated property. It dismissed the owner's argument on appeal that its compensation should have been determined by the equivalent reinstatement method, resulting in an award of almost $300,000, rather than by the more traditional direct comparison method, by which the Expropriation Tribunal had arrived at an award of slightly more than $74,000 plus expenses. The Court distinguished its earlier judgment in City of Montreal by reference to the very special facts of that case, as follows at p. 206 (38 L.C.R.):

[105] It appears to the board that the peculiar attributes said to have been enjoyed by the service station at its expropriated location might, in British Columbia, raise the question of additional compensation beyond market value for loss of "special economic advantage" as contemplated in section 31(2)(a) of the Act. However, they would not, in the board's view, result in compensation on the principle of equivalent reinstatement. Other cases cited by Pay Less in which the courts have fixed an award of compensation in recognition of some special value or advantage, including Irving Oil in the Supreme Court of Canada and Smith-Roles Ltd. v. City of Saskatoon (1977), 11 L.C.R. 193 (Sask. C.A.), lead to a similar observation. The question of special economic advantage as it may apply to the Pay Less claim will be discussed later in these reasons.

[106] The cases referred to by the Ministry on this question, while of some assistance, are not without their own difficulties. The reasoning behind the Reed Vaughan decision of the Ontario Municipal Board, which fixed compensation based on the market value of the expropriated property, moving costs, and executive time, and denied the additional cost of replacement land and the depreciated cost of replacement improvements, is not entirely clear in terms of its treatment of either the facts or the law. Clearly, the Board was not prepared to compensate the owners for the additional costs of relocating their lumber business to replacement land and premises since no such relocation had, in fact, taken place or had even been definitively planned either at the date of expropriation or the date of hearing. However, the owners had also acquired other replacement land, possibly at additional cost, to which they had relocated their window manufacturing business. In this case as well, the owners' claims other than for actual moving costs were denied. It is frankly unclear whether the rejection of these claims was founded on the Board's interpretation of what the Ontario statute permitted, in respect of which the decision is mostly silent.

[107] The Bartle & Gibson decision of the Alberta Land Compensation Board, also cited by Pay Less in its submissions, is a careful and detailed discussion of replacement costs. Because the Board undertook a market valuation of the expropriated property as a starting point for its discussion, and factored depreciation of improvements on the expropriated property into its analysis of replacement costs, the decision was not one based on equivalent reinstatement as that term is used in our Act. However, it is difficult to discern the governing principle which led the Alberta Board to depart from its initial market valuation of the expropriated property and instead to look at the cost of replacement land and premises as the primary basis for awarding compensation. On the one hand, the Board said at p. 16 (48 L.C.R.) of its decision that it would not be proper to characterize as disturbance damages under the Alberta statute such items as the capital costs of the replacement site, renovations and the costs of construction of replacement premises. On the other hand, in proceeding with its hypothetical warehouse approach, the Board in fact did assess compensation on just such a basis, observing along the way that its approach was consistent with what the statute required.

[108] The board is inclined to agree with counsel for the Ministry that the reason the Alberta Board may have adopted this approach is that both parties agreed to it and both presented evidence relating to and made submissions concerning the hypothetical warehouse. It does not appear that the Board's methodology in this respect was put in question before the Alberta Court of Appeal. Be that as it may, the board is unable to find sanction for the approach within our own Act.

[109] However, one case which the board must consider before reaching its final determination on this question is the judgment of the British Columbia Court of Appeal in Bayview Builders. That judgment was rendered after the compensation hearing in this matter concluded and the main body of final written submissions had been received. It has already been referred to in the context of deciding whether Pay Less' decision to relocate could be said to be directly attributable to the Ministry's plans for highway expansion and realignment.

[110] The Bayview Builders case involved the partial taking by the Ministry of a small portion of Bayview's property, situated directly across the TCH from Station 48, for the purpose of constructing a right turn lane from Deloume Road onto the TCH. The highway construction adversely impacted access to Bayview's business premises as well as vehicle parking and circulation within the site. Bayview's claim before the board was one brought under the partial taking provisions of what was then section 39 of the Act. Section 39(1) provided:

[111] Bayview sought from the board a determination that the Ministry pay the entire cost of reconfiguring its buildings on the property, including the cost Bayview incurred in acquiring an adjacent parcel of land in anticipation of such reconfiguration, less the value of any betterment factor it might enjoy as a result. Bayview acknowledged that the board normally approached compensation in partial takings involving businesses by first determining whether there had been any reduction in the value of the owner's remaining property under section 39(1)(a) and then examining the issue of business loss under section 39(1)(b). In this instance, however, Bayview asked the board to deal with business loss first, including its claim for future relocation or reconfiguration costs. If the board made that determination, Bayview indicated that it would not seek any compensation for the diminution in value of its property.

[112] The board declined to follow the method urged upon it by Bayview. It concluded (59 L.C.R. 263 at p. 283) that the proper approach was to "value the reduction in value of the claimant's remaining land (which will be affected by the acceleration of the need to redesign the site), and then to determine any business loss that has occurred, ensuring that the claimant is not compensated twice in the process for the same loss". In the result, the board awarded compensation for reduction in market value under section 39(1)(a) as well as for "past" business losses under section 39(1)(b). It declined to award any amount for the future reconfiguration or relocation of Bayview's business premises or for any other future losses. The board concluded that the future reconfiguration was not made necessary solely by the highway construction and works but would have been necessary at some point in any event.

[113] The Court of Appeal allowed Bayview's appeal from the board's decision. At p. 188 (66 L.C.R.), the Court found as follows:

The Court set aside the board's award for the diminution in market value of the owner's land and improvements, and directed the board to reconsider the applicability of section 39(1) to Bayview's claim, in particular whether relocation costs should be awarded as business losses.

[114] The Court reached its decision after rejecting the Ministry's argument on the appeal that compensation for reduction in value of the land and buildings "included" an amount for reconfiguration or relocation of the improvements. Newbury J.A. wrote in part at pp. 187-188:

[115] The Court of Appeal in the foregoing underlined passages appears to sanction something akin to a reinstatement value approach to compensation under the Act. However, it should be borne in mind that the Court in Bayview Builders was dealing only with the partial taking provisions of what was then section 39(1) and is now section 40(1). It did not expressly consider the statutory requirements under what are now sections 30, 31, 32 and 34 that govern the determination of compensation in a full taking situation to which the board in the present instance must adhere. Furthermore, in remitting the matter to the board for reconsideration, the Court refrained from directing the board to use any particular approach. Newbury J.A. stated at p. 188:

The Court left open for the board to decide, on a correct interpretation of what is now section 40(1) of the Act, whether relocation costs should be awarded. The board in its reconsidered decision in Bayview Builders has declined to award relocation costs: E.C.B. No. 73/91/209, September 20, 2001.

[116] In light of the foregoing discussion, the board concludes that the claim by Pay Less for "disturbance damages as represented by the equivalent reinstatement of Station 48 on the relocated site of Station 88" is miscast. The principle of equivalent reinstatement does not apply. Rather, what Pay Less is entitled to by way of compensation for the taking in the circumstances of this case is defined primarily by sections 30, 31, 32, 34 and 40 of the Act. In order to determine compensation, the board must therefore first proceed to a market valuation of the subject lands which included Station 48, even though Pay Less has not specifically claimed the value of Station 48, and then determine the quantum of disturbance damages in relation to costs of relocation to Station 88 together with business losses at both the old and new locations which are directly attributable to the taking.

[117] Because the board primarily as a matter of law in this case has rejected the "reinstatement value" or "equivalent reinstatement" approach utilized by Mr. Pavlakovic and relied on by Pay Less, it is unnecessary at this juncture to examine the Ministry's detailed argument that the approach is also unreliable. However, when considering the compensable costs of relocation from Station 48 to Station 88, the board will have occasion to look more closely at the evidence provided both by the appraiser for Pay Less and the numerous other witnesses who testified in this regard.

[118] The widely differing approaches to compensation taken by the parties in this matter caused counsel at one point during the hearing to remark that it seemed as though they were on two different cases. This somewhat peculiar situation also leaves the board in the less than ideal position of having to determine some compensation issues without the benefit of evidence from both parties. Nowhere is this more evident than when turning to consider the market value of the subject lands at Station 48. The approach to compensation taken by Pay Less has resulted in its not having commissioned an expert report to appraise, in any direct way, the market value of either the improved site comprising the older style gas station and propane facility or the vacant site across Deloume Road to the south.

[119] The main body of evidence on market value is that of the Ministry's expert, M. Carl Nilsen, a qualified real estate appraiser and president of Nilsen Realty Research Ltd., who testified at the hearing concerning his report dated December 12, 1994. Additionally, several reports prepared by Mr. Gordon of D.R. Coell & Associates Inc., the Ministry's advance payment appraiser, were entered in evidence. The first two of his reports, prepared in December, 1989, were included in the Ministry's filed books of documents. They undertook, respectively, market value appraisals of the improved site as a "going concern service station" and of the whole of the vacant site. His third report, dated February 21, 1992, but appraising the vacant site before and after the taking on September 30, 1990, was produced in evidence by Pay Less during Mr. Pavlakovic's testimony. Mr. Gordon was not called to testify concerning any of his reports, and the Ministry's submissions on the market value of the subject lands at Station 48 relied chiefly on the appraisal opinions of Mr. Nilsen.

[120] Late in the proceedings, Pay Less sought to adduce what it said was rebuttal evidence from Mr. Pavlakovic's colleague at Interwest, Danny R. Grant, addressing some of the valuation issues around Station 48. The Ministry objected that Mr. Grant had already prepared a report in advance of the compensation hearing and that his evidence should have been led as part of Pay Less' case in chief. The board ruled that, because the parties' cases were so disparate, it made sense in this instance to relax somewhat the rules concerning rebuttal evidence and to hear evidence from Mr. Grant after the Ministry had presented its case. However, Mr. Grant was tendered and qualified as an expert rebuttal witness to testify on only one matter, namely, Mr. Nilsen's use of certain comparables to determine the capitalization rate to be applied to Station 48 on an income approach to valuation.

[121] Prior to the Ministry's acquisition, the vacant site at the southwest intersection of the TCH and Deloume Road comprised an area of 9,907 square feet, amounting to nearly half the total of the subject lands at Station 48. Although it was zoned for residential use, its location along a major highway route with considerable traffic volume and the extent of commercial development on the other three corners of the intersection led both Mr. Gordon and Mr. Nilsen to conclude that it would not be a suitable residential homesite location. Rather, they considered appropriate some form of commercial use for which rezoning was probably obtainable. In particular, Mr. Nilsen at p. 32 of his report considered the highest and best use of the vacant site to be "a holding property pending a consolidation with the adjacent property for rezoning and redevelopment to service commercial use." It was, of course, the case that the portion of the vacant site remaining after the Ministry's acquisition, comprising an area of 5,395 square feet, was consolidated with the DF property to the south to create the site for Station 88.

[122] Mr. Gordon's valuation of the vacant site in his report dated February 21, 1992, becomes relevant to the board's determination, in part, because Pay Less has sought to rely on his estimate of loss as satisfying its claim for what it terms the "market value of that portion of the vacant site acquired by the Ministry". This characterization of the claim is, in fact, inaccurate inasmuch as what Mr. Gordon attempted, through a "before and after" valuation, was to estimate the overall loss resulting from the partial taking, not simply the market value of the portion acquired.

[123] In order to estimate the market value of the vacant site before the Ministry's acquisition, Mr. Gordon used the direct comparison approach. He identified for comparative purposes nine sales of what he described as "commercial and potential commercial sites in other main thoroughfare locations" on Vancouver Island as well as one "neighbourhood sale", the latter being the acquisition by Petro Canada of its future service station site at the intersection of the TCH and Kilmalu Road. The sales prices ranged from $2.50 per square foot to $12.13 per square foot, with the average price calculated at $8.39 per square foot and the median at $9.48 per square foot, the median lot size being 15,470 square feet. Mr. Gordon considered that no time adjustments were necessary. He also considered that the slightly smaller than typical parcel size and key corner location of the vacant site were partially offset by its topography, indicating the need for some fill to elevate the site, and by its requirement for a workable on-site sewage disposal system. He therefore concluded that the market value of the vacant site before the taking trended toward the median point of the comparable sales and arrived at an estimate of $10.00 per square foot, or $99,000 rounded.

[124] After the Ministry's acquisition, Mr. Gordon said, the vacant site became slightly more irregular in shape and the roughly 45% reduction in parcel size, while increasing its affordability factor, produced a more limited building envelope size on which only a small building could be developed. At p. 30 of his report, Mr. Gordon concluded:

Therefore, his estimate of the market value of the 5,395 sq. ft. vacant site remaining after the taking was $40,000 rounded. The overall loss resulting from the partial taking, or as Mr. Gordon expressed it the "estimated compensation payable", was consequently $59,000.

[125] Pay Less has expressly claimed the amount of $59,000 based on Mr. Gordon's report in its finally amended statement of claim. In final submissions, Mr. Coates asserted that Mr. Gordon's analysis of the loss in value of the vacant site was not disputed either in Pay Less' pleadings or in evidence, that $59,000 "was offered and has been accepted", and that the figure relative to the partial taking of the vacant site "should be confirmed as agreed on or at least as not disputed." Since, according to Pay Less, the parties accepted the value conclusion in Mr. Gordon's report, the board should also accept it.

[126] The Ministry rejects the contention that it is in any way bound by the earlier estimate provided by Mr. Gordon and says no agreement exists between the parties in connection with this element of compensation. Mr. Hincks submits that Pay Less cannot "cherry pick" the items of compensation included in an advance payment that it likes and dispute others. Where, as here, a claimant invokes the jurisdiction of the board by proceeding to a compensation hearing, it cannot unilaterally limit the issues to be considered at the hearing. Mr. Hincks cites the board's decision in Lojewski v. British Columbia (Minister of Transportation and Highways) (1996), 59 L.C.R. 172, in support of the Ministry's position.

[127] On this particular point, the board agrees with the Ministry's position. It finds that there was nothing amounting to "offer and acceptance" with respect to the Ministry's delivery of Mr. Gordon's report to Pay Less. As the Lojewski decision makes clear, Pay Less was not entitled unilaterally to insist at the hearing that the matter of compensation in respect of the vacant site had been resolved. While the board will consider Mr. Gordon's report in evidence, it is in no way obliged to accept the report's conclusions.

[128] With respect to valuation of the vacant site, the Ministry relies primarily on the estimates of its later appraiser, Mr. Nilsen. Like Mr. Gordon, Mr. Nilsen used the direct comparison approach to determine the market value of the vacant site prior to the Ministry's partial acquisition. He investigated recent sales of five smaller parcels of land situated, he said, with exposure to major arterial routes on southern Vancouver Island. The market evidence indicated a range in sale prices from $3.44 per square foot to $11.76 per square foot. However, Mr. Nilsen considered the majority of the comparables to be superior to the vacant site because of the zoning, servicing and immediate development potential he said they enjoyed. Despite its advantageous location at a prominent intersection along the TCH, he viewed the development potential of the vacant site at the valuation date to be constrained by the need for rezoning to commercial use and consolidation with the adjacent parcel to the south. Mr. Nilsen therefore selected a value at or just below the mid-point of the range and concluded at p. 52 of his report that its market value was "in the region of $7.00 per sq. ft.", equating to $69,500 rounded. The two later purchases by Pay Less of the remainder of the DF property after the highway taking, amounting to approximately 2.5 acres which he said equated to $1.38 per square foot, and the Jones property, comprising just over 22,000 square feet at $6.30 per square foot, Mr. Nilsen considered "not inconsistent" with his estimate for the vacant site of $7.00 per square foot.

[129] When turning to estimate the loss in value arising from the Ministry's partial taking, Mr. Nilsen departed from the "before and after" method earlier utilized by Mr. Gordon. Noting at p. 60 of his report that this method has practical limitations, "particularly in cases where the taking of a relatively small proportion of the site can result in no appreciable loss to the remainder", he instead adopted what he called the "pro-rata method" for the land taken adjusted for any injurious affection or betterment to the remainder as separate items. On his pro-rata calculation, Mr. Nilsen applied the $7.00 per sq. ft. value to the 4,512 square feet of the vacant site which the Ministry acquired to arrive at an estimated loss of $31,584, rounded to $31,500. Because he considered the remaining portion of the vacant site to have the same highest and best use after the taking as before, and because the configuration of the parcel remained irregular, it was Mr. Nilsen's conclusion that there was no injurious affection as a result of the taking.

[130] While the Ministry clearly prefers Mr. Nilsen's estimate over that of Mr. Gordon, it also points out that all of the appraisers in this matter operated from the assumption that the septic tank and field for Station 48 were located on the improved site. However, the Ministry suggests this assumption may be erroneous and sewage disposal for the improved site may in fact have been situated on the vacant site. It refers to Mr. Pavlakovic's testimony during which, while stating that he had never identified the location of the septic field, the appraiser for Pay Less noted that he had picked up on a comment by Mr. McIlmoyle who thought it may have been on the vacant site. Mr. Nilsen, who in his report said he was informed that no known record of the location of the tank and field was available, testified that, after hearing Mr. Pavlakovic's evidence, he had contacted one of the immediately preceding owners of the subject lands. The previous owner, he said, although unaware of its exact location or dimensions, advised that the disposal system was on the south side of Deloume Road "with a pipe running under the road".

[131] The thrust of the Ministry's submission was that, if the vacant site was indeed the location of the septic tank and field, this would have a dramatic impact on its value. Mr. Nilsen said that, to the extent the vacant site was required for septic disposal, he would have tended to reduce his previously estimated value. Mr. Pavlakovic, under cross-examination, agreed with Mr. Hincks that it would have no value "except in contribution to the service station". The Ministry therefore invited the board to consider assigning "zero value" to the vacant site before the taking in light of this evidence.

[132] Whether the vacant site contained the old septic tank and field for Station 48 might also affect the manner in which damages arising from the Ministry's acquisitions are to be treated under the Act. In the Ministry's submission, if the vacant site was truly "vacant" or "surplus", then there were, in effect, two takings - a total acquisition of the improved site north of Deloume Road and a partial acquisition of the vacant site south of Deloume Road. Reasonable disturbance damages arising from the expulsion of Pay Less from the improved site would be recovered under section 34 while damages relating to the partial taking could arise either under section 34 or section 40. If, on the other hand, the vacant site could not be said to be "surplus" to the improved site because it was used for septic disposal, then the Ministry submits that the taking as a whole should be viewed as a partial taking from the three parcels which together comprise the subject lands. Damages could arise under either section 34 or section 40, but the Ministry goes on to suggest that under the overall partial taking scenario, damages under section 40 for reasonable personal and business losses would likely be negligible given what it says were the limited available uses of the remainder.

[133] It is desirable, in the board's view, to defer the final determination of compensation to which Pay Less is entitled for the partial taking of the vacant site until after having also reviewed evidence of market value for the improved site. This is because certain other considerations suggested by one or other of the parties as being relevant to valuation of the improved site may have a bearing on valuation of the vacant site as well.

[134] However, at this juncture, the board considers it appropriate to dispose of the question of the septic tank and field as it relates to the valuation of the vacant site. There was insufficient evidence to lead the board to any firm conclusion as to the true location of the septic disposal system. The hearsay evidence provided late in the day suggesting that the system might have been on the vacant site was unsupported by any documentation from the files of the CVRD or the Ministry itself. There was also no evidence to show when Deloume Road was dedicated in relation to the time when the gas station was built or what, if anything, was discovered by the Ministry in the process of dismantling Station 48. Given the continuing uncertainty, the board considers that the benefit of the doubt should favour the expropriated party, Pay Less, and is not prepared to reverse the earlier assumptions made by the appraisers with respect to this question.

[135] It also follows from this finding that, when considering the question of damages, the Ministry's acquisitions should be treated as two takings - the total acquisition of the improved site and the partial acquisition of the vacant site.

[136] The improved site at the northwest intersection of the TCH and Deloume Road consisting of Lot 1 and Pt. Lot 2 comprised in total an area of 10,083 square feet. Except for the propane tank facility, all of the improvements for Station 48 were located on Lot 1. Like the vacant site, the improved site was zoned for residential use but, within certain constraints imposed by its legal non-conforming status, both Mr. Gordon in his report dated December 29, 1989, and Mr. Nilsen in his report of December 12, 1994, considered continued service station operation to optimize its use. Mr. Nilsen stated at p. 31 that "the existing gas station use (including the potential utilization of the service bays) represented the highest and best use for the remainder of its economic life as at the date of valuation."

[137] While Mr. Nilsen used the direct comparison approach to value the vacant site, he relied entirely on the income approach to value the improved site. As he explained it, under this approach the property's anticipated income stream and reversion are capitalized into a present value using a capitalization rate derived from the analysis of sales of similar investment properties. First, Mr. Nilsen estimated the market rent for the improved site by comparison with rents payable under leases of other gas station properties along the TCH and other major arterial routes. Second, he selected a capitalization rate for the rent derived at the improved site from an analysis of sales of other leased gas station properties on Vancouver Island.

[138] Although at the valuation date the improved site owned by Pay Less was subject to a head lease agreement with Shell under which annual net rent for each of the first five years beginning in July, 1989 was fixed at $44,000, Mr. Nilsen viewed the arrangement as a non-arms length transaction and did not factor it into his income approach analysis.

[139] Instead, he focused primarily on the leases of four other gas stations, two of which like Station 48 had older improvements and two of which were of much more recent vintage. The market evidence obtained concerning these four stations indicated to the appraiser a rental range of $42,000 to $74,000 per annum. However, the highest figure was for a newer facility in what Mr. Nilsen considered a superior location in Nanaimo. The lowest rent related to a sublease of premises with superior improvements but in a more competitive and therefore inferior location in the Victoria suburb of Colwood. The other two comparables, both older style facilities more akin to Station 48, showed rents respectively of $45,000 (land lease) and $50,000 which Mr. Nilsen considered more closely indicative of the market rent for the improved site. He also referred to the board's decision in Nikka Developments which determined the gross market rent for the older style service station at Mill Bay Shell at $56,000 per annum as of the date of expropriation.

[140] At p. 43 of his report, it was Mr. Nilsen's conclusion from the foregoing analysis that the market rent of the improved site on the valuation date of September 30, 1990, was

[141] To arrive at what he considered an appropriate capitalization rate to be derived from the market rent of $50,000 per year, Mr. Nilsen selected the sales of four leased gas station properties on Vancouver Island which had occurred between December, 1988 and October, 1990. Based on the rents obtained in relation to the sales prices, these four indicated capitalization rates ranging from 10.4% to 14.1%. Mr. Nilsen noted that the two properties with the lowest capitalization rates - Shell stations located in Nanaimo and Parksville, respectively - were distinguishable from the improved site of Station 48 in that they were much newer and also legally conforming. The other two comparables - the Colwood station earlier referred to at 13.3% and a Petro Canada station in Nanoose north of Nanaimo at 14.1% -- had higher capitalization rates than what the appraiser considered appropriate for Station 48. They reflected in one case a riskier lease situation and in the other an unusually high rent possibly arising out of the peculiar sales agreement negotiated. Mr. Nilsen concluded at p. 47 of his analysis that for Station 48 "a rate of 11.5%-12% would be appropriate under the circumstances and a capitalization rate of 11.75% has been adopted."

[142] In the result, Mr. Nilsen's estimated market value of the improved site using the income approach, with market rent of $50,000 capitalized at 11.75%, was $425,532, rounded to $425,500.

[143] Although the Ministry relies upon the evidence of Mr. Nilsen for what it says is the market value of the Station 48 improved site, and Mr. Nilsen alone testified as the Ministry's real estate appraisal expert, it should again be noted that Mr. Gordon's earlier report valuing the improved site was also in evidence before the board. Mr. Gordon's principal assignment, it appears, was to undertake a market value appraisal of the service station as a going concern, including the real estate, fixtures, equipment, business and goodwill as of December 29, 1989, some nine months prior to the Ministry's acquisition. Because the scope of his task in measuring the fully going concern value of Station 48 went beyond that of Mr. Nilsen, and neither party has sought to rely upon the estimate of $650,000 ultimately reached, the board concludes that it is unnecessary to review in detail what Mr. Gordon had to say in this regard. It is nevertheless of some interest to the board that Mr. Gordon also attempted valuations of the improved site based on both the income approach relied on by Mr. Nilsen and the cost approach which Mr. Nilsen considered not to be useful.

[144] Under the income approach, Mr. Gordon examined rental data at 10 service station locations on Vancouver Island. It was his opinion that the "economic rental value" best related to the volume of fuel sales achievable. After finding that rent levels generally ranged from 1.25 to 2.0 cents per litre for improved stations, he concluded that 1.75 cents per litre should be applied to the then current volume output projections for Station 48, and that some rental value should be attributed to the two unused service bays, resulting in a total estimated market rent of $54,473 on a fully net basis. After making certain allowances, he adjusted the net income downward to $49,025. In capitalizing this latter amount, Mr. Gordon examined sales of seven commercial properties, some of which were gas stations, from which he derived capitalization rates ranging from 8.87% to 12.27%. After taking into account what he described as current economic conditions, the non-conforming nature of the business at Station 48, and the generally older age of the facility, he concluded that a capitalization rate of 10.75% was appropriate. This calculated to an estimated value by the income approach of $455,000 rounded.

[145] Under the cost approach as defined but not used by Mr. Nilsen in his report, the value of improved property is derived by adding the estimated value of the land to the current replacement cost of the improvements less the amount of depreciation from all sources, that is, physical, functional and economic. Mr. Gordon used the same nine comparables from which he derived the market value of the vacant site in his 1989 report in order to estimate the market value of the land component for the improved site. Making adjustments to the comparables for time, location and the extremely narrow configuration of Pt. Lot 2 and for the subject site's lack of connection to a sanitary sewer system, he concluded a value of $9.00 per square foot. or, in total, $94,000 rounded. He used the costing manual commonly referred to as Marshall and Swift in order to estimate the replacement cost of each floor of the two-storey building on Station 48, arriving at an overall replacement cost of $163,862, to which he applied a 40% physical depreciation factor. The replacement cost new of other site improvements and equipment were, in turn, depreciated at rates ranging between 65% and 85%. In the result, Mr. Gordon estimated the depreciated improvement value of Station 48 at $163,971 to which he added his land value estimate of $94,000 to reach the overall estimated value by the cost approach of $258,000 rounded.

[146] Some other evidence was adduced during the compensation hearing in relation to the cost approach to valuing the Station 48 improved site. Mr. Pavlakovic, the object of whose reinstatement value report for Pay Less was to determine the cost of improved replacement property at Station 88 with utility equal to that at Station 48, did not undertake a market valuation of Station 48 for that purpose. However, he did provide data in his report concerning the cost of "duplicating the utility of the old building" as well as other gas station improvements. These were drawn from replacement cost estimates provided to the appraiser by Pay Less, from the Marshall and Swift cost manual, and from contractor-supplied industry rates.

[147] For his purposes in arriving at reinstatement value, Mr. Pavlakovic considered the estimates from Pay Less, equating to a building replacement cost of $124.45 per square foot, to be too high because they contained elements of enhancement or betterment. The Marshall and Swift costs, estimating that a good quality service station had a value of about $82 per square foot and a good convenience store about $61 per square foot, he thought were too low. Ultimately, Mr. Pavlakovic looked to current industry rates, which he said ranged from $80 to $106 per square foot, as providing the most useful indicators. He concluded that the utility of the old building at Station 48 seemed more appropriately represented by the high end of the industry range, that is, $106 per square foot. Based on the ground floor area only of Station 48 comprising 1,920 square feet, he therefore calculated the replacement cost component of the building at $204,000 rounded.

[148] As for other gas station improvements at Station 48, the appraiser for Pay Less again considered the data from the above three sources, and concluded that replacement value for the various components, including above ground pumps, underground storage tanks, yard improvements comprising the pump islands, aprons and approaches, lighting, paving, signage and landscaping, totalled $110,400. Overall, the numbers derived by Mr. Pavlakovic, to the extent they represent certain elements of a cost approach, calculate to $314,400 for the improvements alone, exclusive of land value.

[149] Mr. Nilsen's explanation for not undertaking the cost approach was that, while it might be useful in valuing new or nearly new improvements and properties that are not frequently exchanged in the market, the age of the improvements at Station 48 rendered such an exercise of little use here. During his testimony, he said he had not formed an opinion as to the replacement cost of the old building, but he went on to suggest significantly lower numbers than those put forth by Mr. Pavlakovic - perhaps $63 to $80 per square foot rather than $106 per square foot. As to the other gas station improvements, Mr. Nilsen was particularly struck by the high cost allocated by Mr. Pavlakovic to the replacement of paving at Station 48, which he noted was more than what he understood to be the total cost of paving the new much larger facility at Station 88. Under cross-examination, Mr Nilsen, who correctly observed that Mr. Pavlakovic did not factor depreciation into his analysis, was asked what depreciation rate he would have applied to the facilities at Station 48. He responded that a 50% rate overall seemed reasonable.

[150] Having described how or to what extent the real estate appraisers valued the subject lands, the board must now weigh certain other evidence suggested by one or other of the parties as being relevant to the determination of market value. This evidence concerns: first, the price paid by Pay Less in 1988 for the subject lands; second, the price paid by the Ministry in 1990 to acquire the Save-on-Gas station across the highway; third, the possibility of some special economic advantage to Pay Less arising out of its ownership of Station 48 as one in a large chain of service stations on Vancouver Island; and fourth, the possibility of site contamination on the subject lands. These matters will be considered in turn.

[151] The evidence before the board, which comes from Mr. Nilsen's report, is that Pay Less purchased the three parcels comprising the subject lands in June, 1988, from the then registered owners, Irene Warner and H.S. and M.K. Bains, for a total price of $245,000, of which $180,000 was for the improved site and $65,000 for the vacant site. The Ministry compares this price with Mr. Nilsen's valuation of $495,000 for all three parcels at the time of the taking just over two years later, evidently to infer that his valuation likely did not err on the low side. The Ministry points out that there was no evidence of anything other than minor cosmetic improvements to Station 48 between the date of purchase by Pay Less and the date of acquisition by the Ministry. Pay Less, however, says that no weight can be given to the 1988 purchase because there was no evidence to show that the $245,000 paid was an accurate reflection of the market value.

[152] The board has expressly recognized that the price actually paid for a subject property near the date of expropriation can serve as cogent evidence of its market value at that date: see British Columbia Corp. of Seventh-Day Adventist Church v. British Columbia (Ministry of Transportation and Highways) (1991), 45 L.C.R. 121 at pp. 149-150, wherein the board followed the decision of the arbitrator, E.C.E. Todd, to that effect in West Kootenay Enterprises Ltd. v. City of Castlegar (1986), 35 L.C.R. 329 at p. 339. Decisions in other jurisdictions have also reached that conclusion. For example, the Ontario Land Compensation Board in Ridgeport Developments v. Metropolitan Toronto Region Conservation Authority (1976), 11 L.C.R. 143, a case cited by the Ministry but on a different point, rejected the valuation evidence adduced by the parties' appraisal experts and considered the best evidence of market value in that case to have been the purchase price paid by the expropriated owner some two years prior to the taking.

[153] Pay Less and the vendors of the subject lands were, prior to the purchase, in the position of lessor and lessee. On the one hand, there was no evidence to suggest that the June, 1988 purchase and sale of the real estate was other than an arms-length market transaction. On the other hand, there was also no evidence of the negotiations which took place leading to the purchase and sale, and no appraisal evidence as to the state of the market at that time. In these circumstances, the board considers that it would be unsafe to view this transaction as somehow confirming the validity, or even generosity, of Mr. Nilsen's market valuation of the subject lands as at September 30, 1990.

[154] On August 13, 1990, the Ministry entered into an agreement with Danada Enterprises Co. Ltd., the registered owner, to purchase the lands and business of the Save-on-Gas station located across the TCH from Station 48 at the southeast corner of the intersection with Deloume Road. The purchase price was $1.9 million and was based on an appraisal report dated April 30, 1990, prepared for the Ministry by Wayne E. Maybee of the real estate appraisal firm, Kuyten & Maybee Limited. Mr. Maybee had valued the real estate portion of the property alone at $900,000 and the "going concern" value of the business, including not only the land and improvements but also the gas station, restaurant and convenience store operations conducted from the site, at $1.9 million. The Ministry agreed to purchase the entire entity, not because it required the Save-on-Gas site for its highway right-of-way, but rather because the highway development would result in effectively closing off access to the site, leaving it inoperable as a service station. The business was shut down after its acquisition by the Ministry but the station itself was not dismantled.

[155] Pay Less contends that the Ministry's purchase of the Save-on-Gas station is relevant to any market valuation of the subject lands since, in comparison to Station 48, as Mr. Coates put it, "Save On was identical in time, identical in location, identical in use, similar in age, and only differed slightly in physical improvements and size." The acquisition, he says, was negotiated in the open market and the price paid represented the free market result of a willing vendor and a willing purchaser negotiating the sale of land, buildings, and business. He referred to items of correspondence concerning those negotiations and the testimony of Ms. Currie, the Ministry's property negotiator, as evidence in support of the true market nature of the transaction. In the submission of Pay Less, to exclude the Save-on-Gas transaction, as Mr. Nilsen in his appraisal report chose to do, was clearly wrong since it was more relevant than any other comparable that could have been commented on in his report.

[156] Pay Less cited a number of decided cases dealing with the admissibility of comparable sales to an expropriating authority: Gagetown Lumber v. The Queen (1956), 6 D.L.R. (2d) 657 (S.C.C.), Peterkin v. Ontario Hydro Electric Power Comm. (1958), 12 D.L.R. (2d) 791 (Ont. C.A.), Shell Canada v. City of Calgary (1985), 33 L.C.R. 235 (Alta. L.C.B.), and St. Laurent v. Societe Quebecoise d'Assainaissement des eaux (1995), 56 L.C.R. 108 (Que. C.A.).

[157] Although acknowledging that there is no presumption against the admissibility of sales to an authority for the purpose of comparison, Mr. Hincks for the Ministry referred particularly to the above-cited Alberta Land Compensation Board decision in Shell Canada for the proposition that it is necessary to examine such transactions with great caution.

[158] In this instance, Mr. Hincks disputes that the Save-on-Gas station is an appropriate comparable. First, he points out, the business carried on there was on commercially zoned property more than double the size of the improved site for Station 48, and included a 100-seat restaurant and 600 sq. ft. convenience store.

[159] Second, and perhaps more importantly, Mr. Hincks says the valuation upon which the Ministry relied in agreeing to pay $1.9 million for the lands and business was negligently prepared and caused it to purchase the Save-on-Gas station business at a price in excess of market value. Ms. Currie testified that she had her own misgivings about the reliability of the appraisal report, but that the Ministry was ill-prepared to undertake a further valuation at the time. The Ministry produced at the hearing a copy of a writ filed in the Supreme Court of British Columbia evidencing that it had commenced litigation to recover damages from the appraiser in the matter.

[160] Third, the Ministry's appraiser, Mr. Nilsen, testified that he initially considered using the Save-on-Gas transaction as a comparable and reviewed the appraisal report upon which the purchase and sale was based. Mr. Nilsen acknowledged having been advised by the Ministry that it did not consider the purchase to reflect market value. However, he indicated that he reached his own independent conclusion that there were deficiencies in Mr. Maybee's report, particularly in his choice of comparables, and other uncertainties concerning the true market nature of the transaction leading him to discard the Save-on-Gas purchase as a comparable in favour of what he considered better market evidence available elsewhere.

[161] The Save-on-Gas station purchase raises a number of unresolved questions which, in themselves, cast serious doubt upon how much reliance the board could place on the transaction as a measure of the market value of the subject lands comprising Station 48. In any case, the fact is that no appraiser expressed an opinion that the purchase was relevant to the valuation of the subject lands. Pay Less led no market valuation evidence. Mr. Nilsen, the Ministry's appraiser, explained at some length during the hearing the factors which ultimately led him to conclude that the appraisal upon which the purchase proceeded would not stand up to scrutiny and was unsafe to use. The board is not prepared to draw the adverse inference which Pay Less seeks that his decision not to rely on the Save-on-Gas transaction was the result of discussions with or instructions from his client. In the result, the board concludes from its review of the evidence and submissions that there are no reliable data upon which to give weight to this transaction.

[162] Pay Less has argued that the Save-on-Gas station purchase is relevant to its case in another way, namely, that its knowledge of what the Ministry paid entered into the claimant company's calculation of what was reasonable in terms of its aspirations and expenditures in relocating to Station 88. The board considers that this contention is perhaps better dealt with later in these reasons in the context of discussing relocation costs.

[163] The board has already noted that section 31(2)(a) of the Act provides that, if not included in the market value of land determined in accordance with section 32, the value of a special economic advantage to the owner arising out of the owner's occupation or use of the land must be added to that market value. Professor Todd, The Law of Expropriation, at pp. 117-119, has reviewed case authority from several jurisdictions interpreting what is meant by "special economic advantage" where the term appears in the governing expropriation statute. In Minute Muffler Installations Ltd. v. R. (1981), 23 L.C.R. 213, the Alberta Land Compensation Board observed at p. 228 that the provision is a statutory

In Arpro Developments Ltd. v. British Columbia (1977), 15 L.C.R. 97, the British Columbia Court of Appeal stated at p. 101 that to be "special", the advantage must be

[164] Just as it has not directly asserted a compensation claim with respect to the market value of the improved site at Station 48, Pay Less has not formally made a claim for special economic advantage. However, Mr. Coates in final submissions suggested that special economic advantage to the owner, in this case arising out of the uniqueness of the physical location of the gas station, was relevant particularly to its election to relocate the business nearby. He went on to argue, in the context of business valuation, that Station 48 had considerably more value as part of the Pay Less network of stations, that is, in contribution to the value of the chain, than simply as a stand alone station.

[165] Mr. Hincks, in his submissions on business value, appeared to agree that the most positive attribute of the Station 48 facility was its location in Mill Bay. However, he went on to argue that any advantage associated with this location was already reflected in the value of the real estate as estimated by Mr. Nilsen. Mr. Nilsen under cross-examination, however, stated that in his market valuation he did not consider any "value to owner" or "value to the chain".

[166] While the board accepts that Station 48 was a significant link in the Pay Less chain of gas stations on lower Vancouver Island, it is not convinced that other oil companies with similar chains of stations would not have been able to take advantage of the same locational attributes of the subject lands such that a "premium" attached to the real estate value of Station 48 in the hands of Pay Less. In the board's view, the value contribution of Station 48 to the Pay Less chain requires consideration when determining such issues as the reasonable costs of relocation to Station 88 and business losses. However, the board finds no basis in the evidence to award compensation for special economic advantage as an added component to the market valuation of either the improved site or the subject lands considered as a whole.

[167] In his appraisal report, Mr. Nilsen pointed out that he was provided with no soil study for Station 48 and that his estimate of market value disregarded the possibility that there were soil contaminants or toxic materials on the gas station site. The presence of such materials, he added, could alter his opinion of value.

[168] It was the Ministry's submission that, by the valuation date in 1990, purchasers of properties for gas stations were already taking into account the problems of contamination and potential costs of remediation when deciding on the prices they were prepared to pay. The Ministry referred to the evidence on point of Mr. Sikora and Mr. McIlmoyle as well as the offer made by Pay Less itself in May, 1990, for the DF property as part of its land assembly for creating Station 88. That offer was made subject to Pay Less being satisfied that there were no environmental hazards or pollution problems on the property. As Mr. Hincks put it, "common sense indicates that a contaminated site would be less valuable than a clean one, all other matters being the same." Indeed, he pointed out, Mr. Coates made the identical point that "in determining the market value of property, business persons would consider the effects of environmental contamination, and those effects would be reflected in a lower market value."

[169] The Ministry introduced evidence at the hearing tending to show that the Station 48 site was contaminated and that the Ministry incurred considerable costs to clean up the improved site before the soils could be used in connection with its highway project. This evidence included oral testimony from two witnesses: Raymond W. Pledger, a contractor to the Ministry with Goodbrand Development Corporation involved in the physical removal of Station 48, and Craig Baskin, an engineering technologist with the firm of Thurber Environmental Consultants Ltd. ("Thurber"). Thurber conducted soil contamination investigations on several gas station sites in Mill Bay, including Station 48, and undertook remediation measures. The evidence also included documentation in the form of reports prepared by Thurber in late 1990 and early 1991 for the Ministry, and correspondence concerning them. As well, there was an affidavit sworn by Robert W. Range, a principal of Arbutus Excavating Limited which subcontracted to remove the building and the underground fuel tanks at Station 48. Mr. Range deposed that when he removed the underground tanks, he found them to be empty and that they were not damaged or broken during the removal.

[170] The thrust of the Ministry's case on contamination was not to suggest that the costs of remediation would convert one-to-one to a reduction in market value. It did not offer evidence of what the market value for Station 48 as a contaminated site would be. Rather, Mr. Hincks in his submissions merely argued that Mr. Nilsen's estimate of market value must be seen as an upper limit due to the existence of contamination.

[171] Pay Less objected to the Ministry's evidence concerning contamination on the basis, firstly, that the Ministry did not raise the subject in its pleadings and, secondly, that it called no qualified expert to express an opinion on the presence of contamination or its effect on the market at the time of valuation. Pay Less called as a rebuttal witness Colin Dunwoody, a geological engineer with the firm of Morrow Environmental Consultants Inc., who was qualified as an expert in the area of environmental assessment work to give an opinion relating to gas station contamination. Mr. Dunwoody, after describing the methods of identifying and remediating soil contamination, reviewed the tests undertaken by Thurber and found them inconclusive as to the presence or extent of contamination at Station 48.

[172] The board concludes that, while there was some evidence of site contamination following the Ministry's acquisition of the subject lands, how and when the contamination occurred and its extent were all far from clear. Also, while the evidence suggests that concern about environmental contamination at gas station locations was growing by 1990, it remains difficult to gauge what level of concern an informed and prudent notional purchaser of the subject lands would have had. In any event, there was no properly quantifiable basis in the evidence upon which the board would be prepared to calculate a reduction in market value on that account. Accordingly, having regard to both the state of the pleadings where no mention is made of site contamination and of the evidence at the hearing, the board declines to factor site contamination into its determination of market value.

[173] Having reviewed the appraisal evidence and considered and rejected other possible indications of value, the board now proceeds to its determination of market value of the subject lands.

[174] The board accepts that, although zoned residential, the highest and best use of the vacant site was as a holding property pending some form of commercial use for which rezoning was probably obtainable. However, in noting that under the CVRD zoning bylaw the parcel size for commercial property not served by a community sewer system was a minimum of 18,030 square feet, the board concludes that rezoning would in all likelihood have required consolidation. This is the manner in which it was valued by Mr. Nilsen, resulting in his conclusion at $7.00 per square foot for the 9,907 sq. ft site before the taking.

[175] Mr. Gordon made no reference to minimum parcel size in his reports. He maintained that his discussions with zoning officials suggested that "commercial development is a reasonable alternative given the locational characteristics". His appended zoning bylaw extracts displayed permitted uses and conditions of use, but stopped short of including the section identifying minimum parcel sizes. In the board's assessment, Mr. Gordon had not turned his mind to the restraint on rezoning imposed by the required parcel size, but rather had relied on what appeared to be a general statement made by zoning officials when considering the overall location. In the result, his analysis was founded on an incorrect premise.

[176] It is for this reason that the board considers that the correct approach to valuing the vacant site is better reflected in the report of Mr. Nilsen. At his $7.00 per square foot, applied to the area taken of 4,512 square feet, he estimated a rounded conclusion of $31,500. The vacant site after the taking was left as a narrow neck of land with a limited building envelope. But, when premised on the notion that the optimum use of the vacant site, both before and after the taking, was for consolidation with the much larger adjacent DF property, it may be concluded, as Mr. Nilsen has, that there was no reduction in market value to the remainder as a result of the taking. In this, the board agrees. The board therefore determines that the compensation payable with respect to loss resulting from the partial taking is the amount of $31,500, consistent with Mr. Nilsen's approach.

[177] The appraisal evidence adduced at the hearing with respect to the improved site leaves no doubt in the board's mind that, despite the legal non-conformity, its highest and best use was correctly described as being the existing service station use.

[178] The board is also satisfied from the evidence provided that the cost approach to valuing the improved site must be discarded as unhelpful, given the age of the improvements and the rates of depreciation which would normally have to be applied. Although the cost approach is often seen as a useful cross check on other methods of valuation, in the present instance it simply seems to result in a serious undervaluing of the real estate component of Station 48.

[179] The only properly developed and truly useful real estate appraisal method for valuing the improved site was the income approach. Here, the board is also persuaded by Mr. Nilsen's analysis of market value. Except with respect to his decision not to use the Mill Bay Save-on-Gas station purchase as a comparable, Pay Less did not particularly challenge either his selection of comparables or his methodology in using them for the initial purpose of estimating the net market rent for Station 48.

[180] The board has, of course, determined in the circumstances that the Save-on-Gas transaction could not be safely used as a reliable indicator. It also finds no basis for criticism of Mr. Nilsen's market rent analysis, concluding at $50,000 per annum fully net. That analysis, incidentally, appears to follow the methodology preferred by the board in Nikka Developments when determining the market rent for Mill Bay Shell.

[181] The only other evidence on market rent before the board in the present case was Mr. Gordon's 1989 report on Station 48 prepared several months before the Ministry's acquisition. The report was not scrutinized at the hearing nor did Mr. Gordon testify concerning it. Nevertheless, it is useful to note that Mr. Gordon's report arrived at much the same figure for net market rent after making certain allowances. His estimate was $49,025 per annum. Mr. Gordon used a broader range of comparables than did Mr. Nilsen, but he appears to have relied solely on a litreage-based methodology for evaluating them. In the Nikka Developments decision, the board said it was persuaded that fuel sales volumes are a factor that often enter into the negotiation of rents at leased service stations, but that as a stand alone approach to the determination of market rent, the litreage-based appraisal approach was unconvincing.

[182] It was mainly Mr. Nilsen's choice of the capitalization rate to be applied to the market rent that attracted criticism. Mr. Pavlakovic's colleague at Interwest, Mr. Grant, was called by Pay Less as an expert rebuttal witness to comment on the capitalization rates derived by Mr. Nilsen for several comparable gas station properties. Based on Mr. Grant's evidence, Pay Less argued that the rate of 11.75% applied by Mr. Nilsen was too high in that it failed to take into account the strong Shell covenant represented by the head lease at Station 48. However, Mr. Nilsen had settled on that rate after examining the somewhat lower capitalization rates for two other gas station properties which also enjoyed Shell lease covenants. In his calculation he had taken into account the fact that Station 48 was a much older and legally non-conforming facility. Mr. Grant on cross-examination was unable to comment on Mr. Nilsen's evidence that the two other stations were, by contrast, legally conforming.

[183] By way of comparison, Mr. Gordon in his 1989 estimate of the market value of Station 48 under the income approach had derived a capitalization rate of 10.75% after taking into account current economic conditions as well as the age and legal non-conformity of the station. However, in addition to the fact that his report was based on data that substantially pre-dated the taking, the board notes that, unlike Mr. Nilsen, Mr. Gordon used a variety of commercial sales as comparables, many of which were non-gas station facilities, in order to arrive at this conclusion.

[184] On the whole, the board is satisfied that Mr. Nilsen's capitalization rate for Station 48 at 11.75% is supportable from the evidence and accepts this number as appropriate in the circumstances. Accordingly, the board determines that the compensation payable to Pay Less for the market value of the improved site is the amount of $425,500, consistent with Mr. Nilsen's report.

[185] From the foregoing analyses, the board has determined compensation with respect to the vacant site in the amount of $31,500, and with respect to the improved site in the amount of $425,500. Therefore, the total compensation payable to Pay Less on account of market value pursuant to sections 31, 32, and 40 of the Act is the sum of $457,000.

[186] Under the basic formula set out in section 31(1) of the Act, the board has awarded compensation to Pay Less for the market value of the subject lands based on their highest and best use, which it has found to be the same as their existing use at the date of expropriation. The board has also accepted that the business at Station 48 was relocated to Station 88. It therefore follows that, in addition to the award for market value, Pay Less is entitled to compensation for disturbance damages as set out in section 34(1) consisting of "(a) reasonable costs, expenses and financial losses that are directly attributable to the disturbance caused to the owner by the expropriation" and "(b) reasonable costs of relocating on other land, including reasonable moving, legal and survey costs that are necessarily incurred in acquiring a similar interest or estate in the other land." To the extent that any separate consideration flows from the partial taking of the vacant site, Pay Less is also entitled under section 40(1)(b) to compensation for "reasonable personal and business losses." The board prefers to examine the issue of relocation costs before turning to the issue of business loss.

[187] Although the board has rejected Pay Less' claim for equivalent reinstatement of the old station on the relocated site, it is still necessary to consider what relocation costs incurred are properly compensable within the ambit of the Act. It appears to the board that the costs put in issue in this regard by the Pay Less claim fall under several heads: first, the cost of acquiring additional land for the purpose of constructing Station 88; second, the cost of acquiring and developing the new veterinary site; third, some of the cost of the sitework at Station 88, including labour, materials, equipment, septic disposal, and associated engineering costs; and fourth, soft costs in the nature of legal and consulting fees, aerial photography costs, and lost executive time.

[188] The board recognizes that the claim for equivalent reinstatement also included allocated costs for the actual construction of the service station and convenience centre. These were based on Mr. Pavlakovic's estimated reinstatement values of the undepreciated building component and gas station improvements at Station 48 which, he said, were adjusted to take into account any betterment. However, it appears unnecessary to delve into the details of this aspect of the claim in light of the fact that the board has already awarded full compensation for the market value of both the lands and improvements at Station 48.

[189] Notably, the Pay Less claim for relocation costs does not include a component for financing or holding costs. Mr. Coates referred to the absence of any such claim in his submissions, observing that holding costs had been "partially offset" by the various advance payments made to Pay Less by the Ministry.

[190] An initial question which the board must ask itself is whether the reasonable costs of relocation to which Pay Less is entitled are limited by the express provision in section 34(1)(b), or whether some costs and expenses in relocating to Station 88 might fall more generally under section 34(1)(a). Perhaps because of the way in which the parties have framed their cases, this question was not directly addressed at the compensation hearing.

[191] The scope of section 34(1)(b) has received only limited consideration to date. However, in the board's view, the language of that provision likely would not encompass the range and magnitude of some of the claims for relocation cost asserted by Pay Less. In Apland v. British Columbia (Minister of Transportation and Highways) (1996), 60 L.C.R. 107 (B.C.E.C.B.), the expropriated owners sought compensation for disturbance damages for the $8,000 difference between what the expropriating authority paid them for their residence, which was agreed on as market value, and what it cost them to purchase a replacement residence. The authority argued that there was no statutory basis in this jurisdiction for the claim, which was really a claim for equivalent reinstatement on the principle of "a home for a home". The board agreed and dismissed the claim.

[192] One question addressed by the parties during the course of the hearing in Apland was whether the claim might stand as a relocation expense under section 34(1)(b). The authority said it could not since, by application of the rules of statutory construction, such relocation expenses are not to be construed in their widest extent but are to be held as applying only to "out of pocket" items of the same general kind or class as those specifically mentioned. The owners appeared not to disagree with this interpretation and expressly did not rely upon the provision for "reasonable costs of relocating on other land" in section 34(1)(b). At p. 117 of the decision, the chair of the board commented as follows:

[193] In the board's view, the scope of section 34(1)(a) is wider, so that, for example, reasonable costs and expenses "directly attributable to the disturbance caused to the owner by the expropriation" could include particular items of relocation expense that do not appear to fall within the scope of section 34(1)(b). The board is also mindful of the general principle set forth by the Supreme Court of Canada in Toronto Area Transit Operating Authority v. Dell Holdings Ltd. (1997), 60 L.C.R. 81 at p. 91, that "the Act should be interpreted in a broad, liberal and flexible manner in considering the damages flowing from expropriations." Although in Dell Holdings the Court was dealing with somewhat differently worded expropriation legislation in Ontario in regard to disturbance damages, the board in Sequoia Springs West Development Corp. v. British Columbia (Minister of Transportation and Highways) (2000), 69 L.C.R. 1 at p. 30, has held that such differences did not make Dell Holdings inapplicable in British Columbia. It is from this broader perspective that the board therefore approaches the question of Pay Less' entitlement to the costs of relocation.

[194] Both provisions for compensation under section 34(1) are premised on the principle of "reasonableness". With respect to what was reasonable in the context of the costs incurred by Pay Less in relocating to Station 88, the parties have advanced several arguments which the board feels should be addressed at the outset.

[195] As noted earlier, Pay Less has argued that its knowledge of what the Ministry paid for the Save-on-Gas station in Mill Bay in August, 1990, entered into its calculation of what it might reasonably spend in order to relocate Station 48 to Station 88. As Mr. Coates expressed it, the knowledge that this station had been acquired for $1.9 million reasonably led Pay Less to assume that, at a minimum, Station 48 likely had a market value in the range of $1.0 million to $1.5 million.

[196] While this argument might appear plausible on its face, there was in fact no evidence to suggest that Pay Less, when proceeding to establish Station 88, was guided or influenced by what it came to know about the Save-on-Gas transaction. Prior to that acquisition, as Mr. Hincks has pointed out, Pay Less had already entered into an agreement to purchase the adjoining DF property as part of a land assembly with the vacant site to create the site for Station 88 as well as an agreement to purchase the Jones property for the purpose of relocating the veterinary clinic. It had also begun the process of having these properties rezoned and was investigating the feasibility of sewage disposal from the proposed new service station site. The board is satisfied that Pay Less had set in motion its costly and expansive relocation project well before the time when knowledge of the Save-on-Gas acquisition could have entered the equation.

[197] Pay Less has further argued that, although it had reasonably projected the anticipated costs of relocation and budgeted for the process, numerous difficulties increased the actual costs incurred. Pay Less holds the Ministry responsible for some of these difficulties. It says that the Ministry could have helped facilitate the relocation by, for example, giving more notice of when it would require the subject lands, taking a more co-operative stance in the approval process, being prepared to shoulder at least some of the extraordinary costs of the new septic and ground water disposal system insofar as it related to the highway right-of-way, and even perhaps making the Save-on-Gas station site available for the creation of a relocated veterinary clinic. Instead, according to Pay Less, the Ministry failed to offer any assistance on relocation while various of its departments threw up "roadblocks" to approval.

[198] The Ministry, while denying that there was any deliberate attempt on its part to frustrate or prolong the relocation process, also asserts that it had no statutory obligation to assist Pay Less in that regard. It cites the decision of the Alberta Land Compensation Board in Hudson's Bay Co. Developments Ltd. v. City of Calgary (1978), 16 L.C.R. 296, as setting out the proper role of an expropriating authority such as the Ministry in regard to relocation. The Board stated at pp. 327-328:

The Ministry argues, in turn, that it was the scale and complexity of the development of Station 88 which drove up relocation costs.

[199] In the board's opinion, there was no credible evidence to show that the Ministry's actions were either designed to, or did in fact, unreasonably increase the costs of relocation. There was also no indication of a legal obligation on the Ministry to assist with the private business planning of Pay Less with respect to relocation. The board accepts that the approval process through the CVRD which necessarily involved approvals from the Ministry and other provincial government agencies imposed certain requirements which increased the overall costs. However, in the board's view a large part of the reason for increased costs lay, as the Ministry contends, in the complexities of establishing a service station development on the scale of Station 88 at this particular location.

[200] Other difficulties which Pay Less says could not reasonably have been foreseen made relocation more protracted and expensive, including the CVRD's belated requirement for a development permit, the need to obtain an Order in Council to restore the two foot strip of the Jones property which had escheated to the Crown, and the fire at the newly constructed veterinary clinic just as it was about to be occupied. In assessing the reasonableness of its relocation costs, Pay Less argues that the board should take into account the unpredictable and unusual nature of these difficulties.

[201] The board accepts that these unforeseeable difficulties probably contributed to the overall time required by Pay Less to relocate to Station 88. In that sense they are germane, at least, to the determination of the period for which reasonable business losses may be awarded. They also appear, marginally at least, to have increased the overall costs of relocation. To the extent that Pay Less is entitled to be compensated for relocation costs to which these difficulties contributed, the board will factor them into its analysis.

[202] It should perhaps be noted in passing, however, that the Act does not make any provision for "special difficulties in relocation". As Professor Todd in The Law of Expropriation has described at pp. 280-283, the Ontario Act is unique in providing for compensation to an owner on this basis. Although it appears the provision grew out of concerns over the difficulties arising on the expropriation of farm property, it has been applied in other contexts. The parties in this matter made no reference to the cases decided under that provision, in the board's view correctly so, since they have no applicability here.

[203] The nub of the Ministry's argument on relocation costs in the context of a claim for disturbance damages is that the purpose of relocation to Station 88 was, or ought to have been, to preserve the goodwill which Pay Less enjoyed at Station 48. Accordingly, the reasonableness of the costs must be viewed in the context of the asset that is being preserved by the relocation. The Ministry notes that Mr. Coates in his argument on behalf of Pay Less acknowledges that it would be unreasonable to incur large relocation costs merely to earn small returns. Mr. Hincks in his argument contrasts what the Ministry's experts have estimated to be the maximum value of Station 48 at the date of expropriation -- $495,000 for the real estate and $120,000 for the goodwill for a total of $615,000 - with what Pay Less has claimed as the total of its costs relating to relocation. Mr. Hincks pegged this figure at over $1.9 million (in which, however, he appears to have included the claim for business loss) and argued that costs of this magnitude are not reasonable as disturbance damages when viewed in light of what the Ministry says is the total value of Station 48.

[204] In the board's opinion, what the Ministry's argument does not fully reflect is that Station 48 was part of a large chain of service stations operated by Pay Less on Vancouver Island and its strategic location in Mill Bay undoubtedly contributed to the importance reasonably attached to its relocation by Pay Less. Moreover, the strength or weakness of the Ministry's argument depends to some degree upon what may truly be said to be the "total value" of the old station including its goodwill component. In that regard, it should be noted at this juncture that, while the Ministry says the maximum value of the goodwill was $120,000, Pay Less, in reliance upon rebuttal evidence from its business valuator, has calculated the maximum goodwill value to be more than four times as great.

[205] In any event, having rejected the Pay Less claim for equivalent reinstatement, and awarded market value for the subject lands taken, the board is not faced with finding relocation costs approaching anything like what Pay Less has asserted to be the case or what the Ministry has denounced as unreasonable or excessive. An examination of each of the several heads comprising the claim demonstrates this to be the case.

[206] The first component of the claim, as the board conceives it, is for the cost of acquiring additional land in order to relocate to Station 88. After the Ministry's partial acquisitions, Pay Less acquired the remainder of the adjacent DF property, the site of the old veterinary clinic, and ultimately consolidated it with the remainder of the vacant site in order to achieve the relocation. The stipulated purchase price for the remainder of the DF property, which comprised approximately 105,683 square feet or slightly under 2.5 acres, was $300,000.

[207] Properly understood, the cost which Pay Less incurred to acquire the replacement land cannot be treated in isolation from the second component of its claim, namely, the cost it incurred in acquiring and developing the new veterinary site. As a condition to completion of the purchase and sale of the DF property, the vendors required Pay Less to acquire the adjacent Jones property, have it appropriately rezoned, serviced, and prepared, and construct a veterinary clinic on it. Pay Less purchased the Jones property, which was improved with a residence, for $140,000. The transaction completed in January, 1991. Sitework and construction followed during the months of August to November, 1991. The costs of development of the new veterinary site are set out at p. 47 of Mr. Pavlakovic's reinstatement value report. They comprise: fill - $42,000; demolition and clean-up - $7,500; retaining wall - $10,000; new veterinary clinic - $260,000; and soft costs, clean-up, landscaping, and septic - $40,000. Total development costs were therefore put at $359,500. In making its claim, Pay Less later deducted from this total the sum of $18,000 which it says it was able to obtain from salvage of the old veterinary clinic on the DF property.

[208] Under the purchase and sale agreement, half of the $300,000 price for the DF property was to be satisfied through the transfer by Pay Less to the veterinarians of the Jones property, improved with the new veterinary clinic, at an agreed price of $150,000. This was achieved by way of a credit to Pay Less when the DF property transaction completed. As the board understands it, completion should have occurred in December, 1991, but as a consequence of the fire at the new clinic, did not actually take place until mid-February, 1992.

[209] Some preliminary observations are in order. First, it seems clear from the evidence that acquisition of the DF property for the purpose of a land assembly with the vacant site offered the only viable means by which Pay Less could relocate its business at Station 48 within the Mill Bay area. Second, it is also apparent that the vendors of the DF property were only prepared to sell to Pay Less if assured that their existing veterinary practice would be reconstituted without interruption or expense to them in a new facility nearby. Third, Pay Less derived no direct benefit in the form of acquiring an additional asset or a source of income or profitability from the costs it incurred in purchasing the Jones property and constructing the new clinic, although obviously it indirectly benefitted from being able to carry forward its plans to establish a large, modern and diverse facility at Station 88.

[210] Although Pay Less incurred various costs to acquire the DF property, including those associated with the new veterinary clinic, it does not necessarily follow in the board's view that the costs in this case qualify as items of compensable disturbance damage, whether considered under either the narrower provision of section 34(1)(b) or the broader provision in section 34(1)(a).

[211] Pay Less has already been awarded full compensation for the market value of the subject lands which the Ministry acquired. By purchasing the additional replacement property for its land assembly, Pay Less has not thereby automatically suffered a demonstrable loss. In purchasing the DF property, it has instead acquired an asset in place of the monies expended on the purchase which it has been able to put to productive use in the creation of Station 88.

[212] The board's treatment of these costs might have been different if it had been proven by Pay Less that, in being forced to acquire replacement property for the purpose of relocation, which necessarily included relocating the veterinary clinic, the claimant company had paid more for the DF property than its market value at the time of purchase. In Lofranco et al. v. Municipality of Metropolitan Toronto (1982), 25 L.C.R. 11, a case cited by Pay Less, the Ontario Land Compensation Board awarded disturbance damages to the owners who had been forced to purchase and renovate replacement business property in the same neighbourhood as the expropriated property at a price in excess of market value. The Board said at p. 32:

[213] In the present instance, however, there was no independent evidence of the market value of the DF property alone but equally nothing to suggest that Pay Less suffered a loss in the sense that the market value of the property was actually less than what the claimant company paid for it.

[214] What Pay Less effectively paid was, of course, more than what might be concluded merely by looking at the stipulated price in the purchase and sale agreement. Mr. Nilsen, in his appraisal of the vacant site, for example, noted that Pay Less had purchased the DF property for an amount which he said equated to $1.38 per square foot. It appears to the board that this rate was probably derived by dividing the remaining size of the DF property after the partial taking, which he said approximated 2.5 acres (108,900 sq. ft.), by the $150,000 net cash payment required of Pay Less on the completion of the transaction.

[215] However, in order to calculate the true cost, several factors must be taken into account. First, the purchase price for the DF property of $300,000, the purchase price of the Jones property of $140,000, and the cost of constructing the veterinary clinic, said to be $359,500, must be added together. Then the credit to Pay Less on transfer of the new veterinary clinic of $150,000 and the salvage value of the old clinic in the sum of $18,000 must be deducted. When these calculations are performed, they indicate that the true cost to Pay Less to acquire the DF property was $631,500. This equates to $5.98 per square foot for the 105,683 sq. ft. parcel.

[216] The development costs for the new clinic, said by Mr. Pavlakovic to total $359,500, require comment. It must be said that the evidence in support of that cost figure is less than overwhelming. Mr. Pavlakovic's only source was a letter from Pay Less' counsel, Mr. Coates, to the Ministry's counsel, Mr. Hincks, dated November 15, 1991, in which among other things Mr. Coates itemized the monies expended by Pay Less on development of the replacement veterinary clinic. No back up for these numbers in the form of invoices, job reports, authorizations for expenditure or the like were provided at the time, although Mr. Coates in his letter indicated Pay Less' willingness to do so. Whether that supporting information was subsequently provided to the Ministry, it was not in any case put in evidence before the board.

[217] The Ministry did not specifically challenge the accuracy of the costs stated to have been incurred by Pay Less in relocating the veterinary clinic. Instead, it relied on its more general position that there was no relocation of the business at Station 48 to Station 88, and therefore such incidental costs were not compensable or, alternatively, were unreasonable and excessive. The board has, of course, not accepted the Ministry's position that there was no relocation.

[218] In the circumstances the board with some reluctance accepts the Pay Less figure as the actual cost to develop the new clinic. It therefore finds that the true cost to Pay Less to acquire the DF property was, as earlier indicated, $631,500 or $5.98 per square foot.

[219] In the board's view, it is highly relevant to note that in February, 1991, Interwest prepared an appraisal report for Pay Less' internal purposes valuing the whole of the Station 88 lands as rezoned for commercial use but also as unserviced land. The report was put in evidence by the Ministry during the cross-examination of Mr. Pavlakovic. Evidently the work was performed largely by another appraiser from Interwest but Mr. Pavlakovic testified that he reviewed and signed the report. It estimated the value of the lands after the taking, comprising the remainders of both the large DF property and the small vacant site, at $8.00 per square foot. Based on a total land area of approximately 111,000 square feet, the market value of the Station 88 lands after certain adjustments was put at $850,000 as of February 19, 1991.

[220] This valuation took place some nine months after Pay Less entered into the purchase agreement for the DF property. It also assumed rezoning of the property to service commercial use which, at the time the report was prepared, was virtually an accomplished fact. However, after making due allowance for the possibility that adjustments might be required for timing and for risk with respect to rezoning, the board views this valuation report as offering no support for the notion that Pay Less incurred a loss on the purchase of the DF property even when the true costs, as the board has set them out, are taken into account. Rather, it suggests the purchase may have been somewhat below market. The report is the only valuation evidence before the board relevant to this question.

[221] Accordingly, because the board has already compensated Pay Less for market value in respect of the subject lands taken, and because it finds on the evidence that no loss was sustained in the acquisition of additional lands, the board determines that no compensation is payable by the Ministry to Pay Less as disturbance damages arising out of its purchase of replacement property for Station 88 or its relocation of the veterinary clinic.

[222] The third component of the Pay Less claim for relocation costs comprises the sitework including servicing costs at Station 88. By far the two largest items in the claim are for the cost to design and install a sophisticated waste water treatment and disposal system on the site, and for material costs, mostly in the nature of "fill" to raise the elevation of the new site to highway grade. The other cost items claimed are for labour, equipment, service connections, and general administration. In finally amended form, the claim for sitework costs totals $668,462.31.

[223] The principal source of information concerning the claim is Mr. Pavlakovic's reinstatement value report. In turn, Mr. Pavlakovic relied upon cost data provided to him in July, 1992 by CPI Construction and Remediation Services Ltd., the general contractor for Pay Less at the Station 88 site. At that time it appears the sitework, in particular the installation of the waste water treatment and disposal system, was not quite complete. Pay Less has relied on later data provided by NovaTec for the engineering and construction costs associated with that system.

[224] In the board's view, the starting point for consideration of this claim is the recognition that Pay Less has already been fully compensated for its serviced site at Station 48 in the board's award of market value. Therefore, the only compensable items of disturbance damage in these circumstances are for reasonable costs and expenses arising from additional sitework at Station 88 made necessary by the forced relocation and which would not have been accounted for in the market value award.

[225] A further consideration lies in the fact that Station 88 is a much larger and more diverse facility than that from which Pay Less was ejected. Accordingly, any sitework costs for which the claimant company stands to be compensated must be determined on the basis of some reasonable allocation between what Pay Less actually spent in that regard in creating Station 88 and what it would have been required to spend on sitework to create a much more modest facility like Station 48 on the relocated site. To some extent, Pay Less recognized the need for such an allocation when advancing its claim for equivalent reinstatement or reinstatement value. For example, the experts retained by Pay Less dealt with construction costs for the new waste water treatment and disposal system on an allocated basis. However, as will be seen, this approach was not consistently followed with respect to other sitework cost items.

[226] With the foregoing considerations in mind, the board will examine each of the items falling under the claim for sitework costs in turn.

[227] A great deal of evidence was heard concerning the design and construction of the waste water treatment and disposal system at Station 88, the estimated costs for which appear to have been in the order of $517,000, more than 60% of the total sitework costs. Without doubt, a very significant portion of those costs came about through the need to incur the extraordinary expense of "tight-piping" the nearby open watercourse known as Wheelbarrow Creek.

[228] Andrew Clark, a senior engineer with NovaTec, testified concerning an expert report he had prepared for Pay Less dated January 25, 1995, which also took into account NovaTec's earlier feasibility study for Pay Less of waste water treatment and disposal at the new site, dated August, 1990. It was Mr. Clark's opinion that, of the approximately $157,000 in engineering costs actually incurred at Station 88, nearly $117,000 could properly be attributed to designing, obtaining approval of, and overseeing construction of such a system for a conventional replacement service station similar to Station 48 on the new site.

[229] Turning to the costs of construction of the works themselves, Mr. Clark indicated that the contractor had not made the actual numbers available to him. However, he estimated the construction costs for the system installed at Station 88 to be approximately $360,000. In his opinion nearly $229,000 could be assigned to a replacement service station similar to Station 48. This opinion was founded on Mr. Clark's view that even a small conventional station like Station 48, relocated on the new lands, would have necessitated the same costs of tight-piping the creek as well as 25% of the costs estimated to have been spent at Station 88 for a disposal field and pump station.

[230] In its finally amended statement of claim, Pay Less revised downward Mr. Pavlakovic's figure of $160,000 for engineering soft costs to $116,926.77 to square with the amount allocated by NovaTec to a replacement station similar to Station 48. Pay Less also made an upward revision from the $160,000 indicated by Mr. Pavlakovic as the construction costs for the system at Station 88 to $228,861.54, the precise figure assigned by NovaTec to such a replacement station based on Mr. Clark's estimate of the costs. Therefore, the total Pay Less claim for disturbance damages on relocation in respect of the waste water treatment and disposal system is $345,788.31.

[231] The Ministry, while taking the position that such sitework costs were not compensable in the circumstances, nevertheless commissioned a report by the firm of Ashford Engineering Ltd. to evaluate the costs of the waste water treatment and disposal facilities at Station 88 and the apportionment of those costs to the replacement of a facility like Station 48. Derek J. Ashford, a professional engineer specializing in municipal and land development engineering, was qualified to testify concerning his expert report dated April 18, 1995.

[232] Mr. Ashford, using two alternative methods, arrived at a dramatically different opinion of such servicing costs for a facility equivalent to Station 48. First, extrapolating from data which NovaTec had already provided, he compared the anticipated peak waste water flows from Station 48, said to be 2.84 cubic metres per day, with the anticipated peak flows from Station 88 which, as indicated in the permit Pay Less actually obtained, was 30 cubic metres per day. He then applied the ratio of these two numbers to the costs outlined in Mr. Clark's report, resulting in total allocated costs of $48,785. Second, Mr. Ashford provided an estimated cost of the septic tank and absorption field required to accommodate a peak flow of 2.84 cubic metres per day for a facility like Station 48, arriving at a figure of $43,250.

[233] Mr. Ashford rejected the view advanced by Mr. Clark that the tight-piping of Wheelbarrow Creek would have been required even for the small flows associated with a facility which was merely replacing that at Station 48. At the relevant time, environmental guidelines prohibited disposal of effluent into the ground within 30.5 metres of an open waterway. Tight-piping was made necessary because the large absorption field for the new larger facility brought it within the environmental guidelines, a situation which, according to Mr. Ashford, would not have applied to a small replacement facility. Because he had included an allocated portion of the tight-piping costs in the estimate arrived at by his first method, Mr. Ashford concluded that the second lower estimate of $43,250 was the more appropriate. These estimates were inclusive of both engineering and construction costs.

[234] The board has reviewed in detail the evidence with respect to the costs of the waste water treatment and disposal system to ascertain whether there is a sound basis for concluding that some portion of those costs are reasonably sustainable as a disturbance damage on relocation for which the Ministry should be held responsible. The board is unable to reach any such conclusion.

[235] In the board's view, the sitework costs for design and installation of the disposal system at Station 88 were for the benefit of the new facility in creating a serviced site. Pay Less has already been compensated for the septic tank and field which serviced Station 48 as part of the board's market value award. Therefore, the only basis upon which the board could reasonably consider awarding additional compensation was if Pay Less had proven that the costs it incurred for the disposal system at Station 88 were additional costs made necessary by the forced relocation of its business from Station 48. The evidence does not show this to have been the case.

[236] Although referral agencies including the Ministry required a complex and sophisticated waste water treatment and disposal system as part of the approval process for Station 88, the board is not persuaded by Mr. Clark's evidence on behalf of Pay Less that anything approaching so costly a system, in terms of engineering or construction, would have been needed for a simple relocation of a conventional service station facility on the scale of Station 48. Rather, it finds the evidence given in response by Mr. Ashford on behalf of the Ministry to be far more plausible. In particular, the board does not accept Mr. Clark's view that tight-piping would have been required for a Station 48-like replacement facility. The board has examined site dimensions for the replacement lands as depicted both in Mr. Pavlakovic's reinstatement value report and in the as-built plan for Station 88, together with plans showing the location of Wheelbarrow Creek, to satisfy itself that a modest replacement facility on the scale of Station 48 could reasonably have located its waste water treatment and disposal system on a portion of the site which would not come within 30.5 metres of the creek. Following that examination, the board finds no reason to doubt Mr. Ashford's conclusion that the edge of the absorption field for such a facility would remain well over 30.5 metres from the creek and preclude the need for tight-piping.

[237] The board agrees with the Ministry's contention that the need for such a complex system was dictated in part by the physical characteristics of the site itself and in part by the very large anticipated flows of waste water into the system. These, in turn, were the product of the scale and diversity of Station 88 which included not only a gas station area but also a car wash, laundromat, sani-dump, large convenience store, and eventually a restaurant.

[238] Accordingly, for all of the foregoing reasons the board finds that no compensation is payable by the Ministry to Pay Less on account of its creation of the waste water treatment and disposal system at Station 88.

[239] Among the itemized sitework costs appearing at p. 47 of Mr. Pavlakovic's reinstatement value report is the amount of $235,219 for "materials". The appraiser explained during the hearing that these materials were mostly soils required as "fill" in order to elevate the Station 88 site to the new highway grade and thereby provide easier access as well as good exposure and visibility. As best the board can determine from the evidence, the cost figure provided was the entire cost for fill material at the new site and not merely an allocated portion of the total.

[240] The evidence of both appraisers, Mr. Pavlakovic and Mr. Nilsen, was that the old site for Station 48 was at grade level with the TCH. However, according to Mr. Pavlakovic at p. 40 of his reinstatement value report, the new site for Station 88 had "an elevation approximately six to ten feet below the grade of the Trans Canada Highway". Given the date of this report, November 3, 1992, and the context in which its discussion of highway grade occurred, the board is satisfied that Mr. Pavlakovic was referring to the grade of the TCH after the highway widening and realignment had taken place.

[241] During the hearing the Ministry questioned the figure of $235,219 claimed as the cost to provide fill material to the Station 88 site. Mr. Hincks, when cross-examining Mr. Pavlakovic, showed him a copy of his 1991 appraisal of the Station 88 lands, in which the appraiser indicated that the cost of fill to raise the elevation of the site to highway grade had been estimated by Pay Less to be in the order of $50,000. Mr. Pavlakovic did not offer an explanation for the difference.

[242] It seems to the board that the desire of Pay Less to elevate its relocation site to highway grade through the placement of fill material was entirely reasonable. Since it already had at its old site before the taking a station situated at highway grade, the cost of raising the elevation of the new site was an additional cost made necessary by the forced relocation which would not be covered in the board's award of market value for Station 48. Although there was a marked difference between Pay Less' original estimate of the cost of fill as reflected in Mr. Pavlakovic's 1991 report and the cost figure shown in his 1992 report, the board accepts on the basis of the rather slim evidence available that, for whatever reason, costs escalated to the approximate $235,000 figure claimed.

[243] The determination of the quantum of damages to be awarded under this head is complicated by the fact that the fill material was required to elevate a site which accommodated a much larger and more diverse facility at Station 88 than that from which Pay Less was ousted at Station 48. As noted earlier, compensation in such circumstances must be based on some reasonable allocation of the cost involved.

[244] There was no evidence to indicate precisely where on the new site or in what varying amounts the fill material was needed. The board therefore considers that the only way such an allocation can be made is by reference to the ratio between what would have been required for a replacement site for a facility on the scale of Station 48 and what was required for the facility actually created at Station 88.

[245] The evidence as to an appropriate ratio for allocating costs is convoluted, to say the least. The board has already observed that the improved site at Station 48 comprised in total an area of 10,083 square feet while the relocation site at Station 88 comprised some 111,078 square feet. However, the parties are at considerable variance as to how to compare the new site with the old for, among other things, the purpose of allocating costs.

[246] Mr. Pavlakovic, in his reinstatement value report for Pay Less, allocated the total relocation site area of 111,078 square feet between what he termed the "non-developable portion", necessary for the waste water treatment and disposal system, and the "developable portion", used to create both the gas station and convenience store areas as well as the other ancillary facilities at Station 88. He estimated the developable portion to be 52% of the total new site or 57,800 square feet. As Mr. Pavlakovic understood it, the new gas station and convenience store area would occupy some 22,100 square feet. However, he reduced the area which he said was required to accommodate a replacement station on the scale of Station 48 to 19,000 square feet. In giving evidence, he referred to the CVRD zoning bylaw then in effect which required a minimum parcel size of 18,000 square feet for service commercial sites.

[247] The Ministry contends that the Pavlakovic analysis is flawed in a number of respects in its choice of 19,000 square feet as the appropriate size of a relocated facility on the scale of Station 48. First, the area of the improved site at Station 48 was only about half as large. Second, considering that nearly all the service station improvements on the improved site were on Lot 1, which comprised 5,895 square feet, the Ministry says the effective site of the old station was really in the order of 6,000 square feet, less than a third of the area allocated by Mr. Pavlakovic to the relocated facility at Station 88. Third, the Ministry points out, the CVRD zoning bylaw cited as a reason to justify the choice of 19,000 square feet referred to sites that required septic fields so that some portion of a site of that size was really, to use Mr. Pavlakovic's terminology, "non-developable". If the same 52% developable factor were applied, this would result in only 9,880 square feet being attributable to a relocated service station like Station 48. Finally, the Ministry refers to a large scale plan of Station 88 as built which was entered as exhibit 23 in the proceedings. A review of this plan, it says, shows that the 19,000 square feet allocated to accommodate a relocated Station 48 encompasses the entire new gas station with the two pump islands, more and larger tanks, the convenience store, the laundromat and parking.

[248] The board is persuaded by the Ministry's arguments that an allocation, in this instance with respect to the cost of fill material, based on a 19,000 sq. ft. replacement facility for Station 48 would lead to overcompensation since it incorporates some improvements identified by the Ministry which were not included at the old facility. The as-built plan for Station 88 also shows that many of the other additional amenities at that location, such as the car wash, propane facility and restaurant location, for which fill probably would have been required, fall outside the area Mr. Pavlakovic identified as being for gas station and convenience store use but within the area he designated generally as the developable portion.

[249] After reviewing all of the available evidence, the board concludes that the most appropriate ratio to be used in the circumstances is derived by comparing the square footage of the improved site at Station 48 (10,083 sq. ft.) with what the appraisal expert for Pay Less estimated to be the developable portion of the Station 88 site (57,800 sq. ft.). Expressed in percentage terms, this indicates that Pay Less is entitled to recover as a disturbance damage on relocation approximately 17.5% of the cost of fill material. Accordingly, the board awards to Pay Less under this head the sum of $41,163.33.

[250] The schedule of sitework costs set out in Mr. Pavlakovic's reinstatement value report includes an item for labour costs in the amount of $21,581. Based on its review of the documentation provided by Mr. Pavlakovic at the hearing in the form of job cost reports prepared by the general contractor, the board concludes that this amount represents the total labour costs incurred for sitework at Station 88 and not an allocated amount.

[251] There was no evidence whatever to assist the board in determining the breakdown of these labour costs on particular items of sitework. However, as best the board can discern, there were only two substantive areas of sitework identified in respect of which labour costs might conceivably arise: the installation of the waste water treatment and disposal system (the costs of which are estimated at $360,000) and the placement of fill material to elevate the site (the costs of which amounted to $235,219). The actual or estimated costs incurred in respect of these items total $595,219.

[252] The board has found that the only compensable item of substantive sitework is for the cost of fill material. Therefore, assuming as seems probable that some of the labour costs were incurred in the course of placing the fill and preparing the site for that purpose, a reasonable approach to the question of their compensability in the absence of better evidence is simply to use a pro-rata calculation. The cost of fill material represented approximately 39.5% of the total cost for the two substantive sitework items. This equates to labour costs on a pro-rata basis of $8,524.50. However, there follows the need to allocate the pro-rated costs on the basis that only 17.5% of them are recoverable as a disturbance damage on relocation. In the result, the board determines that labour costs should be awarded in the sum of $1,491.79.

[253] Mr. Pavlakovic's schedule of sitework costs also includes an item for equipment costs in the amount of $24,511. The appraiser explained during his testimony that these costs were largely incurred through the rental of spreaders, compactors and the like. Again, the figure given appears to be for the total cost involved, not an allocated amount.

[254] Given the absence of more precise evidence as to the purposes to which this equipment was put, the board considers that the same approach used in the determination of compensable labour costs should be applied here. Accordingly, the board determines that 17.5% of pro-rated equipment costs of $9,681.85 should be awarded in the sum of $1,694.32.

[255] The schedule of sitework costs in the reinstatement value report states an amount of $10,000 for what are described as "service connections". This amount appears to have been taken from an estimate in Mr. Coates' letter to Mr. Hincks, dated November 15, 1991, to which reference was made earlier in these reasons in the context of the new veterinary clinic costs. The indication in Mr. Coates' letter was that the service connection costs had not actually been incurred at that point but that they would be incurred in March, 1992.

[256] The board was provided with no more precise evidence as to what these service connections comprised but does not doubt that costs of this nature, for example with respect to utility hook-ups, would have been incurred. The real question is whether they are compensable at all as disturbance damages on relocation.

[257] In the board's view, these costs are similar to those which Pay Less incurred in designing and constructing a waste water treatment and disposal system at Station 88. Since the board awarded market value for Station 48 as a fully serviced site, with septic tank and field, it declined to make an additional award for the cost of a replacement system, noting, however, that it might have awarded damages if it had been shown that Pay Less necessarily incurred additional costs as a result of the forced relocation which would not have been taken into account in the market value award. The award made by the board for a fully operational site at Station 48 necessarily contemplates a site with all the required service connections. Since it has not been demonstrated that Pay Less incurred additional service connection costs of the foregoing nature, the board declines to make an award for disturbance damages on relocation on that account.

[258] The general contractor's job cost report showed as a category under sitework what it described as "general" costs amounting to $31,363. Mr. Pavlakovic included this item in his schedule of sitework costs on an unallocated basis, explaining during his testimony that it covered such matters as administration and overhead.

[259] In the board's view, the only portion of general administrative costs which are compensable as disturbance damages on relocation again relates to the matter of fill, including the labour and equipment associated with it. Without better evidence as to how these costs were incurred, a pro-rata calculation again appears necessary. In this instance the board considers that the calculation should pertain to the whole of the sitework costs, which on an unallocated basis are estimated to total $839,674. The cost of fill component together with labour and equipment represented approximately 30.2% of the total sitework costs. This equates to general administrative costs of $9,471.63 on a pro-rated basis, and 17.5% of that amount is recoverable as a disturbance damage on relocation. Accordingly, the board determines that general administrative costs should be awarded in the sum of $1,657.54.

[260] The fourth and final component of the Pay Less claim for relocation costs, as the board construes it, falls under the heading of soft costs, otherwise described by Mr. Coates as "ancillary consulting costs". It should perhaps be noted that these were set out in the pleadings separately from the claim for equivalent reinstatement of the old station on the relocated site. Pay Less has itemized the claim for soft costs as follows:

[261] At the compensation hearing the parties agreed that it would not be cost effective, in the first instance, to require all of the individuals who had performed services for and submitted accounts to Pay Less to testify in order to substantiate them. Instead, once the accounts were in evidence, the Ministry reserved the right to criticize the accounts and, if necessary, have the individuals involved made available. Apart from taking the general position that there had been no relocation and therefore relocation costs whether in the nature of soft costs or otherwise were not compensable, or if they were, such relocation costs were unreasonable and excessive in the circumstances, the Ministry did not specifically subject most of these accounts to scrutiny or require the attendance of those who had prepared them.

[262] Be that as it may, the evidence in support of the various claims for soft costs leaves a great deal to be desired. For example, although at the hearing Pay Less provided a package of invoices, entered as exhibit 45, purporting to back up these claims, in fact no statements of account from Lang Michener were included and those of Mair Jensen Blair were incomplete. There are other evidentiary difficulties. The claim for the costs of aerial photography was simply an amount allocated to the Mill Bay Pay Less file by Mr. Coates from a much larger invoice. The slim evidence concerning the purpose of the work leaves open to question in the board's mind whether the claim is properly characterized as one for disturbance damage directly attributable to the taking rather than one for costs in prosecuting the compensation claim before the board. Included among the Ward Consulting Group invoices is one which, in terms of both its timing and subject matter, raises a question as to whether it actually relates to relocation. Finally, the claim for the lost executive time of Mr. Sikora is an extrapolation based on the testimony of Mr. Sikora himself as to his approximate annual salary and his rough estimation of time spent dealing with both the expropriation and the relocation. No supporting documentation was provided. It is convenient to deal with the whole of the claim for executive time under this head, recognizing, however, that not all of it has to do with relocation costs.

[263] With these caveats in mind, the board accepts that many of the soft costs described in the claim are of the kind which fit within the scope of section 34(1)(b) as the costs of relocating on other land "including reasonable moving, legal and survey costs". They will be considered in turn.

[264] In his written submissions, Mr. Coates explained that the law firm of Lang Michener acted for Pay Less in its acquisition of the relocation site and, as well, had dealings with the CVRD for the purpose of obtaining necessary approvals. According to Mr. Coates, the accounts of the firm totalling $4,698.29 related to conveyancing, to dealing with the security documents registered against title to the subject lands which had to be re-registered on the replacement lands or at least, presumably, on the DF property after its acquisition by Pay Less, and to some work relative to the subdivision or consolidation plans that had to be filed.

[265] In the board's view, this description of the legal work performed largely accords with the kind of legal work to be anticipated on a relocation from the expropriated subject lands to the replacement lands within the meaning of section 34(1)(b). However, whether the actual costs said to have been billed to Pay Less by Lang Michener for this work were reasonable is most difficult to assess in the absence of account statements providing a detailed breakdown of the work done, the time spent, and the legal professionals involved as well as of the disbursements and taxes.

[266] The board at the compensation hearing commented on the fact that the Lang Michener invoices were missing from exhibit 45 when it was entered in evidence but, unfortunately, their absence was never remedied. The Ministry did not question that such legal costs had been actually incurred. In the absence of direct evidence, but appreciating that the kinds of work in respect of which legal costs are claimed were likely performed, the board considers that it would be reasonable to award as disturbance damages in the nature of soft costs an amount equal to 80% of the Lang Michener accounts as they were described by counsel for Pay Less. This amounts to the sum of $3,758.63.

[267] Mr. Coates, a senior partner in the Kamloops law firm of Mair Jensen Blair, has acted as the lead counsel for Pay Less throughout the expropriation proceedings. Six statements of account rendered to Pay Less by the law firm between October 3, 1990 and February 5, 1992, totalling $67,514.08, were included within exhibit 45. At p. 48 of his written submissions, Mr. Coates provided a summary of seven accounts rendered between April 16, 1991 and September 1, 1993, totalling $79,396.84. In that summary he broke down for each of the seven accounts the amounts which he said were attributable to legal work performed in relation to the relocation of Pay Less from Station 48 to Station 88 as distinct from the amounts attributable to legal work on the expropriation proceedings. By his calculation, the portion of the seven legal accounts related to relocation totalled $37,193.05 and are the subject of this disturbance damage claim. The remaining portion of those seven accounts, totalling $42,203.79, are in the nature of cost claims to be considered, if necessary, at a section 45 review of costs.

[268] An obvious evidentiary difficulty arises from the fact that only four of the seven accounts said to contain legal work attributable to relocation were included within exhibit 45. The first two accounts provided under that exhibit are dated October 3, 1990 and January 29, 1991, respectively, but are not listed by Mr. Coates under his summary of accounts rendered so that there is no indication that any portion of them relates to relocation. The last three accounts listed under the summary are dated June 15, 1992, May 10, 1993, and September 1, 1993. Although amounts are attributed within each of them to relocation, unfortunately the three accounts themselves were not provided.

[269] Having reviewed the first two accounts rendered which are not included in Mr. Coates' summary, the board observes that they appear to contain few entries which, based on the description of work performed, would be attributable to relocation. There are, however, references to subdivision, bylaws, and site visits which may pertain, in part at least, to relocation matters. The amount billed in these first two accounts total $31,468.15.

[270] The next four accounts rendered, all of which are included in the account summary, total $36,333.38. Of this total, $23,181.44 has been attributed by Mr. Coates to relocation. Pay Less' counsel in his written submission explained that the figures were extrapolated from the individual accounts by reviewing each of the entries in them and allocating the amount attributable, in the opinion of Mair Jensen Blair, to relocation rather than expropriation. The board observes that, with one exception, these accounts contain insufficient description of work performed in order for it to be able to verify the law firm's opinion or make an independent allocation. The exception is in respect of the account dated February 5, 1992, in the total amount of $3,547.10, which appears to relate entirely to work performed by the law firm in dealing with the matter of the two foot strip which had escheated to the Crown. This account is therefore clearly in relation to relocation.

[271] With respect to the final three accounts listed in the summary, totalling $43,063.46, the amount allocated to relocation totals $14,011.61. Not having been provided with copies of the actual accounts themselves, the board merely observes that a footnote to the account summary indicates that fees and disbursements attributed to relocation ended as of December 24, 1992. This was approximately a month and a half after the date upon which the relocated facility designated Station 88 opened for business.

[272] Pay Less bears the onus of proving that its claim for soft costs arising out of the work performed by Mair Jensen Blair and attributed to relocation were actually incurred for this purpose and were reasonable. In the board's view, this information should have been provided in a more careful, complete, and explanatory fashion. It is also the case, however, that the Ministry did not raise a specific objection to the manner of presentation or characterization of these accounts. Given the incomplete nature of the evidence, the board considers that some reduction should be made from the amount claimed for disturbance damages arising from the Mair Jensen Blair accounts said to relate to relocation. Accordingly, the board awards 80% of the soft costs claimed with respect to the seven accounts shown in Mr. Coates' summary, amounting to the sum of $29,754.44.

[273] Counsel for Pay Less explained that aerial photographs were required of both the expropriated site for Station 48 and the relocation site for Station 88. A firm known as Aerial Services took these photographs in or about June, 1991. At that time the old Station 48 would have been dismantled and the new Station 88 remained to be constructed. The cost of providing these photographs was included in an invoice rendered to the firm of Mair Jensen Blair on June 19, 1991, in the amount of $5,663.56. Most of the work invoiced was evidently done for a report being prepared by Pay Less on its existing Vancouver Island Highway outlets. Mr. Coates indicated that, based on conversations with Aerial Services, he had simply allocated $600 of the total bill to the Mill Bay Pay Less file. He also observed that, because the services were obtained in conjunction with other services being performed for Pay Less, a substantial savings had been achieved over the cost of obtaining an aerial photograph of the relocation site independently. The invoice, together with a covering letter to Pay Less from Mr. Coates in August, 1991, was included in exhibit 45.

[274] The board has already indicated that some doubt arises as to the actual purpose to which these photographs were intended to be put. A copy of one of them was provided under the cover of Mr. Coates' letter of November 15, 1991 to Mr. Hincks, with the observation that it "may be useful in identifying the properties that did exist and the proposed site." A schematic plan of the proposed new site was also provided at that time. Mr. Coates in his submission said the photographs were also utilized both before and at the compensation hearing. That being the case, it is questionable whether the entire cost claimed should be characterized as a cost attributable to relocation rather than expropriation. However, the amount is not large, the Ministry has not questioned its proper characterization and, in these circumstances, the board is prepared to give the benefit of the doubt to Pay Less and award the entire $600 amount claimed as a soft cost on relocation.

[275] Ward Consulting Group ("Ward") is a consulting firm that provides traffic studies, parking studies, and traffic operations and transportation planning. Pay Less retained Ward to prepare an analysis of traffic and road issues as they related to the relocation site. Specifically, according to Mr. Coates, it was asked to deal with the issues of site circulation at Station 88 and site access onto Deloume Road, and to attempt through negotiation to secure egress southbound from Station 88 onto the TCH. This work was carried out by Trevor J. Ward, a professional engineer who also holds a master's degree in business administration.

[276] Ward rendered four invoices to Pay Less between October 26, 1990 and February 5, 1994, all of which were included in exhibit 45. The descriptions of the work performed in most of these invoices were not particularly detailed.

[277] In the first account, Mr. Ward charged 9.5 hours at $90 per hour for what he described as preparing for and attending the public hearing of October 2, 1990 on Pay Less' application to rezone its proposed replacement site. In the second account, dated February 3, 1992, he charged 32.5 hours at $100 per hour for professional services provided "in conjunction with seeking approval for direct access to Pay Less Gas Co.'s proposed Mill Bay site." This work included such matters as analyzing the technical feasibility of access, holding discussions with Ministry representatives and officials from Pay Less, conducting a site visit, and preparing a letter report. The account contained a further fee charge of 1.25 hours at $30 per hour for word processing. In the third account, Mr. Ward charged 7.5 hours at $100 per hour, again in conjunction with what he described as seeking approval for direct access. The fourth and final account, dated February 5, 1994 but covering the period from March 31 to September 30, 1993, was for professional services rendered for "determining the impact of proposed development projects in the vicinity of Pay Less Gas Co.'s Mill Bay station site, and resultant changes to road network on the site." Presumably, this work had something to do with the "site circulation" issues referred to by Mr. Coates. Mr. Ward charged 10.75 hours of his time at $100 per hour in this account.

[278] Viewed as a whole, the four Ward accounts comprised $5,967.50 in fees, $1,356.09 in disbursements, and $426.74 in GST for a total of $7,750.33. Pay Less has claimed this total in its entirety as a soft cost on relocation.

[279] The board accepts that issues of highway access and traffic circulation would have arisen on any relocation of Station 48. Given the configuration of the relocated site in relation to the TCH, it is not of the view that the scale and diversity of Station 88 necessarily complicated these issues. Therefore, for the most part, the board views the time spent by Ward on these issues on behalf of Pay Less to be reasonable on its face. Although no evidence was offered to support the reasonableness of Mr. Ward's hourly fee rate, the board also finds that rate not to be out of line with what professional engineers in other cases before the board have tended to charge.

[280] However, three matters require comment. First, the board has difficulty in appreciating how the final Ward account for fees and disbursements of $1,424.77, dealing with the impact of other development projects near Station 88 in the period from March to September, 1993, many months after the station was built and opened, has a bearing on relocation costs. There was no reference at the hearing to such projects, except perhaps the development of the A & W Restaurant on the relocation site itself. Given that the restaurant was part of the diversified venture contemplated by Pay Less upon its relocation, the soft costs associated with accommodating it within the Station 88 traffic circulation scheme appear to the board not to be reasonably compensable by the Ministry. If the consulting work reflected in this final account was not in respect of the restaurant, the board in any case finds no other basis in the evidence upon which to allow the account as a compensable item of disturbance damage. The sum of $1,424.77 in respect of fees and disbursements must therefore be deducted in calculating an award.

[281] Second, the board observes that Pay Less is undoubtedly a registrant for the purposes of the GST and is therefore in a position to seek reimbursement of any GST paid. Accordingly, the board is of the view that no amount for GST should be included in any award it makes to Pay Less on account of disturbance damages for soft costs. This has the effect of requiring a further deduction of $426.74.

[282] Third, the board views the fee charge of 1.25 hours at $30 per hour for word processing in the second Ward account as properly falling within the scope of office overhead already covered in the professional fees charged by Mr. Ward. The further sum of $37.50 must therefore be deducted.

[283] Taking all of the foregoing deductions into consideration, the board awards to Pay Less as soft costs on relocation in respect of the Ward accounts the sum of $5,861.32, comprising $4,855.00 in fees and $1,006.32 in disbursements.

[284] Mr. Sikora was the manager of real estate and development for Pay Less from September, 1989 to approximately September, 1993. He testified that his duties included planning and development of retail and wholesale facilities for the claimant company both on and off Vancouver Island, negotiating new site acquisitions and leases, endeavouring to enhance the financial return on existing gas station sites, and arranging for the upgrading of their ancillary services in the nature of C-stores, car washes and laundromats. Mr. Sikora said his starting salary in this position in the fall of 1989 was $4,000 per month with an appropriate benefit package and the potential to receive year-end bonuses. By the time he left Pay Less in 1993, he was making about $57,000 per year.

[285] It was Mr. Sikora's evidence that he was involved on Pay Less' behalf in the Ministry's acquisition of Station 48 and the relocation to Station 88 throughout his tenure as manager of real estate and development from the fall of 1989 until the new station opened in November, 1992. He participated in early discussions with Ministry representatives around the Ministry's highway expansion plans and helped to negotiate the terms and timing of the Ministry's acquisition. At the behest of the new president of Pay Less, Mr. Mitchell, he worked with the company's legal counsel, Mr. Holt, to develop a relocation plan. They searched for alternative sites, negotiated first with the adjacent owner to the west, Mr. Garnett, and then with the owners of the DF property to the south. Mr. Sikora, it appears, was instrumental in negotiating the terms of the veterinary clinic relocation and in putting together the land assembly for Station 88. He initiated the rezoning process with the CVRD and was later also involved in obtaining the development permit. During the construction phase of Station 88, Mr. Sikora was concerned with planning for the new retail facilities.

[286] According to Mr. Sikora, the time actually spent on these duties as a proportion of his overall workload varied from time to time. There were periods when the expropriation and relocation occupied his time for many days in a row, including evening attendances and discussions. During other periods, there was little involvement. He ventured an estimate that "at the bottom end" perhaps 10% to 15% of his time was spent on these matters while "at the top end" perhaps 20% to 25%.

[287] Based upon Mr. Sikora's estimate of the proportion of his time spent on expropriation and relocation and the evidence as to his annual salary, Pay Less has claimed the sum of $35,000 as a disturbance damage in the nature of lost executive time over the roughly three year period in question. In his written submissions, Mr. Coates has argued that the executive time of Mr. Sikora was a cost to Pay Less and, therefore, a legitimate claim for reimbursement under section 34. Mr. Coates has also asserted that some of Mr. Sikora's normal duties as a real estate manager had to be performed by another person in Pay Less, resulting in an obvious expense to the company.

[288] The Ministry points out that no evidence was led by Pay Less to allocate the amount of time said to have been spent by Mr. Sikora on the relocation as opposed to the expropriation. With respect to time spent on relocation, the Ministry's position on this issue is consistent. Since there was no relocation, that time is not compensable. As to time spent in dealing with the expropriation, Mr. Hincks acknowledges that such a claim might be compensable if it could be shown that it resulted in a loss to Pay Less. However, he argues, there was no evidence that Pay Less retained any one else to carry out Mr. Sikora's real estate functions while he was dealing with the expropriation and, in any case, the time Mr. Sikora would have required to deal with it must have been small.

[289] In the board's view, the following passage from Professor Todd, The Law of Expropriation, at pp. 522-523, assists in placing this issue in context:

[290] In other words, based on the decided cases to which Professor Todd refers, there is an important if not always easily discernible distinction to be drawn between lost executive time which can be treated as an item of compensable disturbance damage and lost executive time which is in the nature of a claim for costs, to be dealt with under the costs provisions of the Act.

[291] At p. 290 of his text, Professor Todd also identifies as an item of relocation costs from the decided cases "[e]xecutives' loss of time spent in looking for new premises, supervising and planning the move to new premises or dealing with business difficulties, negotiations or discussions arising out of the expropriation."

[292] This board has dealt with claims for loss of executive or personal time in numerous previous compensation decisions, including two cited by counsel for Pay Less: L'Abri B.C. Ltd. v. School District No. 34 (Abbotsford) (1994), 52 L.C.R. 161, and Patterson v. British Columbia (Ministry of Transportation and Highways) (1994), 53 L.C.R. 88.

[293] In L'Abri the board referred at p. 184 of its decision to the case of Foisy v. City of Gloucester (1985), 34 L.C.R. 350, wherein the Ontario Municipal Board described the fundamental premise underlying a claim for a principal's time as follows, at p. 367:

The board in L'Abri expressed the opinion that, in order for such a claim to succeed, there must be a corresponding loss or expense, or one must be able reasonably to infer a consequential loss, as a result of the time expended by the individual. In that instance there was no evidence of financial loss nor was there evidence to suggest that a loss should be inferred. The claim for executive time was accordingly dismissed.

[294] In subsequent cases where claims for compensation have been advanced for loss of executive time, the board has consistently dismissed the claims, either because it found that there was no evidence of any financial loss to the claimant's business as a result of time spent by one or more of its principals on matters arising out of the expropriation (see, for example, Bill's Frontier Restaurant Ltd. v. British Columbia (1994), 53 L.C.R. 175 at p. 192; Vision Homes Ltd. v. Nanaimo (City) (1994), 54 L.C.R. 103 at pp. 126-127; Kliman v. School District No. 63 (Saanich) (1994), 54 L.C.R. 242 at pp. 269-270; Bayview Builders Supply (1972) Ltd. v. British Columbia (Minister of Transportation and Highways) (1996), 59 L.C.R. 263 at pp. 301-303; and Sequoia Springs West Development Corp. v. British Columbia (Minister of Transportation and Highways) (2000), 69 L.C.R. 1 at p. 38), or because the claim for executive time was, in effect, already captured in the board's award of compensation for business loss (see, for example, Hertel v. British Columbia (Minister of Transportation and Highways) (1997), 62 L.C.R. 3 at p. 28; Roadmaster Auto Centre Ltd. v. Burnaby (City) (1997), 62 L.C.R. 124 at p. 155; and Pentecostal Assemblies of Canada (in Trust) v. British Columbia (Minister of Transportation and Highways) (1999), 66 L.C.R. 275 at p. 300).

[295] None of the foregoing decisions since L'Abri, which has denied claims for lost executive time on the basis that there was no evidence of a corresponding loss or expense, has gone on to consider expressly whether such a loss or expense might reasonably be inferred from the circumstances. In the present instance, the board is of the view that it is reasonable to infer from the evidence as to Mr. Sikora's efforts on expropriation and relocation matters that the diversion of his paid time from normal real estate and development duties represented a cost or expense to Pay Less even if it was not somehow reflected as a loss in the claimant company's financial statements. With respect to the other main reason why the board has denied claims for compensation for loss of executive time based on its concern around double recovery, the board in this instance observes that Pay Less' claims for business loss do not encompass the kind of cost or expense associated with the diversion of Mr. Sikora's time.

[296] The real problem with this claim in respect of executive time, as the board sees it, lies in the rather impressionistic character of the evidence. While the board found Mr. Sikora to be a credible witness and accepts his testimony with respect to his earnings at Pay Less, his evidence as to the varying percentage of time which he devoted to expropriation and relocation was not backed up by any more precise record of total hours spent. Nor does his evidence permit the board to determine whether all of his time falls within a claim for disturbance damages as opposed to a claim for costs in connection with advancing the compensation claim. Finally, there is in the board's mind a question as to whether some of Mr. Sikora's time dealing with relocation matters was intensified by the scale and diversity of the service station development at Station 88. To the extent this may have been the case, the board considers that the Ministry should not be held responsible for it.

[297] Weighing all of the foregoing considerations, the board has decided that a reasonable amount to award as disturbance damages in respect of Mr. Sikora's executive time is the sum of $20,000.

[298] At the outset of its discussion concerning the market valuation of the subject lands, the board noted the widely varying approaches which the parties had taken to the issues of compensation and their effect on the evidence presented. Those comments continue to apply with considerable force when turning to consider the issues around business loss. Although the parties are agreed that Pay Less suffered a business loss in consequence of the Ministry's acquisition of Station 48, they have proceeded along entirely different paths to estimate the quantum of that loss. The principal difference in approach stems from their initial positions on whether the business at Station 48 was relocated or terminated.

[299] Pay Less has asserted claims for business loss under sections 34(1)(b) and 34(3) of the Act related both to the anticipated and actual closure of Station 48 as well as to the disturbance of its business during the final months of operation when highway construction in the immediate vicinity had already begun. Moreover, because Pay Less maintained that its business at Station 48 was relocated to Station 88, it has made further claims for loss in the interim period between September 30, 1990, when the old station closed, and December 31, 1992, some eight weeks after the new station opened. During that interim period Petro Canada, in April, 1992, opened its new station at the intersection of the TCH and Kilmalu Road, leading Pay Less to assert a claim for the consequential loss to Petro Canada of part of its retail propane business on lower Vancouver Island. Finally, Pay Less has claimed for further losses said to have been incurred during the start-up period at Station 88, extending through calendar years 1993 and 1994.

[300] To analyze and quantify these heads of alleged loss, Pay Less retained Ronald J. Hooge, a chartered accountant and business valuator, who at the time was a senior manager in the firm of Doane Raymond. Mr. Hooge was qualified at the compensation hearing as an expert in the determination of economic and business loss and business valuation. He testified concerning his report dated January 26, 1995, to which certain revisions were made during the hearing. As revised, Mr. Hooge's report estimated total business losses ranging between $559,000 and $590,000. Pay Less has relied on the lower of these two figures in its claim for compensation for business loss.

[301] The Ministry proceeded with its estimate of business loss payable on the initial premise that there was no relocation of the business at Station 48 to Station 88. Therefore, the Ministry confined itself in the first instance to estimating the amount of goodwill which attached to the business at Station 48 at the time of closure for the purpose of quantifying what it said Pay Less was entitled to as a "termination allowance" under section 34(4). The Ministry did not consider it necessary to commission a report to estimate future business loss, either from the time Station 48 closed until Station 88 opened, or during the start-up period at Station 88 since, in the absence of a relocation, such estimates became irrelevant to the determination of compensation. Evidently, the Ministry also did not consider that business losses, separate from any calculation of lost goodwill, were incurred or, in any case, were compensable in the months preceding the closure of the station on September 30, 1990 or on "winding up" the existing business.

[302] To estimate the goodwill at Station 48 as of September 30, 1990, the Ministry retained Toby M. Symes, a chartered accountant and business valuator, who at the time was a partner in the firm of Deloitte & Touche. Mr. Symes was qualified during the hearing as an expert in business valuation. He testified concerning his report dated January 17, 1995, as well as some revised schedules which corrected earlier misinterpretations of data and took into account new information produced by Pay Less during the hearing. Based on these revisions, Mr. Symes estimated the goodwill of Station 48 under two scenarios. First, he assumed the sale to a notional small business purchaser who he said would have paid between $56,000 and $120,000 to acquire the income stream of the business at the valuation date. Second, he assumed the sale to a notional corporate purchaser which he said would have paid between $38,500 and $87,500. The mid-point of the lowest and highest estimate of goodwill value is $79,250. It is this mid-point value which the Ministry contends should be the maximum amount to which Pay Less is entitled as compensation for disturbance damages in the nature of lost goodwill.

[303] The board has, of course, determined that the business of Station 48 was relocated to Station 88, making it necessary to examine each of the heads of compensation for business loss which Pay Less has asserted and rendering less relevant the Ministry's calculation of goodwill value. The yawning gap between the the parties' approaches to business valuation has been bridged, to some extent, through cross-examination and by the rebuttal evidence which each of their business experts provided in the course of giving testimony. The parties are agreed that an opinion letter, dated February 20, 1995, from E. Roman Adler, C.A., CBV, entered as exhibit 19 in these proceedings, is not to be considered as part of the record.

[304] However, before analyzing the sales performance and projections provided by the experts in relation to gasoline, propane and convenience items in order to determine business loss, it is necessary to consider two somewhat interrelated issues. The first concerns whether the board should find that, in the absence of an anticipated expropriation, Pay Less would have created a full-sized convenience store at Station 48. During the hearing this notional facility was often referred to as "the hypothetical C-store". The second concerns whether the board should find that Pay Less is entitled to compensation for business loss throughout a period which the claimant company defines as beginning well before the Ministry's closure of Station 48 and extending well after the time when Station 88 opened. These two issues will be dealt with in turn.

[305] A key element in Pay Less' business loss claim is its proposition that, but for the looming threat of expropriation, it would have renovated and greatly expanded its small retail convenience sales outlet at Station 48. According to Pay Less, this hypothetical C-store would have been operational from January 1, 1990, and would have contributed directly to higher ancillary revenues and profits and indirectly to increased fuel-related sales and profits at Station 48. All of the Pay Less projections of business loss, including those at both Station 48 and Station 88, proceed from what Mr. Hooge termed this "most significant assumption". At p. 2 of his report he stated:

[306] Mr. Hooge was, in fact, misinformed as to the size of the service bay portion of the building at Station 48. The service bays actually occupied roughly half of the main floor area or about 950 square feet. However, Mr. Coates in his final submissions indicated that what Pay Less intended was a C-store in the order of 1,800 square feet, which would have occupied all or nearly all of the main floor of the existing building.

[307] Two main questions arise from the Pay Less proposition. First, from a legal perspective, could the convenience sales function at Station 48 have been expanded in the way the claimant company asserts? Second, from an evidentiary perspective, was it proven that, but for the threat of expropriation, the suggested expansion would have been undertaken so as to make the hypothetical C-store operational by January, 1990?

[308] The potential legal obstacle facing Pay Less was the fact that Station 48 was a non-conforming use of the improved site under the CVRD zoning bylaw applicable at the relevant time. The board has already found that, although the improved site was zoned for residential use at the time of the Ministry's acquisition, its use as a service station from probably the late 1940s onward long pre-dated that zoning requirement. The evidence is that the bylaw was first adopted in October, 1974. Therefore, the service station use was legally non-conforming and, as such, fell within the provisions of section 970 of the Municipal Act, R.S.B.C. 1979, c. 290. (These provisions are now found in section 911 of the Local Government Act, R.S.B.C. 1996, c. 323). The relevant portions of section 970 stated:

[309] Pay Less asserts that section 970 would have permitted development of the hypothetical C-store. Its position is that there were, and had long been, retail sales of convenience items at the old service station amounting to a C-store "function". That function was accessory to the service station function and, as such, was part of the legal non-conforming use which could be continued under section 970(1). Pay Less also maintains that no structural alterations, within the meaning of section 970(5), would have had to occur to accommodate the expansion of the retail convenience sales function into the unused service bays. While section 970(6) does not authorize the non-conforming use of land to be continued "on a scale or to an extent greater than at the time of the enactment" of the bylaw, Pay Less argues that expansion of the C-store function over time would simply have been a more intense use of the land for the same purpose. In any case, Pay Less says, there was a high probability of being able in the future to remedy the legal non-conformity of Station 48 through rezoning, possibly in conjunction with acquiring additional land to the west.

[310] As support for its interpretation of what section 970 would have allowed, Pay Less cites a number of decided cases, including in particular Sunshine Coast (Regional District) v. Bailey, [1995] B.C.J. No. 2350 (B.C.S.C.) aff'd. [1996] B.C.J. NO. 1443 (B.C.C.A.), and Nanaimo (City) v. Brickyard Enterprises Ltd., [1993] B.C.J. No. 992 (B.C.S.C.).

[311] The Ministry argues that there never was a C-store at the service station site which came to be designated as Station 48 and no serious prospect of creating one under the governing legislation. No evidence was presented, it points out, to suggest that any retail activity in the sale of convenience items was occurring at the station in October, 1974, when the zoning bylaw was adopted, or that such sales continued without significant interruption from that period up to the time that Pay Less acquired the facility in 1985. The scale of the retail operation under Pay Less was so limited, the Ministry says, that it could not reasonably be said to amount to an existing C-store and thereby to confer whatever protections might be afforded to its continuance, much less its expansion, under section 970 of the Municipal Act.

[312] The Ministry cites the decision of the Supreme Court of British Columbia in Sunshine Coast (Regional District) v. Wood Bay Salmon Farms Ltd. (1992), 71 B.C.L.R. (2d) 19, for the proposition that the purpose of section 970 is to protect the status quo existing at the time of the zoning by-law. It further refers to the decision of the Ontario High Court of Justice in Re Convenience Services Ltd. and City of Sault Ste. Marie et al. (1980), 118 D.L.R. (3d) 362, as indicating that convenience store use is not "accessory" to the retail sale of gasoline.

[313] To address the validity of Mr. Hooge's assumption that Pay Less could and would have built the hypothetical C-store at Station 48, but for the expropriation, the Ministry retained Jay Wollenberg, a professional planner and president of Coriolis Consulting Corp. Mr. Wollenberg was qualified as an expert to express the opinions contained in his rebuttal report, dated February, 1995, and entitled "Evaluation of the Ability to Develop a Convenience Store at the Former Pay Less Gas Station Site in Mill Bay".

[314] Mr. Wollenberg examined both the potential for the hypothetical C-store as an allowable use and its potential from the point of view of market opportunity, site configuration, access and parking. With respect to the latter considerations, he concluded that a market opportunity existed for creating the C-store at Station 48, and that the old site and building could have physically accommodated a C-store of about 1,900 square feet. However, he also expressed the views that direct access from the TCH probably would not have been permitted, on-site circulation would have been awkward, and the parking inconvenient.

[315] With respect to allowable use, Mr. Wollenberg considered there were two possible ways by which the hypothetical C-store might have met the criteria: first, if the improved site could have been rezoned to a commercial category which allowed C-store use, or second, if the hypothetical C-store could truly be said to be a continuation of a legal non-conforming use in accordance with section 970.

[316] Based on his discussions with CVRD planners, Mr. Wollenberg concluded that rezoning of the improved site at Station 48 to the required commercial use was unlikely because it would have contradicted the site's designation as "urban residential" in the Mill Bay - Malahat Official Settlement Plan (the "OSP") adopted in 1986 and because it failed to meet the minimum parcel size requirement under the zoning bylaw.

[317] He was less conclusive with respect to allowable use under section 970. His discussions with Mr. Paras, a CVRD planner, led him to the view that, pursuant to section 970(5), board of variance approval for a structural alteration to the existing building, should such have been necessary to accommodate an expanded retail convenience sales area, was unlikely. On the larger question, however, Mr. Wollenberg considered that, to validate its assumption that a C-store could have been created at Station 48, Pay Less would have to have been able to demonstrate, through evidence in the nature of business records, that retail activity in an amount that qualified as a "use" in accordance with section 970 already existed in October, 1974, and continued without significant interruption to the date of expropriation. He was unable, through his discussions with the CVRD, to discern that this had been the case.

[318] From its review of the evidence and the applicable law, the board seriously doubts whether Pay Less could have created a full-size C-store at Station 48.

[319] The most certain route by which this might have been accomplished would have been through commercial rezoning of the improved site. The chief impediment, as the board sees it, was not its "urban residential" designation in the OSP, but rather its failure to meet minimum parcel size requirements under the zoning bylaw for commercial sites not connected to a community sewer system. The two lots comprising the improved site totalled 10,083 square feet whereas the minimum parcel size required was 18,030 square feet. The board notes that the Ministry's real estate appraiser, Mr. Nilsen, in his report identified minimum parcel size as a factor militating against the prospect of commercial rezoning. In his evidence in chief, Mr. Nilsen was somewhat less categorical. He observed that from his later discussions with the CVRD planner, Mr. Paras, he formed the understanding that minimum parcel size in itself would not necessarily have precluded rezoning of the improved site. However, he said, the views of other approving agencies, such as the Ministry of Health which regulates septic treatments, would have been reflected in the minimum parcel size requirements.

[320] In the board's view, rezoning approval was improbable unless Pay Less could have acquired additional adjacent land to the west and consolidated it with the improved site. The failed negotiations which Pay Less conducted in late 1989 and early 1990 with Mr. Garnett, the owner of the adjacent land, strongly suggest that there was no imminent likelihood of such a consolidation occurring.

[321] The prospect of creating the hypothetical C-store as a legal non-conforming use under section 970 is also problematic, although not necessarily for all of the reasons advanced by the Ministry. The question is not so much whether the convenience function at Station 48, either before or after the new Pay Less management took over in July, 1989, could be described as constituting an existing C-store. The board is satisfied that the activity carried on there was the retail sale of a limited range of convenience items and that this activity was "accessory" to gas station use of the site. Although there was no evidence to show that this activity was also being carried on in October, 1974, when the zoning bylaw was adopted, the board considers it reasonable to infer from the overall nature of the gas station business at the Mill Bay location that, on a balance of probabilities, such was the case.

[322] In the Supreme Court judgment in Bailey, Lysyk J. referred to several decided cases in concluding at para. 31 of his reasons that "it is the concept of fairness that supplies the underlying rationale for the statutory non-conforming use exemption" and "for its liberal interpretation by the courts", including the proposition that "any doubt as to prior use ought to be resolved in favour of the owner." The board in the present case has given Pay Less the benefit of the doubt. In the Re Convenience Services case, the court concluded that the term "accessory use" in the Ontario municipality's zoning bylaw was so narrowly defined, to mean "a use customarily incidental, subordinate and exclusively devoted to the main use", that the convenience store at a gas bar and service station in the municipality could not be said to be a use that was accessory to the main use. In the CVRD zoning bylaw the term "accessory" is more broadly defined to mean "ancillary or subordinate to a principal use." The board considers that under that definition the retail sale of convenience items at Station 48 qualifies as an accessory use.

[323] The chief difficulty for Pay Less in positing its hypothetical C-store as an allowable non-conforming use on the improved site is the provision in section 970(6) which, in effect, limits the continuation of that use to a scale or extent no greater than what was in place at the time the bylaw was adopted.

[324] In the Wood Bay Salmon Farms case, the court had to consider whether a narrow or broad reading of section 970(6) was to be favoured. After reviewing several decisions, the court concluded at p. 23:

[325] Defining the "status quo" in a particular case is not necessarily a straightforward task. In Brickyard Enterprises, Huddart J. (as she then was) referred to the judgment in Wood Bay Salmon Farms as holding that, pursuant to section 970(6), the increase in volume of fish processed took away the protection offered by section 970(1). However, Madam Justice Huddart went on to comment at para. 23 of her judgment:

[326] Even in applying a broad and liberal interpretation of section 970(6), the board in the present case is unable to conclude that expanding what previously constituted the retail sale of a limited range of convenience items into a retail convenience sales operation on the scale contemplated by the hypothetical C-store would be construed as maintaining the status quo. Therefore, the board is of the view that the hypothetical C-store would have offended section 970(6) of the Municipal Act, and on that basis would probably have been disallowed.

[327] If the board is incorrect in its conclusion, and the hypothetical C-store would have been an allowable use, it still remains to be determined whether the evidence supports the likelihood of its creation but for the threat of expropriation.

[328] Mr. Sikora testified that both major and minor upgrades had taken place to service station facilities at numerous other Pay Less outlets between 1987 and 1993, including in some cases to their C-stores. For example, Station 49 (the next Pay Less outlet north of Station 48 on the TCH near Cowichan) and Station 50 (on the TCH north of the entrance to Chemanius), the operations of which together with Station 48 were taken over by Pay Less from Island Petro-West Ltd. in the mid-1980s, were both substantially renovated to include the addition or enlargement of C-stores. These stations, it should be noted, were zoned for that purpose.

[329] Mr. Sikora also referred to the "strategic direction" to upgrade ancillary facilities which he said the new Pay Less owners had provided after taking over in July, 1989, and suggested that Station 48 would have been no exception. Indeed, something of an upgrade also took place at Station 48 in late 1989, when some coolers and shelving were installed and the range of convenience items offered for sale somewhat increased. However, according to Mr. Sikora, plans for a more complete expansion were "put on hold" because of the pending expropriation.

[330] The board accepts that dawning knowledge of plans for highway development in the immediate vicinity would likely have acted as a deterrent to moving forward with any proposal for major expansion. However, to underpin its claim for consequential business loss, Pay Less still bears the onus of providing some concrete evidence of a proposed expansion. There was, in fact, no documentary evidence presented in the form of business plans, contract proposals, conceptual drawings or layouts, inquiries, applications, approvals or permits to support the proposition that plans for such a C-store expansion at Station 48 were in the works.

[331] By way of comment only, the board also observes that there is nothing in the Act which would have expressly prevented the taking of such steps at the relevant time. Section 33(c) provides that, in determining the market value of land, account must not be taken of an increase in the value of the land resulting from improvements made to the land after an expropriation notice has been served. By implication, it is at least arguable that improvements made before that time, even perhaps with foreknowledge of the likelihood of expropriation, might be taken into account.

[332] The case advanced by Pay Less with respect to establishing the hypothetical C-store is, in the board's view, also curiously inconsistent. On the one hand, Mr. Coates, in dealing with the non-conformity issue, asserted that it was the intent of Pay Less to expand the convenience function "bit by bit". At pp. 122-123 of his written submissions, he put the case this way:

[333] On the other hand, Mr. Hooge, for the purposes of calculating business loss at Station 48 on behalf of Pay Less, assumed that a full-fledged C-store occupying virtually the entire ground floor area of the station would have been operational from January 1, 1990 had the threat of expropriation not intervened. In his calculations he took into account the cost to build the hypothetical C-store which he put at $85 per square foot, exclusive of financing costs. On the basis of an 1,800 sq. ft. facility, this equates to $153,000 plus financing. Such costs, in the board's view, appear to be inconsistent with merely "cosmetic" improvements.

[334] The board's task is to determine reasonable business losses based on established facts or supportable assumptions. In the present instance, the board finds there is insufficient evidence to support the likelihood that the hypothetical C-store would have been put in place but for the taking within any relevant timeframe, and therefore declines to take it into account in its determination of business loss.

[335] The foregoing conclusion with respect to the hypothetical C-store has an obvious impact on the determination of the period for which Pay Less is entitled to be compensated in respect of business loss. The first component of its claim is for disturbance damages in the nature of business losses for the period from January 1, 1990 to December 31, 1992, resulting from the loss of gasoline, propane and convenience store sales at Station 48. The starting date is predicated on the theory, which the board has now rejected, that the hypothetical C-store would have been operational from January 1, 1990.

[336] Station 48 closed on September 30, 1990. The Ministry, in alternative submissions based on relocation having been found to have occurred, has offered its own calculations of business loss, using Mr. Hooge's approach but changing some of his underlying assumptions. The Ministry's calculations are founded, not only on the assumption that no hypothetical C-store would have been created, but on the additional premise that the loss period began when the station closed. The board must also reject the Ministry's position on this latter point. As will be seen, the evidence makes clear that sales were adversely affected from the time when the Ministry began actual construction of its highway project in the immediate vicinity of Station 48. That construction commenced on June 20, 1990. In the board's opinion, the downturn in sales was directly attributable to it. The Ministry did not suggest that disturbance damages in the nature of business losses were unrecoverable at law in the period preceding September 30, 1990, the date fixed for possession under the section 3 agreement. Indeed, since Dell Holdings in the Supreme Court of Canada, there is no doubt that compensable disturbance damages preceding the date of taking may arise. The board therefore finds that the loss period began on or about June 20, 1990.

[337] The next question for the board's determination is whether Pay Less should be entitled to compensation for business loss at Station 48 during the whole of the period from June 20, 1990 through December 31, 1992, approximately eight weeks after Pay Less opened Station 88. Pay Less identified this loss period in relation to the closure of Station 48 on its assertion that there was an actual net loss at Station 88 in the opening weeks as well as an ongoing projected loss for Station 48 during the same period. When analyzing business loss at Station 48, the board will consider the data set forth which includes projections for the whole of calendar year 1992. However, its focus at this point is on the reasonableness of the time taken by Pay Less to relocate to its new facility.

[338] The board has already declined to accept the position advanced by Pay Less that the Ministry should be held accountable for some of the delays experienced in relocation. In particular, the board does not find that the short period of notice which the Ministry provided before requiring possession of Station 48 contributed to the delay. The evidence clearly shows that Pay Less was actively pursuing plans for relocation, including the acquisition, rezoning and consolidation of replacement property in Mill Bay, many months prior to when it learned that the old station would be closed on September 30, 1990.

[339] By the same token, the board is unconvinced by the Ministry's argument that relocation could have been achieved in a much shorter time frame with, as Mr. Hincks put it, "a smaller or no business loss due to down time", if Pay Less had simply replaced Station 48 with a comparable facility. It was, of course, the Ministry's position that no replacement site like Station 48 was available and that it was the size and complexity of the development on a much larger replacement site that led to the time taken to develop Station 88 and, hence, to the duration of the business loss claimed. Having accepted that it was feasible for the purposes of the Act for Pay Less to relocate to the larger replacement site, the board's assessment of the reasonableness of the loss period must proceed from that initial determination.

[340] The chronology of events ultimately resulting in relocation supports a finding that Pay Less acted as expeditiously as circumstances reasonably permitted. It began negotiations to acquire replacement property from the fall of 1989 when it first formally learned of the Ministry's highway expansion and realignment plans. As it turned out, the only viable option was to purchase the DF property adjacent to the vacant site, which required in turn a relocation of the veterinary clinic to the adjoining Jones property. The need for rezoning, consolidation, and clinic relocation was a direct consequence of the efforts to relocate made necessary by the Ministry's expressed intentions to close Station 48. By the time the station actually closed on September 30, 1990, Pay Less had already concluded the necessary purchase agreements, conducted feasibility studies, and made applications to rezone.

[341] For approximately the first ten months after Station 48 closed, no site preparation or rebuilding occurred. However, during this period the Pay Less applications had to go through a public hearing process and receive rezoning approvals. These were obtained in early February, 1991. The construction of the new veterinary clinic - the necessary first step before being able to commence work on the Station 88 site - did not begin until August, 1991. It is not entirely clear what was happening in the interim. However, it was during this period that Pay Less discovered that the two foot strip between the DF property and the Jones property had recently escheated to the Crown. In his letter to Mr. Hincks of November 15, 1991, Mr. Coates observed that the problem was being remedied but that it had also created "a great delay in the project".

[342] It was also shortly after getting rezoning approval that Pay Less was faced with the additional requirement of having to obtain a development permit for its new service station and convenience facility. This required close scrutiny by the development services committee of the CVRD of all of the design features for Station 88.

[343] A review of the comments of the planning division of the CVRD, in a memorandum dated October 2, 1991, leads the board to conclude that the imposition of a development permit requirement was not uniquely the result of the scale and design of the proposed Station 88, and that even a more moderate replacement service station on the scale of Station 48 would have met with this requirement. Mr. Paras, the CVRD's planner, explained the rationale in his memorandum as follows:

[344] Pay Less did proceed with construction of the new veterinary clinic between the months of August and December, 1991, but was delayed in its main goal of constructing Station 88, first, by the untimely fire at the new clinic in December, 1991, which postponed the planned relocation of the veterinarians by several months, and second, by the rather protracted process of obtaining a development permit. The permit was finally signed on February 6, 1992, and the veterinarians were relocated once their new fire-damaged premises had been repaired, probably in about April, 1992.

[345] According to Mr. Coates' letter of November 15, 1991, approximately two-thirds of the engineering soft costs associated with the waste water treatment and disposal system had already been incurred by that date. The placement of fill was scheduled to take place in the December, 1991 to January, 1992 period and building construction itself to commence in January, 1992 and to require three months. Because of the difficulties described above, the actual construction of Station 88 began instead in late May, 1992. The new facility was completed over a period of four to five months.

[346] It seems to the board not unlikely that the time required to build the new larger facility would have been somewhat foreshortened had Pay Less simply constructed a service station on the scale of Station 48 on the replacement site. However, there was no evidence as to what the timeframe required to construct a smaller facility would have been. In the overall scheme of things, the reduction in "down time" would not have been very significant.

[347] The board notes in passing that it also took a period of more than two years from date of purchase of the lands in March, 1990, to the date of opening in April, 1992, of the new Petro-Canada station at the corner of the TCH and Kilmalu Road. Like Station 88, this was a large and diverse facility.

[348] In the board's view, although the down time period between the closing of Station 48 and the opening of Station 88 was lengthy, in all of the circumstances it was not unreasonably so. Therefore, the board concludes that there is no sound basis to reduce the loss period so as to deprive Pay Less of any portion of those business losses which would otherwise be compensable.

[349] The board considers that the reasonableness of the Pay Less claim for business losses during the start-up period of Station 88, extending through calendar years 1993 and 1994, is best dealt with in the course of reviewing the business records and projections for that period.

[350] In its finally amended statement of claim, Pay Less has claimed the sum of $415,000 as disturbance damages in the nature of business losses resulting from the loss of gasoline, propane and convenience sales at Station 48. This number results from Mr. Hooge's calculations of projected earnings from January 1, 1990 to December 31, 1992, on a before tax basis, assuming an expanded C-store and no expropriation, as compared with his estimate of actual earnings, before tax, from the business carried on at Station 48 from January 1, 1990 until its closure on September 30, 1990. Built into Mr. Hooge's calculation of loss were certain assumptions regarding the trend of sales, the margins realized on those sales, and the expenses of operation at the service station.

[351] Because the board has determined that no account should be taken of the hypothetical C-store and that the loss period commenced on or about June 20, 1990, it is clear that the quantum of losses will be less than what Pay Less has claimed.

[352] In cross-examining Mr. Hooge, the Ministry's counsel put to him a revised set of calculations of loss flowing from the assumption that no expanded C-store was created and that the loss period commenced only from the closure of Station 48. Different assumptions were also used to project sales volumes, margins, and expenses. The Ministry's initial calculations, after acceptance of some corrections suggested by Mr. Hooge, resulted in a projected loss of $274,000. In final submissions, however, the Ministry argued that lost profits from propane sales should not be factored into the equation. Therefore, its own projection of loss at Station 48, using Mr. Hooge's basic approach, was reduced to $186,000.

[353] The board will examine in turn the evidence concerning each of the three components of the business carried on at Station 48 as well as evidence of the expenses at the station in order to determine both projected earnings and compensable loss.

[354] As the board has already observed, gasoline sales volumes were declining slightly at Station 48 while under the Pay Less banner during each of the calendar years 1987 to 1989. Whereas in calendar 1986 the station sold approximately 2.39 million litres, by calendar 1989 the sales had fallen to approximately 2.21 million litres. However, during the first six months of 1990, volumes were increasing by comparison with the first six months of the preceding year. Mr. Hooge in his report calculated that from January to May, 1990, gasoline volumes at Station 48 were up by 11.8% over the same period in 1989. From January to June, 1990, they were up by 10.4%. He suggested that, but for the highway construction which began on June 20, 1990, slightly higher volumes would have been expected in June, 1990. Indeed, in every one of the first six months of 1990, except June, volumes were greater than in the corresponding month of the previous year.

[355] The upward trend of gas sales at Station 48 in the early months of 1990 was reversed during its final three months of operation. By comparison with July to September, 1989, volumes fell by 13.4% during the same three months of 1990. The board is satisfied that the explanation for this reversal in sales performance lies in the onset of highway construction in the near vicinity of Station 48. Although there was no evidence as to the precise timing or extent of disruption, the board accepts on the basis of the evidence which Pay Less presented, and which the Ministry did not dispute, that access to the station was frequently impeded. For reasons of safety during the construction, the propane facility was also closed. No other reasons were offered to account for the decline in gas sales.

[356] The chief area of contention between the parties in projecting gasoline volumes and margins at Station 48, if the taking had not occurred and the hypothetical C-store had not been built, was over how much importance to attach to the improved sales performance of Station 48 as a retail gasoline outlet during the first half of calendar year 1990.

[357] The business valuator for Pay Less, in noting the foregoing improvement, went on to project that gasoline sales volumes would also have been 5% higher during the last half of 1990 as compared to 1989 if the station had continued to operate but without an expanded C-store. For 1990 as a whole he estimated that approximately 2,383,000 litres would have been pumped, an overall increase of 7.7% over 1989. For the calendar years 1991 and 1992, Mr. Hooge assumed that gasoline volumes would have continued to increase, but at the lower average annual rate of 2% in each of those years. Although in his report he projected the result of the 2% annual increase on the assumption of their being a hypothetical C-store, in the absence of the store the resulting volumes calculate to approximately 2,431,000 litres in 1991 and 2,480,000 litres in 1992.

[358] To estimate margins earned on the sales of gasoline, Mr. Hooge used the actual margins per litre experienced at Station 48 for the period from January to September, 1990. For the remainder of the 1990 calendar year, as well as for calendar years 1991 and 1992, he relied on the average margins per litre experienced at two other Pay Less stations which continued to operate through that period: Station 30, located at the intersection of the TCH and Spencer Road on the northern outskirts of Victoria, and Station 49, located along the TCH some distance south of the City of Duncan. For the whole of calendar 1990, he calculated the margin to be $0.1199 per litre of gasoline sold. For calendar 1991, he said it was $0.1351 per litre and, for calendar 1992, $0.0527 per litre of gasoline sold.

[359] Actual gasoline sales at Station 48 in 1990 totalled 1,695,400 litres whereas, by Mr. Hooge's projections, the sales would have totalled about 2,383,000 litres if the station had remained open all year but the hypothetical C-store had not been built. On that basis the lost margin calculates to $82,443. On the same basis the lost margin for 1991 on projected sales volume of 2,431,000 litres calculates to $328,428 and, for the whole of 1992, on sales volume of 2,480,000 litres, to $130,696. The figures for these three years total $541,567.

[360] The Ministry disputes the Pay Less projections of increased gasoline sales at Station 48. It points to the performance of Station 48 and of the Pay Less chain generally for a longer period over which records are available. Viewed from that perspective, it says gas volumes at Station 48 were, as Mr. Hincks put it, "flat, if not slightly declining". Sales for Pay Less as a whole on Vancouver Island between 1988 and 1992, he said, "show, if anything, a decreasing trend." He referred to business records indicating that volumes fell from about 154 million litres in 1988, to 144 million litres in 1989, 133 million litres in 1990, 128 million litres in 1991 and 117 million litres in 1992.

[361] The Ministry also made reference to a business plan prepared for the new owners of Pay Less in 1989, showing a projected increase in gasoline sales at Station 48 of only 0.18% from 1989 to 1990, and of some 2.0% from 1990 to 1991. The revised set of calculations of loss which Ministry's counsel put to Mr. Hooge in cross-examination assumed volume increases in line with the 1989 business plan. This resulted in projected gasoline sales volumes at Station 48 of 2,220,000 litres in 1990, 2,270,000 litres in 1991, and 2,320,000 litres in 1992.

[362] The Ministry's business valuator, Mr. Symes, through regression analysis of the entire period of operation of the service station under Pay Less, projected gasoline sales as declining even through each of the months of 1990 until the station closed.

[363] Mr. Symes also estimated the margins earned on gasoline sales as a step in his calculation of goodwill value of Station 48 as of September 30, 1990. After both he and Mr. Hooge made revisions to their numbers in the course of giving evidence, the two business valuators were essentially agreed on the margins experienced at Station 48 during each of the first nine months of 1990.

[364] However, Mr. Symes' analysis departed from that of Mr. Hooge in several respects. First, whereas Mr. Hooge's analysis of margins covered the period between January, 1990 and December, 1992, Mr. Symes began his analysis with the month of July, 1989 and ended with the month of September, 1990. The margins experienced at Station 48 in each of the last six months of 1989 were significantly lower than those for any of the months in 1990. Second, Mr. Symes employed a weighted average for the entire 15 month period under his consideration, resulting in a margin of $0.0911 per litre, as well as a weighted average for the last 12 months of operation at Station 48, resulting in a margin of $0.1022 per litre. Finally, Mr. Symes deducted from these figures the amount of $0.0224 per litre for discount coupons and charge card discounts on the sale of gasoline. This amount, he said, represented the cost per litre of such discounts for the Pay Less organization as a whole for the fiscal year ended January, 1992. In the result, Mr. Symes fixed the indicated margin on gasoline sales at Station 48 for purposes of his analysis at between $0.07 and $0.08 per litre (rounded).

[365] The board is persuaded from its review of the evidence that the trend in gasoline sales volumes at Station 48, absent both the expropriation and an expanded C-store, is best reflected in the revised report of the business valuator for Pay Less, Mr. Hooge. Although sales volumes in earlier years reflected a small decline, it is clear that a turnaround occurred at Station 48 during its final year or so of operation. Mr. Hooge's focus was on the somewhat more dramatic volume increases in the order of 11% which took place in early 1990. However, the trend was already becoming evident in the last six months of 1989, during which gasoline sales volume increased by 3.3% over the same six month period in 1988.

[366] Why this should have been so has not been clearly identified from the evidence. Mr. Hooge provided statistics showing that the population in and around Mill Bay was growing in the late 1980s and continued to grow into the early 1990s. Summer traffic counts conducted along the TCH both north and south of Station 48 also indicate a generally increasing trend through the period. As the earlier sales volumes show, Station 48 was not the consistent beneficiary of this growth. The statistics on area growth do, however, provide support for the proposition that the later trend toward increased sales volumes at Station 48 could reasonably have been sustained into the early 1990s.

[367] The evidence adduced by the Ministry showing that Pay Less gasoline volumes were declining across Vancouver Island as a whole is not especially revealing, given Mr. Sikora's testimony concerning the sale or closure of a number of stations in the chain for various reasons. The board also considers that the projections contained in the business plan prepared in 1989 for the new owners of Pay Less were based on an earlier trend which did not reflect what was actually occurring at Station 48 by late 1989 and through the early months of 1990. Finally, the regression analysis performed by Mr. Symes, which was strongly criticized by Pay Less on the basis of the weak correlation co-efficient it produced, was in any case aimed at trying to estimate maintainable gasoline volumes for the purpose of factoring them into the calculation of goodwill value on the winding up of the business. This was a somewhat different exercise than attempting to measure specific sales losses over a defined interim period for the purpose of factoring them into an estimate of business loss.

[368] The board therefore accepts Mr. Hooge's projection that gasoline volumes at Station 48 would have increased by 7.7% between 1989 and 1990, to approximately 2,383,000 litres, and views as reasonable and perhaps conservative his further projections of increases in the order of 2% per year in 1991 and 1992, to approximately 2,431,000 litres and 2,480,000 litres, respectively.

[369] With respect to the margin earned on gasoline sales at Station 48, the board considers that the object in this instance is to determine actual and projected margins over the period during which Pay Less lost its market presence in the Mill Bay area. This involves taking into consideration as well the period between late June, 1990 and September, 1990 when the station was still open but sales volumes were adversely affected. It also involves recognition of the fact that Pay Less opened its new Station 88 on November 7, 1992, and the new station pumped 339,500 litres of gasoline between that date and December 31, 1992.

[370] The board accepts that, in making this determination, it is necessary to have reference to the margins earned at other Pay Less outlets unaffected by the taking after Station 48 closed. Mr. Hooge looked to the margins at Stations 30 and 49 for this purpose, evidently because these outlets were closest in geographic proximity to Station 48 along the TCH. Mr. Symes also made use of data from these stations in his initial calculation of margins for Station 48.

[371] Since the loss period has been determined not to have begun until late June, 1990, the use of margins which pre-date that month tend to distort the overall result. This observation applies in a minor way to Mr. Hooge's analysis which uses an average margin for the whole of the 1990 calendar year. Calculated monthly margins in late 1990 were slightly lower than earlier in the year. Mr. Symes' use of monthly figures going back to July, 1989, to estimate maintainable margins that factor into a goodwill analysis, distorts the result far more significantly since the object in this case is instead to determine the actual losses experienced as well as the projected losses over a defined period. Mr. Symes was criticized by Pay Less for using weighted monthly averages in order to arrive at his margin figures. The board considers that, if an average annual figure is to be used, the use of a weighted average, which takes into account fluctuations in monthly sales volumes, produces a more reliable estimate of actual and projected losses than use of a simple annual average. However, after carefully analyzing Mr. Hooge's calculations, the board observes that the annual average margin figures which he derived are, in fact, weighted averages.

[372] In order to arrive at the true margin figures, discount coupons and charge card discounts on the sale of gasoline must also be taken into account. The two business valuators approached these items differently. Mr. Symes deducted from his gross margin an amount expressed in cents per litre in order to arrive at what he termed were the indicated net margins. Mr. Hooge included these items instead within his analysis of the actual and projected operating expenses at Station 48. Although the end result may be the same in either case, the board prefers to treat the two items, as Mr. Symes has done, as deductions from gross margin to derive a net figure. However, whereas Mr. Symes applied a uniform deduction of $0.0224 per litre, based on the cost per litre of such discounts to Pay Less for its fiscal year ended January, 1992, Mr. Hooge differentiated between the varying costs to Pay Less of discount coupons and charge card discounts in each of the calendar years under his consideration. The board considers that Mr. Hooge's approach in this respect produces a more accurate result and accepts the numbers he provided. The cost of these items to Pay Less was $0.0201 per litre in 1990, $0.0291 per litre in 1991, and $0.0031 per litre in 1992. Therefore, the net margins earned on gasoline sales volumes were $0.0998 per litre in 1990, $0.1060 per litre in 1991, and $0.0496 per litre in 1992.

[373] Taking into account all of the foregoing considerations, the board has recalculated the margin earned on actual and projected volumes of gasoline sales at Station 48. They reflect that the lost margin on gasoline sales at Station 48 on projected volume of 2,383,000 litres, less the actual volume sold of 1,695,400 litres, was $68,622 in 1990. In 1991, on projected volume of 2,431,000 litres, the lost margin was $257,686. In 1992, the lost margin on projected volume of 2,480,000 litres, after taking into account the initial sales at Station 88 of 339,500 litres, was $106,169. The total lost margin was therefore $432,477.

[374] Although propane was being sold at Station 48 at an earlier date, data concerning sales volumes were available only from January, 1989. The evidence reveals a dramatically increasing trend from that time until the tanks were removed on July 16, 1990 to accommodate highway construction. In calendar year 1989, the sales volume totalled 194,531 litres, which equates to average monthly sales of about 16,211 litres. During calendar year 1990, the sales volume totalled 144,444 litres, equating to a monthly average of about 22,220 litres. As Mr. Hooge pointed out in his report, propane volumes at Station 48 during the first six months of 1990 were 51.5% higher than for the corresponding period in 1989.

[375] It was also clearly the case that propane sales volumes during this period were increasing faster than gasoline sales volumes. As a percentage of gasoline volumes, propane volumes at Station 48 during the whole of calendar 1989 were at 8.8%; however, during the last six months of 1989, they were at 9.3%, and for the first six months of 1990, they rose to nearly 11.3%. According to the information which Mr. Hooge received from Pay Less management, these trends were reflected throughout the organization as a whole until 1992, fuelled by growing public awareness that propane was both economical and environmentally friendly, and encouraged by Pay Less itself through incentive programs.

[376] In order to project propane sales volumes at Station 48 during the loss period, Mr. Hooge examined the sales performance not only of the subject station while it remained in operation but also of Stations 30 and 49, both of which also had propane facilities. He calculated total propane volumes as a percentage of total gasoline volumes at the three stations over the entire period from 1989 to 1992, from which he derived a simple average percentage of 10.4%. Mr. Hooge then assumed projected propane volumes over the loss period at Station 48 at 10.4% of his projected gasoline volumes. Once these projections are adjusted to exclude the impact of the hypothetical C-store, they result, by the board's calculation, in propane volumes of 247,832 litres in 1990, 252,824 litres in 1991, and 257,920 litres in 1992.

[377] To estimate margins earned on the sales of propane, Mr. Hooge obtained from Pay Less the actual margins per litre experienced by the claimant company as a whole during these years. He was advised that the margins on propane were $0.164 per litre in 1990, $0.150 per litre in 1991, and $0.146 per litre in 1992.

[378] Actual propane sales at Station 48 in 1990 totalled 144,444 litres whereas, by Mr. Hooge's projections after adjustment, the sales would have totalled about 247,832 litres if the propane facility had continued to operate all year. On that basis the lost margin calculates to $16,956. On the same basis the margin for 1991 on projected sales volume of 252,824 litres calculates to $37,924 and, for the whole of 1992, on sales volume of 257,920 litres, to $37,657. In the opening weeks of operation to the end of 1992, Station 88 sold 30,000 litres of propane. After adjusting for the Station 88 sales, the lost margin for 1992 becomes $33,276. The margin on propane sales over the loss period, based on Mr. Hooge's projections, therefore totals $88,156.

[379] The Ministry's business valuator, Mr. Symes, initially estimated maintainable monthly sales of propane at Station 48 at between 18,000 and 20,000 litres. These numbers were based on his dividing the volume of propane sold for the twelve months of the fiscal year ended January 31, 1991 by a factor of six, yielding a monthly average of 20,967 litres. However, when testifying, Mr. Symes adjusted his factor to 5.5 to account for the closure of the propane facility in mid-July, 1990, thereby yielding a monthly average of 22,874 litres. In his revised calculations he therefore estimated maintainable monthly sales at between 20,000 and 23,000 litres.

[380] With respect to propane margins, Mr. Symes used the average margin of all Vancouver Island Pay Less stations for 1989, which he was informed was $0.1740 per litre, to provide his high estimate, and the average margin of all such station for 1990 of $0.1640 per litre, to provide his low estimate. In his initial report, Mr. Symes deducted from these margins on account of discount coupons and charge card discounts the same amount he had deducted in respect of gasoline margins, that is, $0.0224 per litre. In his revised calculations, however, he eliminated these discounts from consideration, having been advised by Mr. Hooge that they applied only to gasoline. Mr. Symes therefore estimated the maintainable margin on propane sales for purposes of his analysis as between $0.16 per litre and $0.17 per litre (rounded).

[381] If Mr. Symes' low calculations, based on sales of 20,000 per month and an earned margin of $0.16 per litre, are extended over the loss period from July 16, 1990 to December 31, 1992, taking into account the initial sales at Station 88 in late 1992, they result in a lost propane margin of $86,400, closely comparable to Mr. Hooge's projections as adjusted. On the same basis the high calculations, assuming sales of 23,000 per month and an earned margin of $0.17 per litre, result in a lost margin of $106,635, substantially higher than the projections of the business valuator for Pay Less. Furthermore, although Mr. Hooge did not include discount coupons and charge card discounts with respect to propane in his estimate of expenses at Station 48 for 1991 and 1992, he did include them in the expenses for 1990, resulting in an even greater disparity between the numbers he and Mr. Symes derived.

[382] Although the Ministry's estimates of loss in respect of propane sales are somewhat higher than those of Pay Less, the Ministry has argued that lost propane sales should not be compensable in any case. In the first place, the Ministry says, there is no evidence supporting the sale of propane at Station 48 as a legally non-conforming use, and in fact some cogent evidence to the contrary. In the second place, it says, a large part of the propane facility at Station 48 was situated outside the eastern boundary of Lot 1 on the highway right-of-way, and Pay Less cannot be compensated for a claim for lost profits from the use of land which it did not own. The Ministry cites the board's decision in Corner's Pride Farms Ltd. v. British Columbia (Minister of Transportation and Highways) (1994), 52 L.C.R. 15, in support of this latter proposition.

[383] The Ministry called Norman T.J. Hailes, a gas inspector with the Gas Safety Branch of the then Ministry of Municipal Affairs. He testified that, since 1982 when his Ministry first became involved, there had been an annual permit procedure for propane dispenser units. He produced in evidence copies of activity reports and annual gas permits with respect to the propane facility at Station 48. There was, he said, no record of any such permit having been applied for prior to 1986.

[384] Mr. Hailes also produced in evidence an extract of the gas code regulation governing setbacks from property lines and concrete or masonry building walls for various sizes of tanks. This regulation indicated that the required setback for a propane tank of up to 7,500 litres, which would have included the tank at Station 48, was 10 feet (3 m.). While Mr. Hailes had inspected the propane tank at Station 48 and completed activity reports on the basis of which annual permits were issued, he testified that he had assumed the tank was located on property entirely owned by Pay Less. If it had been determined otherwise, he said, Pay Less would have been required to comply with the setback requirements and reapply for its gas permit. According to the Ministry, Pay Less would have been unable to comply, given the configuration of Lot 1.

[385] The Pay Less business data relied upon by the valuation experts indicate that propane was being sold at Station 48 during the period from November, 1985 through May, 1987. Thereafter, there is a gap in the sales data until August, 1988, but further data from that month until July, 1990 show continuous sales of propane. As the board has already indicated, monthly litreage figures are not included in the data until January, 1989.

[386] In the board's view, the apparent absence of any applications for annual gas permits between 1982 and 1985 tends to support the Ministry's position that the sale of propane at the service station which came to be designated Station 48 probably did not pre-date 1985. Certainly, there was no evidence to suggest that propane was being sold there from as early as October, 1974, when the CVRD zoning bylaw was first adopted. Therefore, the board concludes on a balance of probabilities that the sale of propane, inasmuch as it constituted an accessory use at Station 48, did not enjoy the status of a legal non-conforming use. Perhaps the only way in which it might have held such a status was if, as Mr. Wollenberg in his testimony suggested, the existence of the propane tank and dispensing unit could be treated as simply a "piece of equipment" forming part of the principal legally non-conforming use of the improved site as a service station.

[387] There was therefore a risk to Pay Less that its propane sales operation at Station 48 could have been restrained at law, a risk which would have been ongoing if the service station had continued to operate in the absence of expropriation. However, the board finds no basis upon which it should somehow factor this risk into the determination of actual or projected business loss. Section 33(b) of the Act provides that, in determining the market value of land, account must not be taken of "an increase in the value of the land resulting from a use that, at the date of expropriation, was capable of being restrained by a court". However, while this section addresses market value of land, it does not extend to the calculation of business loss. Mr. Nilsen's real estate valuation of the improved site, which the board has accepted, took into account the non-conforming status of the property. Furthermore, unlike with the retail sales convenience function at Station 48, the determination of loss associated with propane sales is not predicated on the theory of an expanded facility which somehow must fit within the non-conforming exemption provided by section 970 of the Municipal Act. The fact is that the propane facility was operational until highway construction intervened, and in the absence of expropriation, it is reasonable to anticipate that it would have continued to operate at least through the loss period which the board has defined.

[388] Pay Less disputed the evidence with respect to encroachment and also suggested that any such encroachment could, in any case, have been easily remedied. It is true, as Mr. Coates for Pay Less argued, that no survey evidence was produced showing that the propane tank was partially situated off Lot 1 on the highway right-of way. However, all of the plot plans in evidence, inexact as they may have been, including those used by the real estate appraiser for Pay Less, clearly indicate this to have been the case. Whether, as Mr. Coates suggested, the propane tank could have been relocated if necessary, perhaps in a vertical rather than horizontal position, so that it was situated entirely on Lot 1 and met setback requirements, is a possibility not easily determined in the absence of appropriate survey evidence.

[389] In any event, the board is unconvinced by the Ministry's contention that the probable encroachment of the propane tank onto the highway right-of-way should lead to a denial of all business losses associated with the projected sale of propane from Station 48. This is, again, a situation in respect of which section 33(b) of the Act has no application. It also unlike the situation in Corner's Pride. In that case the expropriated owner claimed compensation for loss of its ability to continue to remove shale from the bed of a creek running through its property, but the board found that the Crown was the rightful owner of the creek bed and therefore of the shale. In the present instance, Pay Less was not actively exploiting land which it did not own in order to obtain a direct tangible benefit. The profits from the sale of propane were derived from the sale of propane, and the use by Pay Less of the highway right-of-way as part of that operation represented, at most, a passive benefit. The board was not asked to consider whether the Ministry might, in turn, have demanded compensation from Pay Less for the use of its right-of-way. The encroachment of the propane tank undoubtedly deepened the risk that, at some point, Pay Less might have been required to relocate or discontinue its facility. However, the board finds no persuasive reason to conclude that this would been the case during the loss period in question.

[390] The board concludes that the projections of Mr. Hooge with respect to the lost propane margin at Station 48, after taking into account the adjustments which the board has made, should be accepted for the purpose of calculating business loss. In the board's view, they result overall in a more accurate reflection of loss than the estimates made by Mr. Symes, whose maintainable margin on propane sales, for example, takes into account the higher margins realized in 1989 and does not consider the significantly lower margins realized throughout the Pay Less chain in 1991 and 1992. In the result, the board finds that the lost margins on propane sales were $16,960 in 1990, $37,922 in 1991, and $33,269 in 1992, for a total of $88,151 over the loss period. In so finding, the board also accepts that deductions from margin or, alternatively, additions to station expenses are not to be made on account of discount coupons and charge card discounts with respect to propane during any of the calendar years 1990, 1991 or 1992.

[391] It is unnecessary in the ensuing discussion to revisit the question of whether the retail sales of convenience items at Station 48 constituted a small C-store. For ease of reference only, the board will refer to this component of the business as the "existing C-store".

[392] Data on existing C-store sales in the period preceding the expropriation are peculiarly incomplete. For example, for calendar year 1989 there are no sales figures available for the months of July and August and the stated figure for the month of June seems so unusually low as to be considered either unreliable or an aberration. For calendar year 1990, there are no sales figures for the months of January and April. The sales figures are complete, however, for the final four months of operation at Station 48 during which the loss period commenced to run.

[393] Incomplete as they are, the data indicate an increasing trend of sales for the existing C-store at Station 48 during the last year or so of its operation. Based upon the months for which figures are available, average monthly sales were about $8,723 in 1989 and $9,692 in 1990. This represented an increase in the order of 11%. For the first half of 1990, sales increased by over 13% by comparison with the first half of 1989, if the aberrant month of June, 1989 is ignored.

[394] When compared with the data on fuel sales volumes (gasoline and propane) at Station 48, the data on sales at the existing C-store lead the board to two observations. First, existing C-store sales appear to have been increasing on a percentage basis which was closely equivalent to that experienced for gasoline volumes. Second, there appears to be reasonably close consistency over time in the dollar value of existing C-store sales expressed as a percentage of sales volumes for gasoline and propane combined.

[395] Mr. Hooge, in making his projections, looked at the sales performance of other Pay Less stations in the period between 1990 and 1993 to conclude that C-store sales varied with the volumes of fuel pumped, and that on average those sales amounted to about $0.20 per litre of fuel sold. Mr. Hooge's projections for C-store sales at Station 48 were, however, founded entirely on the premise that the hypothetical C-store had been created. The three other stations to which he looked - Stations 30 and 49 as well as the new Station 88 during its first full year of operation - all had full-sized C-stores presumably offering a wide range of convenience products, so that it comes as no surprise to the board that the dollar value of their sales would have represented a considerably higher percentage of fuel litreage sales than those represented by the much smaller existing C-store at Station 48.

[396] The board's analysis of existing C-store sales as a percentage of fuel volumes at Station 48 results in the finding that those sales compute at a weighted average of about $0.0470 per litre in calendar 1989 and about $0.0475 in calendar 1990 for all of the months in which data are available. In the absence of better evidence, the board therefore considers it reasonable to project the existing C-store sales through the loss period, using the actual computed cents per litre for the months of June through September, 1990, and thereafter assuming monthly sales from October, 1990 through December, 1992 at $0.0475 per litre of projected fuel volumes. These projections reflect Mr. Hooge's estimated increases of 5% in the last half of 1990 and 2% in each of the years 1991 and 1992, which the board accepted for the purpose of determining gasoline and propane sales volumes. They also take into account the actual sales at the existing C-store while it remained in operation from June through September, 1990, amounting to $37,681, and the C-store sales experienced at Station 88 during its first weeks of operation to the end of 1992, amounting to $78,603.

[397] In the result, the board finds that projected sales at the existing C-store for all of 1990 would have totalled $124,433, whereas the actual sales in 1990 (calculated by multiplying by nine months the average monthly sales for which data exist) amounted to $87,230. This reflects lost sales in 1990 of $37,203. Projected lost sales for 1991 are $127,476. In 1992, projected sales amount to $130,027, but after the C-store sales at Station 88 in November and December, 1992 are taken into account, the lost sales become $51,424. The board notes that these sales losses are somewhat higher than those projected by Mr. Symes who, basing his conclusion on historical sales at the existing C-store between April, 1988 and September, 1990, said that expected maintainable sales were in the range of $9,000 to $10,000 per month. Average monthly sales based on the foregoing projections work out as roughly $10,600 to $10,800 per month.

[398] The question of margins earned on sales at the existing C-store is complicated by the fact, which both business valuators accepted, that C-store margins vary considerably as between cigarette and non-cigarette sales, and further, that lease operators at Pay Less stations during the relevant period earned a commission on the sales of cigarettes only.

[399] In his analysis, Mr. Symes assumed that cigarettes accounted for 80% of the dollar value of all existing C-store sales at Station 48. Mr. Hooge under cross-examination essentially agreed with this assumption. Support for the assumption can be found from the analysis of C-store sales at the three other Pay Less stations - Stations 30, 49 and 88 - which both business valuators used to assist in determining appropriate margins at Station 48. A breakdown of the sales data at those stations for 1993 indicates that, quite uniformly, approximately 40% of all sales were of cigarettes. Given that the C-stores at these three stations were all much larger than the existing C-store at Station 48, selling a wider range of convenience products, it seems reasonable to conclude that the proportion represented by cigarette sales at Station 48 would be much higher. The board therefore accepts the 80% figure.

[400] After making some revisions to their own numbers with respect to the sales performance of the three stations, Mr. Hooge and Mr. Symes were in complete agreement on the sales figures and were essentially agreed on the average margin earned on the sale of cigarettes. Mr. Hooge calculated the margin at 11.99% and Mr. Symes at 12.09%. The small difference is accounted for by the fact that Mr. Hooge used a simple average whereas Mr. Symes used a weighted average. The board has already expressed its view that a weighted average produces a more accurate result and therefore accepts that the gross margin to be used for cigarette sales is $12.09%.

[401] With respect to the other sales at the three stations, the two valuators were again agreed on the overall figures. However, Mr. Hooge calculated the average margin earned specifically on non-cigarette products at 24.83%, whereas Mr. Symes calculated the average margin on total sales rather than non-cigarette items to arrive at a figure of 19.91% which he then factored into his estimate of maintainable margins. In the board's view, the correct approach should have been to isolate the margin on non-cigarette products as Mr. Hooge has done. Mr. Hooge's calculation was again based on a simple rather than a weighted average. To be consistent, the board considers that a weighted average should be used and therefore recalculates the margin on non-cigarette products at 25.36%.

[402] The evidence was that lease operators at Pay Less stations earned a commission amounting to $0.15 on a package of cigarettes which at the time sold for about $3.50. This equates to a commission of 4.29% which must be deducted when determining the net margin earned on cigarette sales.

[403] From the foregoing numbers the board calculates the overall net margin on sales for the existing C-store at Station 48 as follows:

[404] Therefore, the board determines that the lost margin at the existing C-store on projected sales of $124,433 less actual sales of $87,230 in 1990 was $4,208. In 1991 the lost margin on projected sales of $127,476 was $14,418. In 1992 the lost margin on projected sales at Station 48 of $130,027 less actual sales at Station 88 of $78,603 was $5,816. The total lost margin amounts to $24,442.

[405] Prior to 1992, Pay Less did not prepare statements of earnings for individual stations in its chain. Consequently, both business valuators observed that they did not know the actual amount of expenses relating to the operation of Station 48 prior to the expropriation. When approaching the question of expenses, they looked instead to other indicators in order to estimate items such as repairs and maintenance, utilities, bank charges, training, insurance and accounting. The result was a sometimes bewildering array of alternative figures.

[406] Mr. Hooge for Pay Less relied in particular on the statement of earnings for Station 49 for the fiscal year ended January 31, 1993. At p. 25 of his report, he stated:

He acknowledged in his report that this assumption might have led to an overstatement of projected expenses at Station 48, since Station 49 pumped considerably more fuel than the former Mill Bay station and its expenses during fiscal year 1993 were not adjusted downward for the earlier years to account for inflation. It was, of course, also the fact that Station 49 had a full-size C-store, and Mr. Hooge's projected expenses at Station 48 initially proceeded from his assumption that the hypothetical C-store would have been operational throughout the period under consideration. During his testimony, Mr. Hooge also referenced the expenses incurred during 1994 by Station 38, an outlet located on Sooke Road west of Victoria, which did not have a C-store.

[407] Mr. Symes for the Ministry relied on a schedule of "variable expenses" prepared by Pay Less for the years 1991 to 1993 [Ex. 53]. This schedule set out certain items of expense allocated equally among all of the stations in its chain. Mr. Symes, in turn, calculated a simple average of these expenses over the three years in order to estimate several of the operating costs at Station 48.

[408] There were, however, two items of expense for which information specific to Station 48 was available: first, the lease operator's remuneration, which was by far the largest component of the station's operating expenses, and second, the property taxes. The board will deal with these two items before turning to the other projected expenses.

[409] Pay Less entered into an agreement dated June 8, 1989 with Raymond Mousseau, the lease operator at Station 48. It appears to have been an agreement in standard form used by the company. Under the agreement the lease operator was to receive a commission on fuel sales volumes based on a sliding scale, but was also guaranteed a minimum monthly commission of $6,400. The sales performance at Station 48 was such that only the guaranteed minimum commission actually became payable during the time the station remained in operation until the end of September, 1990. Even if Station 48 had continued to operate through 1991 and 1992, the projected fuel sales volumes would not have resulted in payments above the guaranteed monthly minimum.

[410] Mr. Symes in his estimate of station operating costs simply reflected the lease operator's remuneration as the annualized amount of $76,800. Mr. Hooge, however, increased the remuneration by approximately 10% per year for each of 1990, 1991 and 1992 because he understood from Pay Less management that the company had made such an annual upward adjustment to compensate lease operators for increases in the minimum wages they were required to pay their employees. This annual adjustment has a rather dramatic impact on operating expenses. Mr. Hooge in his estimate of expenses put the remuneration at $84,500 in 1990, $92,900 in 1991, and $102,200 in 1992.

[411] The lease operator's agreement was not for a fixed term, nor did it make express provision for any upward adjustment to the guaranteed monthly commission. However, the board has no reason to question the reliability of the additional information which Mr. Hooge received from Pay Less. It therefore accepts the figures he used in projecting this item of expense.

[412] The property taxes for 1990 on the whole of the subject lands, including the improvements at Station 48, were $1,416 on an assessed value of $120,400. Mr. Symes used the figure of $1,400 in his estimate of station operating costs. Mr. Hooge in his property tax projections factored in the estimated cost to construct the hypothetical C-store and a canopy which, he said, would have resulted in an increase in property taxes of approximately $3,600. Since the board has rejected these notional improvements, it also disregards the corresponding estimated tax increase. However, Mr. Hooge went on to say that, based on mill rates which applied to the Station 88 site, property taxes increased by 16% for each of 1991 and 1992. This results in a projected property tax expense at Station 48 of $1,643 in 1991 and $1,906 in 1992. For the purpose of its analysis, the board accepts these annual amounts.

[413] Mr. Symes referred to this item in the schedule of variable expenses provided by Pay Less in order to derive the average amount of about $17,200, which he used as the estimated annual repair and maintenance costs at Station 48. Mr. Hooge used the expenses incurred on this item at Station 49 to derive his projected estimate of $13,400 in each of 1990, 1991 and 1992. Later, in rebutting Mr. Symes' estimate, he suggested a revised figure of $8,000 for repairs and maintenance.

[414] Pay Less criticized the Ministry's reliance through Mr. Symes on the schedule of variable expenses as a means of estimating, among other things, the cost of repairs and maintenance at Station 48. As Mr. Coates expressed it at pp. 97-98 of his written submissions:

[415] The board finds this argument highly persuasive and considers the Ministry's estimate of repair and maintenance costs at Station 48 to be too high. To some extent the same may be said of the use by Mr. Hooge of the costs experienced in the fiscal year ended January 31, 1993 at Station 49. Although Station 49 did not have all of the additional amenities mentioned by Mr. Coates, it was an outlet which pumped nearly 50% more fuel than Station 48 and its C-store generated sales that were more than six times as large. Notwithstanding the age and condition of Station 48, it seems reasonable to conclude that the annual cost of repair and maintenance would be somewhat less than at a facility on the scale of Station 49. The board notes that at Station 38, the outlet on Sooke Road which had no C-store, the actual cost of repair and maintenance in 1994 was $10,310. It concludes that a reasonable projection of annual repair and maintenance costs at Station 48 would be in the order of 75% of the costs experienced at Station 49. This results in the figure of $10,050, which the board applies to each of the years 1990, 1991 and 1992.

[416] What the board has observed with respect to repair and maintenance expenses has perhaps even greater application to utility and telephone costs. Mr. Symes took the average of all utility costs uniformly allocated by Pay Less to each of its service stations in order to estimate Station 48 annual utility expenses of $13,300. He applied the same approach to estimate annual telephone charges at Station 48 at $6,500. Mr. Hooge relied on the combined figure for utilities and telephone at Station 49 of $11,600. However, at p. 32 of his report, Mr. Hooge noted that, if the hypothetical C-store were removed from consideration, these costs for Station 48 should instead be estimated at 75% of the expenses incurred at Station 49, or $8,700. Even this number seems high, particularly in light of the actual costs experienced in 1994 by Station 38 of $2,791 for utilities and $1,090 for telephone. Indeed, when criticizing Mr. Symes' estimates, Mr. Hooge suggested the costs should be revised downward to $2,500 for utilities and $1,000 for telephone. The evidence with respect to the scope of operations at Station 38 was sparse. Given the wide and inconclusive range of possibilities, the board has pegged utility and telephone expenses at Station 48 for each of the years 1990 through 1992 at $5,500.

[417] The business valuators were not far apart in their initial estimates of the cost of insurance. Mr. Symes again referred to the Pay Less schedule of variable expenses to derive the amount of $4,500. Mr. Hooge initially used the amount of $5,000. However, in choosing this figure, the business valuer for Pay Less was assuming an additional cost for insuring the new hypothetical C-store so that insurance expense became comparable to that at Station 49. In the absence of an expanded C-store, Mr. Hooge's estimate of insurance costs became instead $3,700 per year. The board is satisfied that the figure of $3,700 per year reasonably represents insurance costs at Station 48.

[418] Both business valuators initially reflected the cost of training at Station 48 as being $1,000 per year. Mr. Hooge later revised his estimate downward to $750 per year. The board considers that training costs would likely have been somewhat less in the absence of the hypothetical C-store and accepts Mr. Hooge's revised amount.

[419] Mr. Symes used the average amount calculated from the schedule of variable expenses to estimate bank charges of $4,200 per year at Station 48. Mr. Hooge's estimate, based on the cost experienced at Station 48, was initially $4,000 per year, later revised to $3,000 annually. It seems to the board that a portion of banking charges allocated to each station within the Pay Less chain probably relate to head office expenses. Furthermore, in the absence of the hypothetical C-store, the banking function would likely have been somewhat simplified. The board therefore concurs in Mr. Hooge's revised estimate at $3,000 for each of the years 1990 through 1992.

[420] Mr. Hooge referred to audit and accounting expenses at Station 49 to derive his annual estimate of $2,600 at Station 48. He reduced the cost to $2,000 per year absent the hypothetical C-store. Mr. Symes did not reflect this item in his estimate of station operating costs.

[421] There is perhaps an argument to be made that items such as audit, bank charges and insurance should fall outside the operating expenses of Station 48 and be treated as a fixed cost attributable to head office operations. In Actton Petroleum Sales Ltd. v. British Columbia (Minister of Transportation and Highways) (1996), 58 L.C.R. 47, the experts agreed upon the "contribution approach" to the determination of goodwill at the expropriated owner's service station, which could not be relocated. In the result, such items were not included in the cash flow calculations at the station. In the present instance, however, it is not goodwill which is being determined and the contribution approach has not been adopted. Therefore, in the board's view, an item such as audit and accounting expenses should properly be factored into the operating expenses of Station 48, albeit with an appreciation that some allocated costs properly pertain only to head office and that some stations because of their scale and diversity might bear a higher burden of such costs than a station on the scale of Station 48.

[422] In the particular circumstances of Station 48, the board accepts Mr. Hooge's downward revision and fixes the costs of audit and accounting at $2,000 for each of the relevant years.

[423] Based on the expenses incurred at Station 49, Mr. Hooge projected expenses at Station 48 for what were described as "signage/rental" and "miscellaneous" amounting in total to $3,400 per year. These expenses were later reduced to $1,600 per year. Mr. Symes did not include a category for such matters. The board considers that it would be realistic and prudent to include a miscellaneous allowance under service station operating costs. It accepts Mr. Hooge's reduced figure of $1,600 per year for this purpose.

[424] For the purpose of calculating goodwill at Station 48, Mr. Symes included a provision of $50,000 for notional rent of the facility and $3,000 for depreciation in order to amortize the original cost of pumps and equipment over their estimated useful lives. The notional rent amount was based on Mr. Nilsen's estimation of market rent at Station 48 as a step in his income approach analysis of the market value of the improved site. Mr. Symes said that no information was made available to him regarding the original cost of the assets at Station 48 and that the amount included for depreciation was based on his professional experience in dealing with other similar gas stations. Mr. Hooge made no allowance for rent or depreciation in his estimate of operating expenses.

[425] The inclusion of notional rent is necessary as part of a goodwill analysis where the object is to estimate what a notional purchaser of the business would be prepared to pay. However, in the board's view, it is not an appropriate component when estimating the business loss incurred by Pay Less as a result of the closure of Station 48 on property which the claimant company owned and during the period of relocation of its business to Station 88. Similarly, the inclusion of a depreciation factor is appropriate in order to derive maintainable earnings, but it would normally not form part of the determination of ongoing service station operating expenses to arrive at projected net earnings and consequential business loss. The board therefore takes no account of rent or depreciation in this instance.

[426] The result of the board's determination of projected sales and margins for each of the three components of the business carried on at Station 48 as well as the station's projected operating expenses is set out in the following table:

[427] As the table shows, the lost margin on projected gasoline, propane and convenience sales at Station 48 during the loss period totals $545,075. Projected operating expenses for the 1990 through 1992 calendar year total $363,015. When these expenses, projected over a 36-month period, are pro-rated for the loss period beginning June 20, 1990 and ending December 31, 1992 (which calculates to 30.3 months), they amount to $305,538. Accordingly, the board concludes that total business losses at Station 48 directly attributable to the taking, on a before tax basis, are represented by the difference between the total lost margin on sales and the total operating expenses pro-rated over the loss period. The board has determined this amount at $239,537.

[428] In addition to its claim for business losses at Station 48 up to December 31, 1992, which included losses related to the sale of propane, Pay Less has also claimed disturbance damages in the nature of business loss amounting to $91,000 for decreased propane sales within what it describes as the Mill Bay "trade area" subsequent to that date. It says it has permanently lost a portion of its propane market as a direct result of the Ministry's project-related acquisitions.

[429] Pay Less defined the Mill Bay trade area for propane sales as being bounded on the south by Station 30, which was situated on the northern outskirts of Victoria, and on the north by a station known as "Triangle Shell", situated just south of Duncan. Triangle Shell was a short distance north of Station 49 on the TCH. Pay Less stations 30, 48, and 49, together with Triangle Shell, were the only four service stations along the TCH in the defined trade area which sold propane in the period preceding the Ministry's acquisition and closure of the three existing stations in Mill Bay - Station 48, Mill Bay Shell and Save-on-Gas.

[430] According to the data provided, the three Pay Less outlets in 1989 and 1990 accounted for approximately 94% of total propane sales volume in the defined trade area. After the propane facility at Station 48 closed, the other two Pay Less stations continued to dominate this market. In 1991 they accounted for about 90.4% of total propane sales volume. Propane volumes at Station 30 rose from 473,459 litres in 1989 to 548,630 litres in 1990 and 752,816 litres in 1991. The volumes at Station 49 were 244,849 litres in 1989, 291,953 litres in 1990 and 445,681 litres in 1991. In 1992, the trend of increasing sales was reversed. At Station 30, sales volume fell to 661,590 litres, a decrease of 12.1% from the preceding year. At Station 49, sales volume fell to 369,720 litres, a decrease of 17.0%.

[431] Pay Less points to the opening of the new Petro Canada station, with its own propane sales facility, north of Mill Bay in April, 1992, as the reason for declining propane sales at Stations 30 and 49 in that year. The opening of the Petro Canada station coincides with an observable decline in propane sales at the two Pay Less outlets in the months thereafter. Propane sales at Station 30 for the period from April to December, 1992, were 15.2% lower than for the corresponding period in 1991, and at Station 49, were 27.4% lower.

[432] Pay Less argues that the closure of the three existing service stations in the Mill Bay area in late 1990 allowed the development of the Petro Canada station to occur, and for that station to take, as Mr. Coates put it, "the substantial part of the propane market." Moreover, Pay Less says, Petro Canada was able to capture permanently a significant portion of the propane market which hitherto had been dominated by Pay Less. The claimant company was not in a position to compete for that market until several months later when Station 88 opened. The evidence was that, even after the propane facility at Station 88 became operational, Petro Canada was able to sell approximately 200,000 litres of propane in 1993 and was expected to continue to sell about the same volume in 1994.

[433] In quantifying the Pay Less claim, Mr. Hooge assumed that, of the 200,000 litres of propane sold or projected to be sold annually at the Petro Canada outlet, 90% of such sales were taken from the Pay Less market share. On this basis he estimated lost propane margins in 1993 and 1994, and capitalized estimated future loss of such margins resulting from decreased sales for 1995 and subsequent years. In the result, he estimated the present value of the business loss arising from decreased propane sales, after tax, at between $91,000 and $107,000. Pay Less has claimed the lower of these two estimates.

[434] The Ministry submits that, although the Pay Less claim is presented as one for disturbance damages, it is more accurately characterized as a claim for the loss of a capital asset. The Pay Less theory proceeds on the notion that the project-related closures of the three existing service stations in the Mill Bay area, including Station 48, "allowed" Petro Canada to establish itself in the area and take a share of the propane market that was rightfully the property of Pay Less. According to Mr. Hincks at p. 62 of his submissions, "[i]n a case involving far-fetched claims for compensation, this is the most extreme in concept, if not in amount."

[435] The Ministry argues that the claim for loss of the propane market should not be allowed for several reasons. First, as indicated above, the claim is not a reasonable disturbance damage. Second, the sale of propane at Station 48 was not a permitted use and the propane tank encroached on the highway right-of-way. Third, there was evidence at the hearing from Mr. Hailes, the gas safety inspector, that the Save-on-Gas facility in Mill Bay could have accommodated a propane tank, leading to the observation that there were other potential competitors in the Mill Bay trade area even in the absence of expropriation. Fourth, the defined trade area was artificial and unrealistic, stretching all the way from the outskirts of Victoria to those of Duncan, without any consideration being given to the possibility of competition from other propane outlets in or around those urban centres. Fifth, propane sales within the Pay Less organization generally declined significantly between 1991 and 1992. Finally, the CVRD policy which limited the number of gas stations in Mill Bay, and hence effectively prevented the creation of a further outlet such as the new Petro Canada station while the existing three stations remained open, was a policy made in contemplation of the highway project through Mill Bay. Therefore, any increase in value resulting from this policy through the creation of a "monopoly" situation in Mill Bay would be excluded under section 33(g) of the Act.

[436] With respect to the Ministry's last argument, section 33(g) of the Act deals with the exclusion of any increase or decrease in the market value of the land that results from, among other things, the enactment of a community plan made with a view to the development in respect of which the expropriation is made. The board is not persuaded that this provision is applicable to a claim for disturbance damages in the nature of business loss.

[437] However, in the board's view, the Pay Less claim for loss of its propane market is fraught with uncertainty and inconsistency. Having already sought and been awarded compensation for the loss of projected propane sales at the expropriated Station 48 from mid-1990 through 1992, Pay Less in making this further claim appears to be arguing that it should also be indemnified against future business competition within a broadly defined trade area that includes two other of its service stations which were not, in fact, expropriated. In other words, this claim seeks to extend the scope of consequential damages well beyond the losses experienced at Station 48.

[438] If the primary rationale for this claim is that the entry of Petro Canada into the Mill Bay propane market caused permanent harm to Pay Less' propane business, it would seem to follow logically from this position that competition offered by the new Petro Canada station might also have adversely affected ongoing sales of gasoline and convenience items at stations within the Pay Less chain, including the new Station 88. Pay Less, however, advanced no such argument.

[439] Also, if as Pay Less asserts there is a direct correlation between the opening of Petro Canada's propane outlet in Mill Bay and the declining propane sales performance of Stations 30 and 49, a similar direct correlation would logically exist between the closure of the propane facility at Station 48 in mid-July, 1990, and the large increases in propane sales experienced at Stations 30 and 49 in 1990 and 1991. The migration of propane customers from Station 48 to the other two stations would mean that Pay Less had recaptured at least some portion of its business and would logically result in a reduction of the propane sales losses claimed in respect of Station 48. One basis upon which the Ministry submitted that the quantum of business losses claimed by Pay Less was excessive was the possibility that a portion of lost sales at Station 48 would have been recovered by other stations in the Pay Less chain. It is the case that Mr. Hooge was instructed to ignore this possibility, and no such adjustment was ever estimated by either of the parties.

[440] The notion that, but for the expropriation, Pay Less would not have been exposed to the risk of future competition in the sale of propane within Mill Bay is unsupported by the evidence. Mr. Hailes, for example, demonstrated to the board's satisfaction that the Save-on-Gas station site in Mill Bay could physically have accommodated a propane dispensing facility. Moreover, the fact is that Petro Canada purchased the site for its new service station in March, 1990, several months before any of the three existing service stations in Mill Bay was acquired by the Ministry. It is true that CVRD planning considerations limited to three the number of service stations in the Mill Bay area. Therefore, what foreknowledge Petro Canada may have had concerning the pending closure of the existing stations would be germane to understanding how calculated was its risk in making that purchase. However, no evidence was adduced on this point.

[441] The risk of future competition for propane sales within the much more broadly defined trade area essentially extending from Victoria to Duncan seems to the board an even more acute possibility of which no account was taken by Pay Less in its estimates and submissions.

[442] Although the board has rejected the Ministry's position that Pay Less should not be compensated for its lost propane sales at Station 48 because of the non-conforming and encroaching nature of its propane facility, certainly the risk that the facility might have to have been discontinued at some point for these reasons would need to be factored into any projection of permanent loss. There was no basis in the evidence for quantifying that risk.

[443] The board accepts that the closure of Station 48 and the two other service stations in Mill Bay opened up a business opportunity for Petro Canada to establish itself within the local market. However, Pay Less has been awarded compensation for the loss of propane and other sales during the whole of the period in which the claimant company lost its market presence in Mill Bay. If Station 88 had been able to open for business in April or May of 1992, as originally planned, it would have been on an even footing with Petro Canada from the outset in competing for the local propane market. The unforeseen delays which resulted in Station 88 not opening until early November, 1992, undoubtedly placed Pay Less at an initial disadvantage. The board has not found these delays to have been attributable to the Ministry.

[444] Furthermore, in the board's view, competitively speaking there was evidently nothing to preclude Station 88 from recapturing a large share of the Mill Bay propane market. Indeed, this appears to have occurred. The information received by Mr. Hooge from the operator of the Petro Canada station in Mill Bay and incorporated into his report, showed that the volume of propane sold at that station as a percentage of gasoline sales volume was much lower than what was experienced at Station 88 and the other two Pay Less outlets, Stations 30 and 49. Given the correlations noted earlier between gasoline and propane sales in the 1989 to 1992 period, it can reasonably be inferred that Petro Canada's inroad into the propane market in what Pay Less defined as its Mill Bay trade area was less substantial than what Mr. Coates in his submissions described.

[445] Taking all of the foregoing considerations into account, the board concludes that the Pay Less claim for compensation from the Ministry for loss of a portion of its propane market to Petro Canada is inconsistent, uncertain and too remote. It cannot be sustained as a reasonable disturbance damage and, accordingly, the board dismisses the claim.

[446] Pay Less has also asserted a claim for compensation for business losses said to have been incurred during the start-up period of Station 88. The claim covers the period from January 1, 1993 to December 31, 1994. It does not include the first few weeks of operation at Station 88, from November 7, 1992 to December 31, 1992, since projected lost earnings for that period were already reflected in the earlier claim for business losses at Station 48. It does not extend into 1995 since, by that year, Pay Less acknowledges that the new Station 88 reached maturity. The total claim under this head of disturbance damages is for $53,000.

[447] Mr. Hooge, in estimating this loss, had to take into account the fact that Station 88 was a much larger and more costly facility which would be expected to pump greater volumes of gasoline and propane, and presumably sell more convenience items, than Station 48. Nevertheless, he said it was reasonable to assume that, had Pay Less built a new station in Mill Bay comparable to Station 48, it would have taken a period of time before the new comparable station would have been pumping the same volume as the old station. At p. 43 of his report he stated:

[448] Mr. Hooge first projected estimated earnings for Station 48 in the years 1993, 1994 and 1995, assuming no expropriation. His analysis again proceeded on the assumption that the hypothetical C-store would have been fully operational through this period. He also assumed gasoline volume increases of 2% per year. These two assumptions taken together resulted in projected gasoline sales volumes of 2,784,000 litres in 1993, 2,840,000 litres in 1994 and 2,900,000 litres in 1995. He used the gasoline margins actually experienced at Station 88 which, when adjusted to take into account charge card discounts, worked out to $0.083 per litre in 1993 and $0.086 per litre in 1994 and 1995.

[449] Because he had already estimated separately the loss of the propane market after 1992, Mr. Hooge did not factor propane sales volumes into his analysis. However, he noted that propane sales volumes at Station 88 expressed as a percentage of gasoline sales volumes were 9.65% in 1993 and 9.10% in 1994 and 1995.

[450] He calculated projected C-store sales during these years at $0.020 per litre of fuel sold, and also left unchanged the net margin on C-store sales after taking into account the lease operator's commission.

[451] Mr. Hooge assumed that the operating expenses at Station 48 in each of the years 1993, 1994 and 1995 were the same as they had been in 1992. In the result, he projected earnings at Station 48 absent expropriation at $157,700 in 1993, $172,600 in 1994, and $179,300 in 1995.

[452] The next step in Mr. Hooge's analysis was to estimate the projected earnings during these same years at Station 88, assuming that what had been put in place was instead a new station comparable to Station 48. He estimated the actual volumes of gasoline sold at Station 88 as 3,665,800 litres in 1993, 3,976,700 litres in 1994, and 4,295,000 litres in 1995. These litreages were compared with those projected for Station 48 if there had been no expropriation. Because he assumed that Station 88 had reached maturity in 1995, he used the comparison between Station 88 sales that year of 4,295,000 litres and Station 48 sales projected at 2,900,000 litres in the same year in order to derive a percentage reduction of 32.5%. At p. 48 of his report, he wrote:

[453] Mr. Hooge applied this percentage reduction in order to "normalize" gasoline sales volumes at the new comparable station for 1993 and 1994. He thereby reduced projected volume in 1993 from 2,784,000 litres to 2,470,000 litres and, in 1994, from 2,840,000 litres to 2,680,000 litres. These reductions calculate to lost volume totalling 474,000 litres. The same gasoline margins, convenience store margins, and operating expenses were used in projecting earnings at the new comparable station as were used in projecting earnings at Station 48 in the absence of expropriation. In the result, projected earnings from the comparable new station were put at $123,000 in 1993, $154,400 in 1994, and $179,300 in 1995.

[454] By Mr. Hooge's analysis, the loss in estimated earnings at the comparable new station when compared with estimated earnings at Station 48 absent expropriation therefore amounted to $34,700 in 1993 and $18,200 in 1994 for a total estimated start-up business loss of $52,900, which he rounded to $53,000.

[455] The Ministry did not mount a detailed challenge to the Hoogie analysis of start-up business losses at Station 88. However, it observed that for the purposes of this loss calculation, Mr. Hooge was required to create a "hypothetical Station 88" and then compare the profits from that hypothetical facility to the "hypothetical Station 48", resulting in a loss based upon the difference between two hypothetical businesses. Mr. Hincks submitted that a significant concern arising from such an analysis was the "potential for compounded error".

[456] It is certainly the case that Mr. Hooge's analysis proceeded on certain assumptions which have been found to be flawed. For one, he assumed the existence of the hypothetical C-store at Station 48, resulting in inflated projections of fuel volumes and convenience sales. For another, he removed from consideration any loss in propane sales during the period in question on the basis that these had already been addressed under the Pay Less claim for loss of the propane market. No compensation has been awarded under this head of alleged disturbance damage. The hypothetical models, in turn, suffer somewhat from lack of reliable data on actual margins for convenience sales during the years 1993, 1994 and 1995. Mr. Hooge's assumption that annual operating expenses remained constant between 1992 and 1995 also seems unrealistic. However, since his object was simply to measure the difference in net earnings between the old business at Station 48 and the new comparable business at Station 88, applying uniform expenses to each, the result is unaffected by whether the expenses are held constant or are increased over the years in question.

[457] Despite the difficulties noted, the board considers reasonable Mr. Hooge's observation that it would have taken a period of time before the business at Station 88 reached maturity. It is also generally persuaded by the approach which he adopted to measure start-up business loss. It accepts his assumption that sales performance at Station 88 reached maturity in 1995.

[458] In order to determine the quantum of loss, the board has reconstructed the model employed by Mr. Hooge. It has removed his assumption concerning the hypothetical C-store, and has instead projected gasoline sales volumes at Station 48 during the further years in question on what it considers the reasonable assumption of a 2% annual increase over the volume figure of 2,480,000 litres which the board derived for 1992. This results in projected volumes of 2,530,000 litres in 1993, 2,581,000 litres in 1994 and 2,633,000 litres in 1995. The actual net margins on gasoline said by Mr. Hooge to have been realized at Station 88 during these years are considerably higher than those realized by other stations in the Pay Less chain in 1992. However, the board has no reason to question the accuracy of the numbers provided.

[459] Although the board has rejected the Pay Less claim for loss of a portion of its propane market, it nevertheless considers that projected propane sales volumes at Station 48 beyond 1992 should be taken into account. It has projected those volumes to accord with the ratio of propane sales volumes to gasoline sales volumes which Mr. Hooge said were realized at Station 88, resulting in 244,145 litres in 1993, 234,871 in 1994, and 239,603 in 1995. Mr. Hooge in his report, when discussing the loss of the propane market, indicated that the margin earned on propane sales was $0.055 per litre in 1993, $0.099 per litre in 1994 and $0.10 per litre in 1995. The board adopts these figures in its analysis.

[460] The board has calculated projected sales at the existing C-store at Station 48 during 1993, 1994 and 1995 on the same basis as earlier, that is, at $0.0475 per litre of fuel sold. The result is projected sales of $131,772 in 1993, $133,754 in 1994, and $136,449 in 1995. Data on the appropriate margin to apply to these sales are inadequate. Certainly, Mr. Hooge's net margin is too high, since it is based as before on the margin earned on sales at a full-fledged C-store. The board considers it reasonable in the circumstances to adopt the same percentage margin which it used for the earlier years of 11.31%.

[461] Like Mr. Hooge, the board for the purposes of its analysis assumes operating expenses at Station 48 remained constant during the three years following 1992. When those expenses, recalculated at $130,256 annually, are taken into account, the board finds that the projected earnings at Station 48 in the absence of expropriation, are $108,065 in 1993, $130,090 in 1994, and $135,574 in 1995.

[462] In turning to examine the projected earnings at Station 88, the board's analysis is premised on its acceptance of Mr. Hooge's assumptions of a new station comparable to Station 48 which reached maturity in 1995. Therefore, it becomes necessary to normalize the sales performance for the years 1993 and 1994 with reference to the gasoline volumes estimated to have been achieved at Station 88 in 1995 in comparison with the projected gasoline volumes at the new comparable station for the same year. Mr. Hooge's comparison for 1995 led him to conclude that gasoline volumes at the new comparable station would have been 32.5% lower than those pumped at Station 88. However, this comparison was founded on the notion of the hypothetical C-store. In the absence of the store, the same comparison leads to the conclusion that gas volumes at the new comparable station would instead have been 38.7% lower.

[463] Normalized in this way, projected gasoline volumes at the new comparable station become 2,247,100 litres in 1993 and 2,437,700 litres in 1994, and remain at 2,633,000 litres in 1995. Projected propane volumes and existing C-store sales which are, of course, linked to gasoline sales volumes must also be normalized. Projected propane volumes therefore become 216,845 litres in 1993, 221,831 litres in 1994, and 239,603 litres in 1995. Projected existing C-store sales become $117,037 in 1993 and $126,328 in 1994, and remain at $136,449 in 1995. When the same margins used above for Station 48 are applied, and the same station operating expenses are deducted, the resulting projected earnings for the comparable new station are $81,417 in 1993, $115,635 in 1994, and $135,574 in 1995.

[464] The difference between projected earnings at Station 48 absent expropriation and at the new comparable facility at Station 88 in 1993 amounts to $26,648. The difference in 1994 amounts to $14,939. The board has accordingly determined that reasonable disturbance damages in the nature of business losses during the start-up period at Station 88, from January 1, 1993 to December 31, 1994, should be awarded in the total sum of $41,587.

[465] From the foregoing analysis the board has determined that the amount of compensation payable by the Ministry to Pay Less under the various heads of alleged loss is as follows:

[467] The board has determined total compensation in the amount of $844,105.37, whereas the advance payments made by the Ministry on account of compensation total $729,098.13. The provision for interest under section 46(1) therefore applies. However, the board is at a disadvantage in determining precisely how interest should be applied, given the incomplete and somewhat conflicting information provided as to the way in which advance payments were allocated among the various heads of compensation and as to the dates upon which they were received.

[468] In its amended pleadings, the Ministry stated that the sum of $450,000 was paid on or about January 9, 1991, that three further payments totalling $204,521 were made on or about April 12, 1991, and that a further payment of $45,685 was made on May 10, 1991. The figure of $45,685 was clearly a typographical error in the Ministry's amended pleadings. The corrected amount is $40,685. Additionally, both counsel, by letter to the board dated August 16, 2000, which was received and entered as an exhibit in these proceedings on September 12, 2000, agreed as to the timing and amount of six additional payments totalling $33,892.13 on account of professional costs incurred falling under the head of disturbance damages. Finally, Mr. Coates in his letter to Mr. Hincks, dated November 15, 1991, which was entered as part of exhibit 44, provided dates upon which he said certain of the payments were actually received by or on behalf of Pay Less. The board accepts the dates itemized in the letter from Mr. Coates as those upon which those advance payments were effectively made.

[469] From all of the foregoing, the board determines that the dates of the advance payments, the amounts of each payment, and the totals paid from time to time were as follows:

The payments marked by an asterisk were those on account of professional costs which the parties are agreed should be properly categorized as advance payments of disturbance damages.

[470] Section 46(1)(a) stipulates that interest begins to run on any amount awarded in excess of any amount paid by the expropriating authority in respect of the market value portion of compensation from the date that the owner gave up possession. The section 3 agreements which the parties concluded on October 26, 1990 stipulated that the date fixed for possession was September 30, 1990. The board has determined compensation for the market value of the subject lands in the total amount of $457,000. Accordingly, interest on the outstanding balance of that amount from time to time accrues from September 30, 1990 until fully paid.

[471] The board has found that the first advance payment of $450,000 occurred on January 11, 1991. However, the evidence surrounding this payment is less than clear. A notice of advance payment dated January 9, 1991, a copy of which was included in the Ministry's book of documents, referred only to the sum of $353,206, allocated $303,206 to "land and improvements" and $50,000 to "relocation costs". The letter of November 15, 1991 from Mr. Coates indicated that $353,206 had been received by his firm in trust and, in turn, had been paid over to National Trust, presumably on account of the trust company's mortgage registered on title to the subject lands. Mr. Coates also stated that the balance of the $450,000 payment, or $96,794, had been retained by the law firm in trust on certain undertakings imposed by the Ministry's counsel, Mr. Hincks, from which he had been released only as of March 27, 1991.

[472] While the question is therefore not free from doubt, the board concludes that the first advance payment on January 11, 1991 of $450,000 and the third advance payment of April 18, 1991, comprising three cheques in the amounts of $75,000, $75,000 and $54,521 respectively, for a total of $204,521, should first be applied to the market value award, and that these two payments taken together would have more than satisfied the Ministry's obligations with respect to compensation for the market value of the subject lands. Interest on this component should therefore be calculated from September 30, 1990 until April 18, 1991, taking into account the advance payments made. Not having been informed as to the reason why Mr. Coates was required to hold a portion of the first payment in trust for a period of about two and a half months, the board hesitates to conclude whether, for the purpose of calculating interest, the first advance payment should be deemed to have been fully received by Pay Less on January 11, 1991, or only fully received as of March 27, 1991. In these circumstances, the board requests the parties to endeavour to reach agreement on this question and make the necessary interest calculations. Either party will be at liberty to apply to the board, if necessary, for a further determination if agreement on this comparatively minor point cannot be reached.

[473] Section 46(1)(b) provides for payment of interest on any other amount from the date the loss or damages were incurred or from any other date that the board considers reasonable. The other claims in respect of which the board has awarded compensation are for relocation costs and business losses. Clearly, unlike the market value award, the awards of compensation for relocation costs and business losses are for costs, expenses or losses which were incurred over an extended period of time during which Pay Less relocated its business from Station 48 to Station 88 and during which the Ministry continued to make further advance payments. Therefore, the board must determine the date from which it is reasonable to assess interest on any outstanding balance of compensation payable for relocation costs and business losses, recognizing that the outstanding balance from time to time cannot actually be stated with any precision.

[474] Relocation costs have been awarded in the total amount of $105,981.37. These costs were incurred in the period beginning with Mr. Sikora's involvement in late 1989 and extending through the period from 1990 to 1992 during which two law firms, a traffic consultant, an aerial photographer, and a general contractor performing sitework at Station 88 were involved. All relocation costs found by the board to be compensable were incurred by the end of 1992.

[475] Business losses have been awarded in the total amount of $281,124. The losses were found to have commenced from June 20, 1990 and to have extended through calendar year 1994. However, by far the largest proportion of these losses was incurred during calendar year 1991.

[476] Taking all of the foregoing factors into account, the board concludes that the reasonable date from which interest should be calculated under section 46(1)(b) in respect of relocation costs and business losses is September 30, 1991. This is exactly one year from the date upon which Station 48 closed. At that date the Ministry had already made advance payments totalling $703,260.51. As of September 30, 1991, the difference between what the Ministry had already paid in advance and what the board has now awarded as total compensation is the amount of $140,844.86. Interest will be calculated from September 30, 1991 on that outstanding balance, until paid, taking into account the five further advance payments made by the Ministry between October 19, 1992 and November 29, 1994.

[477] Since the total amount of the advance payments is more than 90% of the compensation awarded, excluding interest and business loss, the provision for additional interest under section 46(4) does not apply.

[479] The board has awarded total compensation to Pay Less in the amount of $844,105.37, whereas the Ministry's advance payments total $729,098.13. The award is 115.8% of the advance payments. Assuming that the "business losses" referred to in section 45(4) encompass the loss in earnings at Stations 48 and 88, which the board has determined in the amount of $281,124, their exclusion from the overall calculation results in Pay Less not having met the "greater than 115%" threshold which would have automatically entitled the claimant company to its costs. On this assumption, it would appear that the board has a discretion in the awarding of costs to Pay Less.

[480] In final submissions the Ministry requested the board, if it had a discretion, to adjourn the matter of entitlement to costs in order to permit the Ministry to adduce evidence of a settlement offer which it says it made prior to commencement of the compensation hearing. Pay Less did not make any submissions in reply to this request. Under these circumstances, the board has decided to adjourn the matter of the Pay Less costs of these proceedings, pending a further application by either party as to the question of entitlement.

(1)	The Ministry shall pay compensation to Pay Less in the amount of $31,500.00 for the market value of its fee simple interest in that portion of the vacant site forming part of the subject lands which was acquired by the Ministry, pursuant to sections 32 and 40 of the Act.
(2)	The Ministry shall pay compensation to Pay Less in the amount of $425,500.00 for the market value of its fee simple interest in the improved site forming part of the subject lands which was acquired by the Ministry, pursuant to sections 31 and 32 of the Act.
(3)	The Ministry shall pay to Pay Less interest on the amounts in items (1) and (2) from and including September 30, 1990 to and including April 17, 1991, pursuant to section 46(1) of the Act, taking into account moneys paid by the Ministry to or on behalf of Pay Less in the advance payments made on January 11, 1991 and April 18, 1991 under section 20. If the parties are unable to reach agreement as to whether the advance payment made on January 11, 1991 should be deemed to have been fully advanced as of that date for the purpose of calculating interest, either party will be at liberty to apply to the board for a further determination of that question.
(4)	The Ministry shall pay compensation to Pay Less in the amount of $387,105.37 for disturbance damages consisting of $105,981.37 in relocation costs and $281,124.00 in business losses, pursuant to sections 31 and 34 of the Act.
(5)	The Ministry shall pay to Pay Less interest on the amount in item (4) from and including September 30, 1991, until paid, pursuant to section 46(1) of the Act, with adjustments to take into account moneys paid by the Ministry to Pay Less from time to time under section 20. For greater certainty in making the required calculations, the board orders that interest initially is to be calculated from and including September 30, 1991, on the outstanding balance of $140,844.86, in accordance with paragraph 476 of these reasons for decision.
(6)	Pursuant to section 46(2) and (3) of the Act, the interest payable under items (3) and (5) shall be calculated annually at the following rates:
	(i)	Fourteen and three-quarters per cent (14.75%) from September 30, 1990 to December 31, 1990;
	(ii)	Twelve and three-quarters per cent (12.75%) from January 1, 1991 to June 30, 1991;
	(iii)	Nine and three-quarters per cent (9.75%) from July 1, 1991 to December 31, 1991;
	(iv)	Eight per cent (8.00%) from January 1, 1992 to June 30, 1992;
	(v)	Seven per cent (7.00%) from July 1, 1992 to December 31, 1992;
	(vi)	Seven and one-quarter per cent (7.25%) from January 1, 1993 to June 30, 1993;
	(vii)	Six per cent (6.00%) from July 1, 1993 to December 31, 1993;
	(viii)	Five and one-half per cent (5.50%) from January 1, 1994 to June 30, 1994;
	(ix)	Eight per cent (8.00%) from July 1, 1994 to December 31, 1994;
	(x)	Eight per cent (8.00%) from January 1, 1995 to June 30, 1995;
	(xi)	Eight and three-quarters per cent (8.75%) from July 1, 1995 to December 31, 1995;
	(xii)	Seven and one-half per cent (7.50%) from January 1, 1996 to June 30, 1996;
	(xiii)	Six and one-half per cent (6.50%) from July 1, 1996 to December 31, 1996;
	(xiv)	Four and three-quarters per cent (4.75%) from January 1, 1997 to June 30, 1997;
	(xv)	Four and three-quarters per cent (4.75%) from July 1, 1997 to December 31, 1997;
	(xvi)	Six per cent (6.00%) from January 1, 1998 to June 30, 1998;
	(xvii)	Six and one-half per cent (6.50%) from July 1, 1998 to December 31, 1998;
	(xviii)	Six and three-quarters per cent (6.75%) from January 1, 1999 to June 30, 1999;
	(xix)	Six and one-quarter per cent (6.25%) from July 1, 1999 to December 31, 1999;
	(xx)	Six and one-half per cent (6.50%) from January 1, 2000 to June 30, 2000;
	(xxi)	Seven and one-half per cent (7.50%) from July 1, 2000 to December 31, 2000;
	(xxii)	Seven and one-half per cent (7.50%) from January 1, 2001 to June 30, 2001;
	(xxiii)	Six and one-quarter per cent (6.25%) from July 1, 2001 to December 31, 2001.
(7)	The matter of the costs payable by the Ministry to Pay Less, pursuant to section 45 of the Act, is hereby adjourned, pending a further application by either party on the question of entitlement.