September 17, 2002, E.C.B. Control No. 33/99/227

REASONS FOR DECISION

1.  INTRODUCTION

[1]  The claimants, Gorman Bros. Lumber Ltd. and Dunfield Holdings Inc., are related companies that operate a sawmill operation in Westbank, British Columbia. It is a family run business that began in 1951 with two brothers, Ross and John Gorman. At the time of the hearing it had 270 employees plus almost 200 people involved in logging operations on a subcontractor basis. There was evidence that in recent years (during the 1990's) the mill site had expanded production from close to 60 million board feet per year to close to 90 million board feet per year, an increase of approximately 50%.

[2]  In this decision we have generally referred to the two claimants collectively. In the early 1990's the lumber mill operation was located on two lots, the mill site on the north-west side of Highway 97, and the subject property on the south-east side of Highway 97 that was used for storage of chips, sawdust and lumber. The mill site was owned by the claimant Dunfield Holdings and leased to the claimant Gorman Bros. which ran the sawmill business. The subject property across the highway from the mill site was owned by the claimant Gorman Bros. Beginning in 1994 the claimant Gorman Bros. had leased approximately one hectare (2.5 acres) on a third property that was adjacent to the west boundary of the mill site and owned by Mr. Doerr. The claimants used the leased land on the Doerr parcel for log storage. In June 1997 the claimant Dunfield Holdings purchased the entire 23.5 hectare (58 acre) Doerr parcel and used a portion of it for log storage and lumber storage.

[3]  The respondent, Her Majesty the Queen in right of the Province of British Columbia as represented by the Minister of Transportation and Highways and the Ministry of Transportation and Highways, (the "Ministry") required 0.965 hectares (2.385 acres) of the lot on the south-east side of Highway 97 (the "subject property") for a new Glenrosa interchange and overpass on Highway 97 (the "project"). This partial taking under the Expropriation Act, R.S.B.C. 1996, c. 125 (the "Act") occurred on February 11, 1999. The work on the project occurred in the summer of 1999 and was completed by November, 1999.

[4]  Although the taking and the project occurred in 1999, preliminary design work on the project had begun a decade earlier in 1989. In 1993, the design for the project contemplated the acquisition of the whole subject property on the south-east side of Highway 97. However, the project was suspended in 1993 and again in 1996 for budgetary reasons. When the project was reinstated in 1997, the value engineering assessment and review released in February 1998 recommended a design for the project that required only a partial acquisition of the subject property.

[5]  The claimants' purchase of the Doerr parcel in June 1997 was at an agreed sale price of $2,000,000. The claimants say that although the project was on hold when they were negotiating this sale, the Doerr parcel was purchased to provide replacement land near the mill site for the subject property. At this time they understood that when the project was eventually built, the whole of the subject property would be required. When Mr. Doerr insisted on selling his land in 1997 the claimants say that as a result of the anticipated effect of the project on their business they were required to acquire the entire Doerr parcel for a price that was greater than its market value. The claimants claim the amount that they have paid for the Doerr parcel that they say was in excess of its market value.

[6]  As a result of the project, the claimants lost direct legal access from Highway 97 to both the subject property and the mill site. With respect to the subject property direct highway access has been replaced by access via the new Glenrosa overpass that is part of the project.

[7]  The claimants say that the more significant effect is the loss of direct access to the mill site from Highway 97. Before the project all traffic for the mill could turn from the highway into a large driveway near the office building. From the entrance driveway there were different routes for different types of vehicles. Following the project, access to the mill site required an exit from Highway 97 via the new interchange that was part of the project and the new Glenrosa Road. However, there was no road access from Glenrosa Road to the mill site and the Ministry owned the land between Glenrosa Road and the mill site. This land had previously been residential lots to the north of the mill site that had been acquired by the Ministry as a result of the project and were surplus to the Ministry's requirements. The new mill access had to be built across this surplus land. There was some discussion from the beginning that the claimants might acquire some of this surplus land in part exchange for the subject property and one of the uses for the surplus land would be to supply replacement access. However, in the end, the partial taking was expropriated and an advance payment was made without any land exchange. Late in the day the Ministry offered the claimants a choice: the Ministry would retain the surplus land (at least for some time) and build a public road across it to the mill site with an entrance near the existing office building or the Ministry could sell the surplus land to Gorman Bros. so that it could build a private road across this land and incorporate the remainder of the surplus land into its mill site.

[8]  In March 1999, the claimants chose to acquire the surplus land described as the consolidated exchange parcel and to construct a new access driveway to its existing office building over this parcel. The parties agreed on a formula for establishing the price for the consolidated exchange parcel and this sum is not at issue. The claimants state that the access route to the mill site now results in the mixing of industrial and civilian traffic and in response to safety concerns the claimants wish to construct a new office building near the new entrance to the site. They claim for the depreciated cost of the old office building which will be redundant and torn down.

2.  THE CLAIM FOR COMPENSATION

[9]  The claimants are making the following claims for compensation:

1.	market value of the partial taking and injurious affection to the remainder of the subject property	$ 232,500.00
2.	compensation for the purchase of the Doerr parcel that is in excess of market value	$ 820,000.00
3.	compensation for the depreciated value of the office building	$ 640,000.00
4.	disturbance damages or business losses for various expenses arising from the taking including
	• Reid Crowther engineering invoices	$ 38,969.73
	• John MacDonald legal invoices	$ 26,543.64
	• Emil Anderson road construction invoices	$ 34,094.45
	• Pro rata Property Purchase tax (PPT) for Doerr parcel	$ 15,580.00
	• PPT for consolidated exchange parcel	$  7,220.00
	• miscellaneous expenses	$ 57,239.25
	Total	$1,872,147 rounded

[10]  The respondent has made the following advance payments:

1.	market value of the partial taking and injurious affection to the remainder on February 9, 1999	$ 119,000.00
2.	compensation for the purchase of the Doerr parcel that is in excess of market value including pro rata share of PPT	nil
3.	compensation for the depreciated value of the office building	nil
4.	disturbance damages for various expenses
	• payment made for the lawyer John MacDonald's invoice dated September 9, 1999 on October 22, 1999	$   1,832.79
	• payment made for some Reid Crowther engineering invoices from 1999 on April 11, 2000	$    6,038.10
	Total	$126,870.89

The Ministry also paid monies or provided credits as part of two settlements with the claimants: one made in 1996 when the project had been put on hold for a second time and the other made in 1999 for the agreed value of the consolidated exchange parcel minus the cost of constructing a public road. In addition, at an earlier stage, there were claims by Ron and Jenifer Gorman and Ross and Eunice Gorman whose personal land had also been affected by the project. (Ron Gorman is the son of Ross Gorman one of the two brothers who founded the business in 1951.) The two couples own parcels of land to the north of the mill on which they reside. These claims have also settled.

3.  THE ISSUES

[11]  One of the issues in this case on which there was considerable difference of opinion was the market value of the partial taking and injurious affection to the remainder of the subject property.

[12]  At the heart of the two other main issues in this case -- the loss on the purchase of the Doerr parcel and the loss on the existing office building -- was the tension between the uncertainty surrounding the project over a ten year period at the same time as the claimants' business was expanding. During this time the project was put on hold twice, once for over two years and the second time for approximately a year. There were changes in the interchange design over the ten years and in the end it became one of the first Design/Construct projects built by the Ministry. This meant that uncertainty about the design and the necessary requirements continued until after the project was completed. We accept that the protracted delays and changing requirements created considerable uncertainty and inconvenience for the owners of properties that were to be taken, including the claimants.

[13]  During much of this period when the project was under consideration the sawmill business of Gorman Bros. was expanding. We were told that production had expanded by approximately 50% during the 1990's. The claimants submit that the acquisition of both the Doerr parcel in 1997 and the consolidated exchange parcel in 1999 were made necessary because of the project. However, because of the significant increase in the number of board feet produced per year, the claimants also needed more land to store both logs and lumber. There were also changes in the Forest Practices Code that required more storage space for logs. It is difficult to separate out those threads of causation that were to do with the partial taking of the subject property and the changes in access on the one hand (especially when the circumstances surrounding these two factors kept shifting), from the desire for the claimants for more land. As a result, the circumstances and events over the 10 year period have to be carefully reviewed.

[14]  Thus, the issues of the claims in relation to the purchase of the Doerr parcel and the existing office building both depend on causation and whether the claimants are entitled to compensation from the respondent under sections 34 or 40 of the Act. Were the purchases of these properties directly attributable to the partial taking or the disturbance or did they result from the construction or use of the works for which the land was expropriated? Or was there another explanation? If the purchases were due to the taking or the project, have the claimants suffered any losses?

[15]  There are also substantial claims for other expenses and losses, many of which relate to the purchase of the Doerr parcel or the consolidated exchange parcel. Other expenses and losses relate to the subject property and to access issues more generally. Similarly these claims depend on whether they are due to the partial taking or the disturbance or the project.

4.  BACKGROUND

[16]  During the hearing we heard extensive evidence from Doug Tracey, who was the Project Manager for the claimants. There were also a large number of relevant documents in evidence.

4.1  Property

[17]  The subject property on the south-east side of Highway 97 from which the partial taking was made is legally described as:

PID 024-225-967
Lot A
District Lots 3188 and 4056
Osoyoos Division, Yale District
Plan KAP62186

[18]  The parcel was irregular but approximately triangular in shape with Highway 97 running along the hypotenuse. Before the taking the subject property was 3.69 hectares (9.118 acres). The partial taking from the northern part of the parcel was 0.965 hectares (2.38 acres), leaving a remainder of 2.725 hectares (6.74 acres).

[19]  Before the taking there was a small area of about 0.2 hectares (0.6 acres) of the subject property bordering the highway that was at grade with the highway. This area was about midway on the subject property's highway frontage. It was opposite the access to the claimants' mill site, and served as the access to the subject property from the highway, as well as storage area for wood chips. Mr. Parkhill, the claimants' appraiser, described this as the highway sector. There was also a bench area, approximately 1.6 hectares (4.0 acres) in size, located about 11 metres (35 feet) above the highway. This bench, which the claimants used for the storage of lumber, was reached by a winding internal driveway. There was evidence that certain types of wood needed to be air dried and that this bench was suitable for air drying. Mr. Parkhill called this the high utility sector. The remaining 1.8 hectares (4.5 acres) of the subject property consisted of steep slopes that had limited use and was therefore known as the low utility sector.

[20]  Most of the subject property is zoned I-3, Forest Industrial, but 20% of the subject property that forms a strip along the southern boundary, very approximately 40 metres by 175 metres (and with no highway frontage), is zoned C-4, Service Commercial. In the Official Community Plan (OCP) the whole of the subject property was designated Industrial. There were services available at the boundary of the subject property but for sanitary sewer and Reid Crowther estimated $35,000 to extend the sewer to the property. There would also be some cost to hook into the gas pipe line that crossed the property.

[21]  There were a number of legal encumbrances registered on the subject property. There was a BC Gas right of way through the southern portion of the subject property. This right of way prevented construction or placement of any type of structure or pavement on the right of way. There also was a 15-foot wide right of way for the Westbank Irrigation District that ran east-west in the northern portion of the subject property. This right of way prevented any permanent structures on the right of way. There was a 20-foot easement running along part of the western boundary of the subject property from the mid point where the subject property has access to Highway 97 to the south-western corner. This easement was to provide access to the lot to the south of the subject property but was never constructed because the topography was too steep. The internal driveway from the highway access to the bench area was used instead.

4.2  Project

[22] As indicated above, we heard evidence that there was preliminary design work for an interchange at a position slightly to the north of the eventual interchange as early as 1989, although it was not pursued at that time because of public opposition. In 1990, Urban Systems Ltd., a consulting engineer firm, was retained by the Respondent to examine other possible locations. As early as 1991 the Urban Systems Ltd. design using the location of the interchange that was eventually built showed that the whole of the subject property would be required. Further work was done on this design but in May 1993 the project was suspended for budgetary reasons. In September 1995 the project was reinstated and the design was updated. The design still showed that the entire subject property would be required. In June and July 1996 it was again determined that the project would not proceed for budgetary reasons. In April 1997, funding for the project was restored to complete the design and to finish acquiring the necessary properties. In February 1998, a value engineering report of the project recommended a design that required only a portion of the subject property. In August 1998 the Respondent determined that the project would be built using the Design/Construct method, which meant that the contractor was responsible for both the design and the construction to approved Ministry standards. This allowed the project to be fast tracked as some aspects of construction could start before the final detailed design was complete. Mr. Tracey indicated that they first found out that only part of the subject property would be required at an open house meeting near the end of 1998.

[23]  The successful contractor on the project, Emil Anderson Construction Ltd., was selected in March 1999 and the project was completed by November 1999.

4.3  Taking

[24]  The partial taking was 2.38 acres from the northern portion of the subject property. The land that was taken was zoned I-3 and included most of the right of way for the Westbank Irrigation District. It also included a small portion of the easement along the western boundary that provided access to the lot to the south of the subject property. According to Mr. Parkhill the partial taking consisted of the 0.6 acres that were at grade with Highway 97 and provided access to the subject property as well as 1.78 acres of the steep low utility sector.

[25]  After the taking the remainder was 6.74 acres. This part of the subject property was zoned both I-3 and C-4 and contained the BC Gas right of way. Mr. Parkhill described the remainder as consisting of the 4.0 acres of the high utility sector (the bench land used for storage) and 2.74 acres of the steep low utility sector. However, Mr. Parkhill indicated that the storage capacity of the remainder had been increased beyond the pre-existing 4.0 acre bench as a result of work done related to the project. The easement that provided access to the lot to the south of the subject property had to be relocated.

4.4  Claimants' Use of the Doerr Parcel

[26]  The Doerr property was approximately 58 acres and was adjacent to the western boundary of the claimants' mill site. Approximately 25.5 acres of the northern portion of the Doerr property were in the ALR and about 16 acres of this portion were planted as vineyards. In addition, there was an area of 4.5 acres in the north-west corner of the Doerr property that was excluded from the ALR but bounded on two sides by land that was in the ALR. Thus, approximately 28 acres were outside the ALR and the ALR associated property. Some of the non ALR property was forested and steeply sloped such that approximately 10 acres had low utility. This leaves about 18 acres of the parcel that had some potential as industrial land being outside the ALR and outside the steeply sloped area that was eventually subject to a non-disturbance covenant. In January 1997 it was zoned RU 2 Rural and was designated Rural Resource on the OCP. The only legal access at that time was a panhandle about 107 feet in width to Highway 97 at the south boundary of the property. However, access through this panhandle was not practical because of very steep slopes at more than 50% gradient and the presence of Hardy's Slough, a protected wildlife area. There was access over crown land via a gravel road that left the highway 330 feet to the south of the Doerr parcel. However, this road had a 16% gradient and was not suitable for tractors or trucks. By agreement, Mr. Doerr historically accessed his land by using the claimants' logging road across the mill site.

[27]  In June 1989 at a meeting between the Ministry and Gorman Bros. to discuss the effect of the project on the claimants, the notes by someone from the Ministry indicated that the main problem for Gorman Bros. if the subject property was taken was the loss of a place for storing wood chips. The notes also reflected a discussion of a land trade and Gorman Bros.' intended use of any land so acquired for parking and lumber storage.

[28]  The Ministry presented plans in June 1991 showing a revised location for the project in approximately the same place as was eventually built.

[29]  At a subsequent meeting in June 1991 between representatives of the Ministry and Gorman Bros. the Ministry's notes of the meeting report that Gorman Bros. was considering purchasing part of Mr. Doerr's land and there was a discussion of Mr. Doerr's difficulties with accessing the property. The Doerr parcel had originally been owned by Ross Gorman who continues to own land north of the mill site. The notes suggest that Ross Gorman had subdivided his land to create the Doerr parcel in such a way that there was no practical access for the Doerr property.

[30]  In October 1991 at a meeting between the Ministry, Urban Systems, the consulting engineering firm retained by the Ministry, and Gorman Bros., the Ministry's minutes reflect that Mr. Tracey said Gorman Bros. was interested in acquiring some or all of the Doerr property depending on cost. Mr. Tracey went on to report that the Doerr property was currently for sale at $1,000,000, but that in his opinion it was overpriced since it was not prime agricultural land, and even if it was, $550,000-$650,000 would be a more realistic price. He also said that the claimants needed more log storage area.

[31]  The project was suspended in May 1993 for budgetary reasons.

[32]  In September 1993 Mr. Doerr wrote the provincial Ombudsman complaining that the postponement of the project meant that the access that he was going to get from the Ministry was also delayed. This letter indicates that Mr. Doerr had been trying to get access from the Regional District since at least 1990 and that he had an ongoing file with the Ombudsman about access to his property. In November 1993, the claimants entered into negotiations with Mr. Doerr to lease some of his land for additional space to store logs. The proposed area to be leased was adjacent to that part of the mill site in which the claimants already stored logs. Mr. Tracey gave evidence that the need for more land for log storage was occasioned by general increases in mill production requiring more logs and at least two changes in the Forest Practices Code. In the spring when the ground was wet, there was a prohibition on equipment entering forest land. During that time no logs could be cut or removed for transport to the mill. One of the changes in the Forest Practices Code was that this break-up period of non-logging in the spring was lengthened by two months. Consequently, a greater number of logs had to be stock piled so that mill production was not slowed down. The second more minor change in practice involved the procedures for scaling or measuring the volume of logs that were being processed. On a random basis the mill must measure the weight and volumes of a selection of logs in order to calculate stumpage fees. In order to measure the volumes of the log sample it must be spread out on the ground. At one time, as soon as the log sample had been scaled, the mill could remove the logs and proceed to mill them. The change required the claimants to leave a sample spread out on the ground for a certain period of time so that the Crown could check the mill's calculations.

[33]  These changes resulted in more land for log storage being required. We were not provided with the specific dates when the changes became effective. However, the claimants' log inventory volume more than doubled between March 31, 1993 (about 50,000 cubic metres) and March 31, 1995 (more than 105,000 cubic metres). Volumes on March 31, 1996 and 1997 were about 87,000 and 100,000 cubic metres respectively.

[34]  The documentary evidence shows that in November 1993 when Gorman Bros and Mr. Doerr were negotiating a lease of part of the Doerr land, they also discussed the possibility of the claimants purchasing the Doerr land. It was reported that Mr. Doerr was not interested in selling all of the land at this time. However, he was concerned that if he only sold the south part to the claimants that he would lose the only legal access and have no access for the northern part containing the vineyards. In December 1993 Gorman Bros. asked the Ministry to inform Mr. Doerr that a new legal access for his property would be provided as shown on the plan when the project was completed, which would provide access to the northern ALR sector. One week later there was a letter from the Ministry to Mr. Doerr that referred to a telephone conversation with him and enclosed a drawing showing the new proposed property line for his property. The letter went on to say that the details of relative elevation were not known and that it was not clear when the funding to proceed with the project would be in place. This letter was copied to Gorman Bros. but the evidence was unclear as to whether Gorman Bros. had ever received it.

[35]  As indicated above, in January 1994, the claimants and Mr. Doerr did enter into a two year lease for approximately 2.5 acres of the Doerr land for the storage of logs. This land was the subject of a temporary industrial use permit and the rent was $25,000 a year. There was a provision for a month to month tenancy to continue after the term of the lease had expired in January 1996 as long as both parties agreed. There was also a provision for the claimants to clear the land of all logs and debris at the end of the lease.

[36]  In late July 1995 the project was reinstated.

[37]  Beginning in February 1996, since the term of the lease had expired, Gorman Bros. and Mr. Doerr attempted to negotiate a purchase of the southern portion of the Doerr land. There were a number of documents in evidence that detailed the positions each party took during the negotiations. The area that Gorman Bros. wished to purchase was 6.46 hectare (15.96 acre) of non ALR land and included the 2.5 acres that had been leased. Not all of this approximately 16 acre site was reported to be usable, since there was some steeply sloped forested land to the south and west of the usable sections. Mr. Doerr's initial offer to sell this sector was for $895,000, reduced in stages to $775,000, while the claimants offered to pay $650,000. In both parties' offers the purchase price was to be made over time. There were a number of conditions or terms in the proposed sale including the following:

• That the property be subdivided and rezoned for industrial use;
• That new legal access would be provided to the remainder of the Doerr parcel in connection with the project;
• That the Ministry confirm its intent to acquire the subject property;
• That Gorman Bros. have a right of first refusal on the remainder of the Doerr parcel;
• That Gorman Bros. would indemnify Mr. Doerr against any potential liability.

The documentary evidence indicated that all the conditions proposed by both parties appear to have been agreed but for the price. The Ministry did provide a letter confirming its intention to purchase the subject property. Meanwhile the Ministry and the claimants were exchanging correspondence about the potential for gravel on the part of the Doerr parcel that the claimants were attempting to buy. The Ministry hoped to use any gravel that was found for the project and this possibility was being considered by Gorman Bros. as a factor in the purchase price. However, these negotiations were ultimately unsuccessful and broke down in late May 1996 according to Mr. Parkhill. We were provided with no details as to the reason for the breakdown. The lease of the 2.5 acres continued on a month to month basis.

[38]  In late June 1996 funding for the project was frozen pending a capital program review and the Ministry reimbursed Gorman Bros. for funds spent to date. It is not clear whether any of the invoices from appraisers, lawyers and engineers related to the Doerr parcel.

[39]  On March 11, 1997, Mr. Doerr wrote the claimants that he intended to list his property for sale and he wanted the leased land cleared of logs by June 1, 1997. On June 9, 1997 the claimants made a written offer to Mr. Doerr to purchase his property for $2,000,000 and a cheque for this sum was enclosed. A formal agreement of purchase and sale was signed between the claimant Dunfield Holdings Inc. and Hans Doerr dated June 11, 1997. It provided for a sale price of $2,000,000 and was contingent on the rezoning of all of the land south of the area in the ALR (approximately 28 acres) to I-3 Industrial. There was a provision for rental payments to be paid until closing. Gorman Bros.' application for rezoning to the Regional District dated June 12, 1997 stated that part of the land was required for log storage and that the mill's inventory of logs had doubled since 1993 because of changes in the Forest Practices Code and increased production. The land in the ALR would remain as an operating vineyard. A media release from Gorman Bros. dated June 13, 1997 announced the acquisition of the Doerr lands and stated that the property was acquired for on site log storage that was made necessary by changes in the Forest Practices Code extending the logging shut down period by two months. Later in the media release Mr. Tracey added another reason as follows:

"This purchase was also made expecting that the [project] would eventually occur, we just did not know when. Our land purchase will reduce the impact of this project on Gorman Bros. The announcement of this project resuming, just one day later, was a real surprise."

[40]  In April 1997 the project received funding again to complete the design of the interchange and to acquire more properties. It appears that Gorman Bros. only learned that the project was going ahead when a public announcement was made on June 11, 1997.

[41]  The purchase of the Doerr parcel completed on September 30, 1997. One of the conditions of the rezoning was that a non-disturbance covenant was registered on title with respect to 8.3 acres that had slopes of 30% or greater of the total of 28 acres that were zoned I-3. This covenant prohibited construction or removal of any soil or vegetation of trees without written consent of the Regional District. Changes were made on part of the I-3 zoned property to accommodate more log storage. In the spring of 1999 an area of the I-3 zoned property was also cleared and levelled for chip or lumber storage but it had only been used for lumber as of the date of the hearing. Since the taking, chips have been trucked from the site on a daily basis and there has been no stockpiling of chips on the mill site. When the project was finally constructed during the summer of 1999, the Ministry did not in the end provide a new access to the Doerr parcel, presumably because its ownership by the claimants meant that access could continue through the mill site.

4.5  Access to the Mill Site and the Consolidated Exchange Parcel

[42]  The claimants lost their existing access to the mill from Highway 97 as a result of the project. The new access had to be from Glenrosa Road and the interchange that was part of the project. A short new road called Dunfield Road, a public road, was constructed by the Ministry from Glenrosa Road. This new public road provides access to two new driveways to the Ron and Jenifer Gorman property and the Ross and Eunice Gorman property. The claims for Ron and Jenifer Gorman and Ross and Eunice Gorman have settled and are not before us. Dunfield Road also provides access for the mill via a new private road that ends close to the existing office. The new private road for the mill site crosses the consolidated exchange parcel as well as an area of land beside Dunfield Road that used to belong to Ross and Eunice Gorman called the panhandle. There is also no claim before us for the value of the panhandle property.

[43]  The consolidated exchange parcel consisted of surplus residential lots between the project and the mill site that the Ministry did not need. The parcel was approximately 1.79 hectares (4.4 acres). The name that was eventually used to describe this parcel the "consolidated exchange parcel" was chosen because at an early stage in the proceedings there was discussion between the parties that this parcel might be exchanged for part of the subject property. In the end, nothing was in fact exchanged. The claimants asked that the taking of the subject property occur by formal expropriation and the Ministry made an advance payment for this partial taking. In turn the Ministry offered the claimants a choice of two options for access and the claimants chose to purchase the consolidated exchange parcel according to an agreed formula.

[44]  Before the taking, the access from Highway 97 to the mill site on the north-west side of the highway was by means of a large driveway located beside the office building. Vehicles heading north had a left turn lane on the highway where they could wait for a pause in the oncoming traffic. Vehicles heading south turned right off the highway into the driveway. All vehicles entered through this driveway. Visitors to the site could turn left from the driveway immediately after leaving the highway and park in front of the office building. Employees drove slightly further on the driveway and entered a parking lot to the right and up an incline. Logging trucks drove along the same driveway past the office building and followed an internal road that took them to the scales and the log storage area. Trucks to take away the finished product such as chips and lumber also entered through the same driveway and after passing to the right of the office building followed a different internal road that took them to the required storage locations. Industrial vehicles such as fork lifts, loaders and trucks used the internal road system but had relatively minimal contact with civilian visitors to the office building.

[45]  As we have already described, the Ministry presented plans for the project in June 1991 showing the revised location. At the same time the Ministry began to acquire the 29 residential properties to the north of the mill site for the project. From the beginning it was understood that some of these properties would be surplus to the Ministry's requirements. In October 1991 the Ministry's minutes of a meeting with Gorman Bros. report discussion about a possibility of a land exchange with Gorman Bros. whereby Gorman Bros. would acquire surplus land north of the mill site from the Ministry in exchange for the subject property. Mr. Tracey is reported as saying that some of the functions located on the subject property, such as parking, lumber storage, a boneyard for old equipment, and possibly even the chip storage site, could be relocated to what would become the consolidated exchange parcel.

[46]  The project was suspended in May 1993 for budgetary reasons.

[47]  By the fall of 1993, the documents show that the Ministry had acquired 25 of a total of 29 residential properties north of the mill site. Gorman Bros. hoped to lease some of these properties that had already been purchased by the Ministry on a temporary basis until the project went ahead. Gorman Bros. stated that they wished to use these properties for employee parking and storage of rough lumber and steel. A rezoning to industrial use was necessary before this could happen. The three or four residents who had not yet been bought out by the Ministry (at a point in time when the project was suspended and it was not known when it would resume) objected to this. Despite Gorman Bros.' efforts to negotiate with the neighbours, it was eventually forced to abandon its plans to rezone and lease these properties on a temporary basis. Nonetheless, Gorman Bros. appeared to have been able to use one of the properties nearest the mill site for storage. In March 1994 when the project continued to be on hold Gorman Bros. bought one of these four properties since the owner wanted to vacate the property. Gorman Bros. sold this property back to the Ministry in 1996 when the Ministry once again had funding.

[48]  In late July 1995 the project was reinstated.

[49]  In February 1996, there were documents reiterating the proposal for a land exchange between the claimants and the Ministry. However, the Ministry stated that it was not possible to know how much land would be surplus until a grading plan was done. There were plans from Reid Crowther prepared at this time showing possible access routes for Gorman Bros. through the proposed consolidated exchange parcel.

[50]  In late June 1996 funding for the project was frozen pending a capital program review and the Ministry reimbursed Gorman Bros. for funds spent to date including accounts rendered by Reid Crowther in the approximate amount of $18,000. In April 1997 the project received funding again.

[51]  In the fall of 1998 the claimants communicated that they wished the required portions of the subject property to be formally expropriated (instead of by section 3 agreement or by a land exchange) but offered to accept the land that would become the consolidated exchange parcel in place of cash advance payments. The Ministry decided to follow the Act and make an advance payment for the partial taking. The claimants nonetheless pushed the Ministry to sell them the consolidated exchange parcel. Negotiations about the transfer of the consolidated exchange parcel continued for some months. The documents indicate that the Ministry hoped to use the transfer of the consolidated exchange parcel as an inducement to achieve final settlement of the claimants' claim. The claimants in turn pointed out that the Ministry needed the claimants' co-operation in providing new easements to the Ron and Jenifer Gorman property to the north of the mill site and to the Tingstad property to the south of the subject property. The claimants indicated that they would cooperate in providing these easements so long as the Ministry transferred the consolidated exchange parcel. Later they emphasized that access to the mill must not be interrupted and the consolidated exchange parcel was necessary for the access.

[52]  Although initial designs for the new access road used the consolidated exchange parcel only, by late February 1999 the claimants had decided that they wanted to add another piece of land owned by Ross and Eunice Gorman called the "panhandle". The claimants wanted the new private road to be routed through the panhandle first, and then through the consolidated exchange parcel to the former boundary of the mill site. The use of the panhandle meant that the private road for the mill site would be longer than if it was through the consolidated exchange parcel only. However, this route facilitated access for the two personal properties owned by Ross and Eunice Gorman and Ron and Jenifer Gorman as well as providing more land area for the mill site for uses other than the private road such as employee parking. The claimants had the engineers Reid Crowther do several layouts and configurations to determine the best possible use of the land that was available.

[53]  After negotiations had gone on for some time, on March 12, 1999, the Ministry decided to offer the claimants a choice. For the first time the Ministry offered to build a public road across the consolidated exchange parcel without conveying the consolidated exchange parcel to the claimants. This option would not incorporate the panhandle as the claimants had recently proposed. The second option was that the claimants could acquire the consolidated exchange parcel and construct a private road themselves using the panhandle area as well. Mr. Tracey testified that the plans for the hypothetical public road that the Ministry offered to build on the consolidated exchange parcel showed the road taking up so much room that there was virtually no land left on either side. And of course in this scenario the claimants would not necessarily ever acquire the land left over in any event. On March 26, 1999 the claimants chose to purchase the consolidated exchange parcel from the Ministry so that they could build a private road from the new Dunfield Road through the panhandle and the consolidated exchange parcel to the former boundary of the mill site.

[54]  The parties agreed on a formula to establish the net price for the consolidated exchange parcel. The valuation of the consolidated exchange parcel was approximately $675,000. From this the parties have agreed to deduct the value of the land needed for the hypothetical road on the consolidated exchange parcel (0.60 hectares or 1.48 acres at approximately $222,500) and the agreed cost to construct the hypothetical public road across the consolidated exchange parcel (approximately $259,000). We note that the a public road such as the hypothetical public road is required to be wider and to be built to a higher construction standard than a private road such as the one that was eventually built by the claimants. When these amounts were deducted the net value of the consolidated exchange parcel was approximately $193,000. We repeat that the formula for arriving at this sum is agreed and is not before us for consideration. Gorman Bros. has signed a promissory note dated June 29, 1999 that sets out that any net payment by Gorman Bros. for the consolidated exchange parcel, as determined by the formula, is to be made within a certain time frame following the release of this decision, or an appeal from this decision. The letters that are attached to the promissory note state that the claimants agree "upon the transfer of the consolidated exchange parcel on the agreed terms that the Ministry has complied with its obligation to replace the access taken with reasonable access". The claimants have not agreed to release other claims; they pointed out that it was premature to release all claims at this stage before the Design/Construct project had been built.

[55]  The claimants built the new private road. They had to use considerable quantities of fill to make the site level with the mill site. Given the need for large trucks to use the private road the level of the road was important. The evidence was that as a result of the Design/Construct approach used in the project the Ministry had to have more land available than it eventually needed. The thin strips along the edge of the highway that eventually turned out to be surplus were called the "shaded" area. The parties made an agreement at some stage that the Ministry would turn over some of this shaded area to the claimants at a price to be agreed. The claimants built some of the new access road on this shaded area that they hoped would be transferred to them in due course. The shaded area had not yet been transferred at the time of the hearing because of delays caused by the requirements of providing rights of way for BC Hydro and other utilities. Again compensation for the shaded area is not in issue since the parties have made a separate agreement. However, there are disturbance damages that are claimed in relation to the shaded area.

[56]  Following the completion of the project, access to the mill site now requires vehicles to exit from Highway 97 via the new interchange that was part of the project. After using the new private road to cross the panhandle area logging trucks veer right up an internal roadway to the scales and log storage area where they unload. Other vehicles turn left after crossing the panhandle area and continue on the new private road. Visitors or employees can park in parking lots on the panhandle and the consolidated exchange parcel to the left of the private road. Trucks for lumber and chips travel along the new private road to storage areas for these products. There is a large new lumber storage shed, which is located half on the original mill site and half on the consolidated exchange parcel. There are also new kilns for drying lumber on the consolidated exchange parcel. In addition, photos show that there are large quantities of finished product (lumber) stacked wherever there is room on both the original mill site and the consolidated exchange parcel.

[57]  The claimants now state that the long private road through that part of the mill site that was the consolidated exchange parcel to the existing office building results in industrial vehicles mingling with the vehicles of visitors en route to the office building, or with the visitors themselves, if they park near the entrance and attempt to walk to the office building. There was evidence that as many as 100 trucks a day enter the site; an average of about 50 logging trucks a day (with more in the late fall and winter when they are building the inventory for the spring break up season); an average of about 30 trucks a day for chips and an average of 10 trucks a day for lumber. The claimants say that this mixing of loaders, fork lifts and trucks with civilian traffic raises concerns about safety. As a result the claimants wish to construct a new office building beside the parking lot near the new entrance to the site.

5.  MARKET VALUE OF THE PARTIAL TAKING

[58]  Dennis Parkhill of Kent-Macpherson Appraisals provided appraisal evidence for the claimants. The Ministry relied on Reid Umlah of Hooker, Umlah, Craig, Lum, Real Estate Appraisers and Consultants Ltd. for appraisal evidence. Both appraisers used the direct comparison approach to value the property before and after the taking. The positions of each party, based on the appraisal evidence, may be summarized as follows:

	Claimants		Ministry
	Before	After	Before	After
Direct Comparison Approach	$873,500	$641,000	$456,000	$337,000
Value per Gross Acre	$ 95,791	$ 95,202	$ 50,000	$ 50,000
Estimate of Compensation		$232,500		$119,000

5.1  Highest and Best Use

[59]  The claimants' appraiser, Mr. Parkhill, provided a highest and best use for the 4.6 acres of the subject property that was usable (out of the total of 9.118 acres). In his opinion the highest and best use of this portion was "the current air dry lumber and chip storage use, in connection with the … mill operation" pending redevelopment "to independent light industrial/service commercial [use]". After the taking he dropped the service commercial option as a result of the loss of highway access. Mr. Umlah, for the respondent, concluded that the highest and best use for the subject property both before and after the taking was "for limited and industrial based uses such as storage and similar ancillary industrial uses".

[60]  Mr. Umlah treated the subject property as a whole and emphasized the steep topography and lack of services as constraints on its use. In contrast, Mr. Parkhill highlighted the two flat areas of the subject property that were usable before the taking and the highest and best use of these two areas if the mill was closed.

[61]  Despite the steep terrain of the subject property, we accept that there were two significant areas before the taking that were usable. The smaller of these was at grade with the highway and formed part of the access, while the other was a 4.0 acre bench area 35 feet higher than the highway and reached by an internal driveway. We are also satisfied that the cost to bring the missing services to the property was in the region of $30,000 to $40,000.

[62]  Clearly Mr. Parkhill's highest and best use depended on the subject property having good highway access. The existing access permit dating from November, 1985 stated that it was granted on condition that the subject property be used for lumber storage and a 372 square metre fabrication shop only and that any change in ownership rendered the permit void. In his report Mr. Parkhill suggested that his choice of light industrial and service commercial use did not include those uses that could be categorized as tourist or retail commercial. Mr. Parkhill conceded that he had not checked as to the likelihood of a purchaser acquiring an access permit for his highest and best use. However, we note that the mill site had an access permit for the same location on the other side of the highway and it received more traffic than the subject property. We are satisfied that the subject property maintaining highway access on a sale to a hypothetical purchaser is a reasonable assumption for Mr. Parkhill to have made.

[63]  The respondent submits that the highest and best use should emphasize the existing use, given Mr. Tracey's evidence that the subject property was a vital part of the sawmill's land base. We do not accept this submission. The market value of the subject property is defined in section 32 of the Act as the amount that would have been paid if it had been sold in an open market by a willing seller to a willing buyer. The highest and best use of the subject property is a key ingredient of this hypothetical model and should not be based on the present owner's needs.

[64]  Mr. Parkhill was asked in cross-examination about the Level 2 Environmentally Sensitive Area to the south of the subject property, including the southern part of the subject property that was zoned C-4. Mr. Parkhill said that he did not talk to anyone about this because the subject property already had C-4 zoning. A development permit would be necessary and possibly a covenant for the designated area.

[65]  Mr. Parkhill noted that the existing Industrial designation and Industrial zoning is linked to the claimant's sawmill operation. If the mill is closed then, in his opinion, it is probable that the Regional Board would consider a change in zoning to light industrial or service commercial. He came to this conclusion after consideration of the location of the site in relation to downtown Westbank and the use of other properties in the area. We accept Mr. Parkhill's opinion on the highest and best use of the two areas of the subject property that are usable on the appraiser's assumption.

5.2  Market Valuation -- Before the Taking

5.2.1  The Evidence

[66]  Mr. Parkhill used 14 comparable sales that occurred between February 1993 and December 1999 to obtain an extracted land value range between $79,835 and $381,818 per acre. After adjustments for time derived from statistics and a number of paired sales he obtained a range between $83,096 and $436,738 per acre. Mr. Parkhill considered that different parts of the subject property had different valuations; the relatively small section of 0.6 acres beside Highway 97 and at grade with the highway was the most valuable; the four acres of bench land that were used for storage were the next most valuable and finally the steep portions of the lot and the portions encumbered with easements and rights of way were the least valuable. After considering size, location, access and relative utility of the comparables in relation to each of these three sections of the subject property, Mr. Parkhill estimated the valuation of these sections before the taking as follows:

Before the Taking
Highway 97 sector	0.600 acres @ $250,000 per acre	$150,000
High utility sector	4.000 acres @ $162,500 per acre	$650,000
Low utility sector	4.518 acres @ $16,250 per acre	$ 73,418
Total market value estimate	9.118 acres @ $95,791 per acre	$873,418 or $873,500 rounded

[67]  Mr. Umlah relied on 8 market sales that occurred between March 1993 and April 1998. These ranged in value between $34,483 and $232,564 per acre. Two of these sales were also used by Mr. Parkhill. After comparing the subject property to each of these comparables and considering such factors as size, location and topography, Mr. Umlah concluded an average valuation of $50,000 per acre for the subject property. His valuation for the subject property before the taking was $456,000 rounded.

5.2.2  Analysis

[68]  The main difference between the appraisers is that Mr. Parkhill has identified those parts of the subject property that are useful, given them a more valuable highest and best use and then analyzed the value of each sector separately. Although he estimates that half of the subject property is worth very little, his identification of the two sectors that are usable and his separate valuation of them leads to a greater valuation for the overall property. Mr. Umlah's more general approach that does not clearly identify how much of the land is usable has led him to a lower valuation.

[69]  The respondent submits that Mr. Parkhill's approach in valuing each of the three sectors separately appears similar to one that was rejected by the board in Sequoia Springs West Development Corp. v. British Columbia (Minister of Transportation and Highways) (2000), 69 L.C.R. 1 (B.C.E.C.B.) at para 65. In Sequoia, the claimant's appraiser "treated the 187 acre subject property as divided into two theoretical parcels, one of 107 acres for all the areas with single family lots and one of 81 acres for the areas of multi-family units". Having made this hypothetical subdivision of the subject property, the size adjustments of the claimant's appraiser for the three selected comparables were smaller than those of the respondent's appraiser, who was in fact Mr. Parkhill. The board in Sequoia said that they did not agree with this adjustment by the claimant's appraiser that was dependent on dividing the subject property into two theoretical and smaller parts. The board in its conclusion of value used the size adjustment of the respondent's appraiser who treated the subject property in its entirety as a 187 acre parcel.

[70]  In this case, Mr. Parkhill has treated the subject property as having three different sectors with respect to use. The respondent points out that since Mr. Parkhill's adjustments in the present case (other than for time) are qualitative and not explicit, it is difficult to ascertain if the different sectors have been improperly overvalued as separate parcels of smaller size than the whole 9.118 acre subject property. We agree with Sequoia that what is being sold is the entire subject property and any adjustments that are made should reflect this. We note, however, that Mr. Parkhill's report states that he has valued each sector as attached to the remainder of the parcel. He testified that if the 0.6 acre Highway 97 sector had been sold on its own it would have sold at a higher unit value than $250,000 an acre. His comparables appear to support this evidence. We accept Mr. Parkhill's approach as being distinguishable from the approach that was criticized in Sequoia and find his description of each sector of assistance in valuing the property.

[71]  Most of Mr. Umlah's comparables have a much higher sale price per acre than the $50,000 per acre that he concluded for the subject, five of them having a sale price that exceeded $100,000 per acre. While he indicated that the subject property's characteristics suggested a somewhat lower valuation than these comparables, in the end Mr. Umlah has relied on his analysis of the sale of the Doerr parcel to the claimants to support his conclusion for $50,000 an acre for the subject. We disagree with the use of this comparable. While the Doerr parcel is located near the subject property on the other side of the mill site, it is dissimilar in many other respects. We note that the Doerr parcel is 58 acres compared to 9 acres for the subject property. Approximately 30 acres of these 58 acres are for agricultural land use, much of it planted in vineyards. Mr. Umlah attempts to extract the agricultural sector to arrive at a value for the 28 acres that he says are similar to the subject property. But he has failed to make any adjustments for size or access. Mr. Umlah also failed to make any time adjustment, although this sale occurred two years before the date of valuation and one of his sales occurred six years before.

[72]  Mr. Parkhill has valued the 0.6 acre highway sector that is at grade with Highway 97 at $250,000 an acre. He is not explicit on which sales he has used as a basis for this valuation. Three of Mr. Parkhill's comparables were located beside Highway 97 and have highway exposure. One of these, with an adjusted sale price of $282,796 per acre, was a 0.93 acre parcel that was purchased to form part of a recreational vehicle sales outlet. The second comparable was a larger parcel of 3.99 acre with an adjusted sale price of $323,135 per acre. This lot was improved with a building containing self storage units. The third sale was the 4.4 acre consolidated exchange parcel that was sold to the claimants by the respondent at the appraised value of $150,000 per acre. Three of Mr. Parkhill's other comparables have adjusted values between $252,451 and $272,036 per acre but these were all relatively small properties, approximately one acre in size. We are satisfied that there is sufficient evidence to support a value of $250,000 per acre for the 0.6 acre highway sector that is part of a 9.118 acre parcel.

[73]  Mr. Parkhill valued the 4.0 acre high utility sector at $162,500 per acre. The reasons for this valuation were not based on particular comparables that he thought possessed some similarities to the high utility sector. Rather he considered the legal and physical attachment to the highway sector, direct highway access and exposure and the grade separation and two of the comparables that exhibited a difference in their adjusted valuation of approximately 50%, a difference that Mr. Parkhill attributed to the highway exposure of the more valuable property. He concluded that a somewhat higher valuation of 65% of the highway sector or $162,500 was appropriate for the subject property. We accept Mr. Parkhill's valuation of the 4.0 acre bench sector before the taking at $162,500 per acre.

[74]  Finally Mr. Parkhill valued the low utility sector at 10% of the high utility sector. The respondent submitted that there was no explanation for this percentage but we acknowledge the difficulties inherent in valuing this type of land and accept Mr. Parkhill's valuation.

5.2.3  Conclusion

[75]  We conclude that the valuation of the subject property before the taking is as follows:

Highway 97 sector	0.600 acres @ $250,000 per acre	$150,000
High utility sector	4.000 acres @ $162,500 per acre	$650,000
Low utility sector	4.518 acres @ $16,250 per acre	$ 73,418
Total market value estimate	9.118 acres @ $95,791 per acre	$873,500

5.3  Market Valuation -- After the Taking

5.3.1  The Evidence

[76]  The partial taking was 2.38 acres from the northern portion of the subject property. According to Mr. Parkhill this partial taking consisted of the Highway 97 sector that was at grade with the highway and 1.785 acres of the low utility sector. The remaining 6.733 acres were 4.0 acres of the high utility sector that were used for storage and 2.733 acres of the low utility sector. Relying on three comparables, including the consolidated exchange parcel, Mr. Parkhill estimated the valuation per acre for the high utility sector at $150,000 per acre or somewhat lower than the valuation before the taking. He estimated the valuation of the 2.733 acres of low utility sector at 10% of the high utility rate or $15,000 per acre. Thus his valuation of the remaining subject property after the taking was as follows:

After the Taking
High utility sector	4.000 acres @ $150,000 per acre	$600,000
Low utility sector	2.733 acres @ $15,000 per acre	$ 40,995
Total market value estimate	6.733 acres @ $95,202 per acre	$640,995 or $641,000 rounded

[77]  Mr. Umlah stated that in his opinion there was no injurious affection as a result of the taking. As a result the estimated value of the remainder was based on the reduction in size. At $50,000 per acre for 6.74 acres the value of the remainder was $337,000.

5.3.2  Analysis

[78]  The difference between the two appraisers' valuation after the taking is that Mr. Parkhill thinks the remainder has been injuriously affected by its loss of highway access whereas Mr. Umlah says that there has been no injurious affection. In addition, Mr. Parkhill's categorization of the subject property into zones means that the loss of specific sectors is reflected in the value of the remainder.

[79]  The loss of the highway access primarily affected the 0.6 acre highway sector that was at grade with the highway. However, since the entire 0.6 acre highway sector area was taken, the value of the remainder after the taking reflects the loss of the most valuable part of the subject property, which derived its value from the highway access. With respect to the existing use as a storage site for the mill Mr. Parkhill comments that the new access using the overpass now involves a longer return trip: 4,500 feet between the mill site and the remainder, compared to 500 feet before the taking. However, we note that the new access is approximately at grade with the 4.0 acre bench and does not involve transport trucks crossing four lanes of highway traffic.

[80]  There was evidence that the 4.0 acre bench area was extended on both the east and west boundaries as a result of cut and fill work done by the claimants or Emil Anderson in connection with the project. We understood that the usable area after the work on the remainder was approximately similar to the total usable area before the taking (4.6 acres). Mr. Parkhill described the industrial utility of the remainder considering the post-taking site fill and preparation as excellent. This expanded bench area was not valued by Mr. Parkhill. In our opinion this expanded bench area should be valued because the expansion occurred at least in part as a result of work that was part of the project. We do not have the exact areas for the expansion of the bench on the east and west boundaries. Doing the best we can we estimate that 4.2 acres of the remainder should be valued as the high utility bench area.

5.3.3  Conclusion

[81]  We conclude that when the subject property is valued in separate zones, the value of the remainder after the taking is

High utility sector	4.2 acres @ $150,000 per acre	$630,000
Low utility sector	2.533 acres @ $15,000 per acre	$ 37,995
Total market value estimate	6.733 acres	$667,995 or $668,000 rounded

5.4  Market Valuation of the Partial Taking and Reduction in Market Valuation

5.4.1  The Evidence

[82]  Mr. Parkhill's valuation of the land taken together with reduction in market value to the remainder was:

Estimated valuation before the taking	$873,500
Estimated valuation after the taking	$641,000
Value of the land taken and reduction in value to the remainder	$232,500

[83]  Under subsection 40(3) of the Act, the minimum compensation is the ratio of the area of land taken to the total land area before the taking times the market value of the land before the taking. This calculation yields $228,482 (2.385 acres / 9.118 acres x $873,5000). Under subsection 40(5) the calculation for the minimum compensation may be adjusted to take into account that some of the land is more valuable or less valuable than the average value of the land that was not taken. Mr. Parkhill made the following valuation of the taking under subsection 40(5) using the per acreage values for each sector:

Highway 97 sector	0.600 acres @ $250,000 per acre	$150,000
Low utility sector	1.785 acres @ $16,250	$ 29,006
Valuation of the taking		$179,006 or $179,000 rounded

This calculation takes into account that while some of the land taken was from the most valuable sector, other land taken was from the least valuable sector. Mr. Parkhill's valuation of the land taken and reduction in value to the remainder after the taking at $232,500 is greater than the minimum compensation for the land taken only at $179,000. As a result his final valuation of the land taken and reduction in value to the remainder after the taking is $232,500.

[84]  Since Mr. Umlah has concluded that there was no injurious affection, his final conclusion of market valuation of the partial taking and reduction in market valuation of the remainder is based on the reduction in size of the subject property. When his before and after valuations are compared the difference is $456,000 – $337,000 = $119,000. Mr. Umlah also calculated the market valuation of the remainder using the minimum calculation set out in section 40(3) of the Act. This minimum calculation yields the same result of $119,000 rounded.

5.4.2  Analysis and Conclusion

[85]  We have concluded that the valuation of the subject property before the taking was $873,500 while the valuation after the taking was $668,000. This results in a valuation of the taking and the reduction in market value of the remainder of $205,500. We agree with Mr. Parkhill that the minimum compensation should be calculated under subsection 40(5), taking the value of the different sectors into account. Thus the valuation of the land taken and reduction in value to the remainder after the taking at $205,500 is greater than the minimum compensation for the land taken only at $179,000. The claimant is entitled to $205,500 for the valuation of the taking and the reduction in market value of the remainder.

6.  COMPENSATION FOR THE DOERR PARCEL in excess of market value

[86]  The claimants' position is that as a result of the project, and the anticipated taking of the subject property, they were driven to purchase the whole Doerr parcel in 1997 at a price that was in excess of its market value.

[87]  The respondent says that no compensation is owed as a result of the claimants' purchase of the Doerr parcel for two basic reasons:

1. The claimants' purchase of the Doerr parcel was not caused by the respondent.

2. In any event, the claimants have not suffered a loss since they have not paid more for the Doerr parcel than it was worth.

6.1  Causation

6.1.1  Statutory basis

[88]  The first issue is whether the purchase of the Doerr parcel was caused by the respondent. Section 40 provides:

40	(1)	Subject to section 44, if part of the land of an owner is expropriated, he or she is entitled to compensation for
		(a)	the market value of the owner's estate or interest in the expropriated land, and
		(b)	the following if and to the extent they are directly attributable to the taking or result from the construction or use of the works for which the land is acquired:
			(i)	the reduction in the market value of the remaining land;
			(ii)	reasonable personal and business losses.

[89]  Although the Doerr parcel was purchased before the actual expropriation in this case, Dell Holdings Ltd. v. Toronto Area Transit Operating Authority (1997), 60 L.C.R. 81 (S.C.C.) is authority for permitting disturbance damages that were suffered prior to the expropriation. At para. 38 Cory J. states:

The approach to damages flowing from expropriation should not be a temporal one; rather it should be based upon causation. It is not uncommon that damages which occur before the expropriation can in fact be caused by that very expropriation.

[90]  Another relevant section is section 34:

34	(1)	An owner whose land is expropriated is entitled to disturbance damages consisting of the following:
		(a)	reasonable costs, expenses and financial losses that are directly attributable to the disturbance caused to the owner by the expropriation;
		(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.

6.1.2  Relationship to the loss of the subject property

[91]  As we have indicated above, the question may be put as follows: was the claimants' purchase of the Doerr parcel directly attributable to the taking (or to the disturbance caused to the claimants by the expropriation) or did it result from the construction or use of the works? Or was there a different reason unrelated to the taking or the project? The circumstances surrounding the claimants' use of the Doerr parcel since the project was announced have to be examined. Because of this lengthy time frame we find the documentary evidence written at the time of particular assistance in fixing the chronology of what has occurred. These documents also reveal what the participants' reasoning appeared to be at different times.

[92]  As early as 1991 the documents show that Gorman Bros. planned on buying the Doerr parcel when the price was right in order to have more space. At this time the parties contemplated that the consolidated exchange parcel north of the mill site, which the Ministry was acquiring piecemeal from the residential owners, would be exchanged for the subject property. Mr. Tracey reported that, in the fall of 1991, there was a shortage of space for log storage.

[93]  In late 1993, when the project was on hold, the correspondence in evidence establishes that Gorman Bros. was anxious to lease on a temporary basis parts of both the Doerr parcel and specific lots within what became the consolidated exchange parcel for log storage and for rough lumber storage, steel storage and employee parking respectively. Gorman Bros. was successful in negotiating a two year lease for 2.5 acres of the Doerr parcel for log storage. However, it was unsuccessful in leasing any lots in what became the consolidated exchange parcel because of the opposition of residents who continued to live in the area who had not yet been bought out by the Ministry.

[94]  In 1996, it was still contemplated that some unknown amount of the Ministry's surplus land would eventually become the consolidated exchange parcel and be provided to Gorman Bros. to minimize the impact of the loss of the subject property. With the expiry of the lease, Gorman Bros. attempted to purchase 16 acres of the Doerr parcel with one of the conditions of sale being the Ministry's confirmation that it would acquire the subject property. The Ministry provided such a letter. In addition, it appeared that the Ministry intended to obtain gravel from the portion of the Doerr parcel that the claimants were attempting to buy and that the two parties were exploring the mutual advantages of this purchase. Although the project was scheduled to go ahead at this point, the negotiations for the sale of part of the Doerr parcel collapsed in May 1996 and the existing lease of the 2.5 acres continued on a month to month basis. The evidence was that the final positions of the parties on the price to be paid for the 16 acres were $125,000 apart, namely $650,000 and $775,000.

[95]  Later in 1996, in August, after the project was on hold, the evidence indicates that the Ministry made some efforts to proceed with the taking of the subject property from Gorman Bros. in any event. The stated reason by the Ministry was to permit Gorman Bros. to acquire an alternative chip storage site so that more chips did not have to be put on the subject property. Earlier in the year when the project had been proceeding there had been specific discussions about the existing chip pile and the need to reduce it in order to provide vacant possession of the subject property to the Ministry. An agreement had been made to move the chips. As a result of this agreement the Ministry was prepared to proceed with the taking of the subject property. However, these negotiations between the Ministry and Gorman Bros. broke down and the agreement to move the chips was cancelled. In a letter to the Ministry written at this time (three months after negotiations for the Doerr parcel had collapsed), Mr. Tracey stated that the potential purchase of the Doerr parcel "is being exacerbated by the highway project. Mr. Doerr appears to be holding [Gorman Bros.] out to ransom on the price he expects."

[96]  Finally in March 1997 Mr. Doerr delivered his ultimatum. He was going to list the property and he wanted all logs cleared from the property by June 1, 1997. On March 31, 1997, Gorman Bros. reported having 100,000 cubic metres of logs, many of which were stored on the Doerr property. The annual logging moratorium under the Forest Practices Code would continue through to some time in July. The highway project was again on hold. Gorman Bros. offered to pay $2,000,000 for the whole property on June 9, 1997 and a formal agreement of purchase and sale was signed in this amount conditional on the rezoning of all the land south of the ALR area as industrial. Both the application for rezoning and the media release prepared by Gorman Bros. stated that the acquisition of the Doerr parcel was for log storage purposes, while the media release provided the additional purpose that it would reduce the impact of the project, when it happened.

[97]  Thus, the documentary evidence shows that over the ten year period, any link between the purchase of the Doerr parcel and the potential loss of the subject property fluctuated, depending on the circumstances. It was strongest in 1996, but those negotiations to acquire the Doerr parcel failed. There was also evidence that established independent reasons for the purchase of the Doerr parcel.

[98]  In 1996 the claimants understood that the whole subject would eventually be taken for the project, requiring a replacement for about 4.6 acres of storage space. Gorman Bros. was particularly concerned about losing storage space for the chip pile. There was acknowledgement that an alternative site had to be found for the storage of chips. The Ministry and the claimants were cooperating in investigating the amount of gravel on the Doerr parcel which factor would be considered by the claimants in the negotiations as to the price to be paid. Although there had been discussion of the Ministry transferring some surplus land north of the mill site in exchange for the subject property there was no certainty about how much land would be transferred or when. Later in 1999, after the partial taking, a potential site for chip storage was established on the Doerr parcel but this has never been used for chips at the time of the hearing as conditions had changed and there has been no requirement for chip storage to date. This is the evidence that supports the connection between the purchase of the Doerr parcel and the potential loss of the subject property.

[99]  However, there was also evidence that reinforced other, independent, reasons for the Gorman Bros.' purchase of the Doerr parcel. Mr. Tracey described the mill as being in a tight spot, squeezed between the highway and a steep incline. Gorman Bros. was perhaps the only sawmill that was three storeys high. (Gorman Bros. did have a number of sites for various purposes that were further afield that provided them with some flexibility.) There are several references in the documents about Gorman Bros.' intention to buy some or all of the Doerr parcel at some point in the future when the price was right. The proposed terms of the agreement to purchase 15.96 acres of the Doerr parcel in 1996 included a right of first refusal to acquire the balance of the Doerr parcel. Mr. Tracey went so far as to say that Gorman Bros. had always planned to buy some or all of the Doerr property but was not in any hurry. There was a good chance of being able to eventually purchase some or all of the property from Mr. Doerr's estate (since he was an elderly owner with no children) and as long as it was a landlocked parcel Gorman Bros. was the only purchaser. These comments were not in relation to the Doerr parcel being a substitute for the subject property. In late 1993, when the project was on hold, the documentary evidence shows that Gorman Bros. was attempting to lease on an interim basis both the Doerr parcel and some properties that became the consolidated exchange parcel, for separate storage purposes that were not related to the subject property. The evidence establishes that the efforts to lease the two parcels were not linked and were being pursued for different purposes. Once the lease of the Doerr parcel was in effect, the log inventory increased dramatically, doubling between March 1993 and March 1995. We also note that there was a significant increase in sawmill production in the period during the latter 1990's and this would logically require an increase in the supply of logs and storage space for those logs.

[100]  In addition to the use of adjacent properties for industrial purposes, there was also evidence that Gorman Bros. wanted to create buffer zones between their mill operations and any non-industrial neighbours. Approximately 20% of the subject property had been bought to create a buffer zone from any potential development of the property to the south. A rock outcrop had been used to create a buffer zone between the mill site and the residential properties to the north that eventually were bought and formed the consolidated exchange parcel. Mr. Tracey testified that Gorman Bros. did not want developers buying adjacent property and that it would be unhappy if someone other than Gorman Bros. bought the Doerr parcel.

[101]  Mr. Tracey also agreed that in March 1997 when Mr. Doerr's ultimatum arrived that it was an important consideration for Gorman Bros. to avoid the expense of moving something less than 100,000 cubic metres of logs, perhaps to some location off site, in a short period of time and of replacing the topsoil from the 2.5 acres of leased land. Gorman Bros.' application for rezoning stated that the purchase of the Doerr parcel was necessary for the continued operation of the mill and that part of the land was for expanded log storage as a result of changes in the Forest Practices Act and increased production. Gorman Bros.' media release also stressed that the purchase was for sufficient on-site log storage, although it also acknowledged that the purchase would reduce the impact of the loss of the subject property. The documentary evidence shows that surplus Ministry land to the north of the mill site was discussed as a substitute for the subject property in 1991 and 1996, although it was not known how much land would be surplus. In the end as Mr. Tracey acknowledged it was a business decision by Gorman Bros. to purchase the Doerr parcel in June 1997 for $2,000,000 on the facts as known at that time.

[102]  In our opinion, given all the circumstances leading up to and surrounding the purchase in 1997, the claimants would have probably bought the Doerr parcel even if the loss of the subject property had not been anticipated. The claimants had always intended to purchase the property but thought that they would be able to negotiate a good price later with Mr. Doerr's estate. The primary and urgent reasons for the purchase in 1997 were to do with log storage and the subject property had never been used for log storage. The documentary evidence of the rezoning application and Gorman Brother's media release written at the time of the purchase contradict Mr. Tracey's allegations that the potential loss of the subject property was the main motivating reason for the purchase.

[103]  Nonetheless, the potential loss of the subject property was also a contributing factor in the purchase. We accept that it was important for the claimants to maintain their flexibility vis-à-vis the project and the anticipated loss of the whole of the subject property especially when there was so much uncertainty about the amount of surplus land north of the mill site, and when it would be available. We conclude, that while there were a number of reasons that were independent of the taking, and indeed we think these reasons were sufficient, the anticipated expropriation of the subject property was one factor in the purchase of the Doerr parcel by the claimants. Thus, the purchase of the Doerr parcel was in very small part attributable to the taking.

[104]  The claimants say but for the Ministry's provision of alternate access to the Doerr parcel they would never have had to purchase it in June 1997. However, this reasoning does not altogether make sense to us. First, the Ministry's provision of alternate access was not a surprise in 1997. We are satisfied that both parties had anticipated this access since 1993 and that in the spring of 1996 the evidence was clear that both parties knew the access would eventually be provided when the project went ahead. Second, in 1996, when negotiations ultimately failed, the parties were only $125,000 apart at $650,000 and $775,000 respectively for 16 acres of the Doerr parcel, (out of a total of about 28 acres that were non ALR). Both parties knew at this time that access would ultimately be provided, and in fact the proposed offers in 1996 were based on this with provision for a temporary easement until the permanent access was created. The documents indicate that the parties had apparently agreed on everything but price. We do not have all the evidence on why the negotiations failed but they did fail, apparently on the issue of the price to be paid. The claimants chose to carry on with only a month to month lease in place for the 2.5 acres that they were using for log storage. This left the claimants in a vulnerable position that it appears Mr. Doerr was able to exploit in March through June 1997. We understand the claimants' frustration at this turn of events and their inclination to blame the project. But we do not find that the evidence supports the claimants' explanation. In any event, in our opinion, it is simply too remote to make a claim for an alleged loss in bargaining power with a third party on the basis of the Ministry's promise of access to the third party as a result of the project.

6.2  Was the $2,000,000 Paid for the Doerr Parcel an Overpayment?

[105]  The next issue is whether Dunfield Holdings suffered a loss by paying more for the Doerr property than it was worth. The claimants make a claim for the difference between the purchase price of $2,000,000 and the market value of the Doerr parcel as estimated by Mr. Parkhill.

[106]  Mr. Parkhill on instructions from counsel, appraised the Doerr parcel in June 1997, on the basis of two assumptions:

• that the claimants were not unduly motivated or compelled to buy the Doerr property as replacement land for the looming expropriation;
• that the claimants foreseeable off-site log storage requirements would not significantly extend beyond the 2.5 acres of the Doerr property that were leased.

In 1997 the Doerr property was zoned RU2, Rural, and was designated Agricultural and Rural Resource in the Westbank Official Community Plan. The OCP provided that Rural Resource properties meant large parcels of undeveloped land used for forest management, limited grazing, and outdoor recreation. General policies with respect to Rural Resource properties included preserving public access and protection from subdivision and development. There was a temporary industrial permit in place for the 2.5 acres that had been leased to the claimants. Mr. Parkhill concluded that the highest and best use was as a speculative holding property with some potential for residential lots on parts of the ALR land that afforded views over the lake and mid to long term potential for increased industrial utility on the southerly portion adjacent to the claimants' mill site.

[107]  Mr. Parkhill used 16 sales of properties that occurred between November 1996 and October 1999 that provided a range in value of $6,027 to$49,920 per acre. From these sales he derived the following estimations of value for different parts of the Doerr parcel making the assumption stated above:

ALR impacted sector	±25.5 acres + ±4.5 acres x $17,000 per acre	$ 510,000
Low utility sector	±10 acres x $4,000 per acre	$ 40,000
Potential industrial sector	±18 acres x $35,000 per acre	$ 630,000
Total	±58 acres x $20,345 per acre	$1,180,000

[108]  The claimants claim compensation for that portion of the sale price for the Doerr parcel that they say is in excess of this market price of $1,180,000. The difference between the purchase price of $2,000,000 and the market value of the Doerr parcel as estimated by Mr. Parkhill at $1,180,000, is $820,000.

[109]  The respondent says that there has been no loss suffered by the claimants. Gorman Bros. has a particular, possibly unique, interest in the Doerr property. If the claimants did pay more for the Doerr property than the market value, it is because the property is worth more to the claimants.

[110]  We agree with the Ministry that the Doerr parcel had a special value to the claimants. It was immediately adjacent to the mill site and approximately 18 acres of it were potentially suitable for various industrial uses associated with the sawmill. There was evidence that the claimants were concerned to maintain buffer zones around the mill site. The claimants always intended to purchase the property for purposes that were not associated with the expropriation. At the time of the purchase they were leasing 2.5 acres of the property but it was only a month to month tenancy and it would have been a nuisance and costly for them to vacate the land as Mr. Doerr demanded. There were no other adjacent properties except for what became the consolidated exchange parcel.

[111]  We reject Mr. Parkhill's first assumption that the claimants were not unduly motivated to buy the Doerr property. The Doerr parcel was worth more to the claimants as a special purchaser because of the unique characteristics of the property to them.

[112]  We also disagree with Mr. Parkhill's second assumption. The need for more log storage and other uses (but for those associated with the subject property) was foreseeable given the changes in the Forest Practices Code as well as the increased production in recent years. Adopting this assumption could result in a lower estimate of the market value.

[113]  We note that the agreement between Gorman Bros. and Mr. Doerr to purchase the property for $2,000,000 was subject to a condition that the area south of the ALR land be rezoned to industrial. In 1999, Mr. Parkhill concluded that the high utility sector of the subject property (the 4.0 acre bench used for storage of lumber) was valued at $150,000 an acre after the taking when it had lost direct highway access. This property was zoned industrial. Also in 1999, the claimants agreed to pay $150,000 an acre for the consolidated exchange parcel which was subsequently rezoned to industrial. It has been used for parking and storage of lumber. The area of the Doerr parcel that was subject to the condition that it be rezoned industrial and was potentially usable for industrial purposes (since it was not covered by any covenant on use) was 18 acres. Applying the valuation of $150,000 an acre that Gorman Bros. had accepted for two other nearby industrial properties in 1999 to the 18 acres of the potential usable industrial sector of the Doerr parcel in 1997 yields a sum for this portion of the Doerr property alone of $2,700,000.

[114]  Further, the loss claimed is based on the difference between the purchase price of $2,000,000 and the market value. There was a lack of evidence as to the negotiations and why the claimants suddenly agreed to pay $2,000,000 in cash in June 1997, having refused to agree to pay $775,000 over time for 16 acres in May 1996. As we have indicated above, we do not accept Mr. Tracey's explanation that it was simply the Ministry's intervention in promising better access. There has been no explanation as to how circumstances changed between May 1996 and June 1997.

[115]  In summary, we conclude that the claimants were special purchasers who made a business decision to purchase the Doerr parcel in June 1997 for $2,000,000. The anticipated loss of the subject property was, at best, one small factor in that decision and we have specifically found that the claimants would probably have purchased the Doerr parcel in the absence of any anticipated loss from the subject property. Even if the sum paid was more than the market value, in our opinion, the claimants' special interest in the property means that they have not suffered a loss. In any event we have rejected Mr. Parkhill's two assumptions and as a result his conclusion of market value of the Doerr parcel is not accepted. Because we have found that the claimants suffered no loss we deny their claim for $820,000 for an overpayment on the purchase of the Doerr parcel.

7.  COMPENSATION FOR RELOCATION OF THE OFFICE BUILDING

[116]  The claimants say that as a result of the project and the new long private road through the consolidated exchange parcel, their site is now unsafe. The existing office building is no longer situated near the entrance to their site as it was before the project and the mixing of civilian traffic with fork lifts, loaders and large trucks causes concerns. The claimants plan on constructing a new office building on the consolidated exchange parcel near the new entry to the mill site. The construction of the new office building has not yet begun because the claimants are waiting for the shaded area to be transferred to them, following which appropriate setbacks can be determined. They claim for the depreciated cost of the old office building which they say will eventually be torn down.

[117]  The claimants relied on Ross MacDougall of Kent-Macpherson Appraisals for an opinion of the depreciated value of the existing office building. A quantity surveyor estimated the construction costs for an equivalent building in 2001 at approximately $526,000. There were allowances for other project costs such as site development, design, demolition of the existing building, construction insurance, provision for new features such as an elevator and fire suppression system required under the current building code which brought the total development costs to $770,000 rounded. The office building was estimated to be 18 years old with a remaining economic life of 35 years for a weighted depreciation in 2001 of 19%. This depreciation factor was applied to the building cost plus 5% contingency. There was also an allowance for depreciation of the site improvements. After deducting these sums for physical depreciation the depreciated replacement value of the current office building in 2001 was estimated as $640,000.

[118]  The Ministry provides four reasons for denying this claim. First, the Ministry submits that the real basis for this claim is that the claimants want a newer and considerably larger office building and that neither the project nor the respondent is the cause of the claim. Second, in March 1999 the claimants were provided with two options for replacement access. The Ministry says that the claimants chose to acquire the consolidated exchange parcel and it was this choice that led to the existing office building being a long way from the initial access point to the mill property. If the claimants had chosen the other option with the Ministry retaining the consolidated exchange parcel and building a public road across it, the initial access point to the mill site would be in much the same place as it was before the taking. There would have been no need to move the office building. Third, the Ministry says that the contract entered into for the purchase of the consolidated exchange parcel gives the claimants a credit for the costs and space required for a hypothetical public road that would end near the existing office building. Any compensation for the depreciation of the office building for being in this location contains an element of double compensation. Fourth, the Ministry points to the most recent access permit issued to the claimants in 1973 which contained a provision that there be "no claim against the crown for damages arising out of changed access" caused by any subsequent public works.

[119]  We note that we are not persuaded by this last submission. The Ministry did not provide us with any cases where the wording of access permits had been used to deny a claim for compensation. The access permit was a document drafted by the Ministry. It is applicable to the current owner only and does not run with the land. In permitting the use of a particular access at a particular point in time, it attempts to unilaterally deny liability for any damages arising from any change in access due to any public works at any subsequent date. If the claimants are entitled to compensation under the Act for an expropriation of land, including compensation for damages resulting from the project, we do not accept that the 1973 access permit should necessarily preclude any compensation for damages from changes in access arising from the project.

[120]  The issue that we must decide is whether the existing office building had to be abandoned as a direct attribution of the taking or as a result of the project. If not, has the existing office building experienced accelerated obsolescence as a result of the taking or the project?

[121]  One of the difficulties in this case is that there has been a blurring between two things: the need for a new access road to the mill site through what became the consolidated exchange parcel and the desire by the claimants to acquire surplus land adjacent to the mill site for other mill functions. The documents show that the claimants have expressed interest in acquiring whatever surplus land the Ministry owned beginning in 1991. In 1993 the claimants pursued the temporary leasing of these lands and in 1996 they retained Reid Crowther to provide various layouts for potential access across these lands. The Ministry was amenable to the idea of eventually providing surplus land on the grounds that it would reduce their cost if they exchanged this land as part of the payment for the subject property. It was clear that new access to the mill would have to cross this land. What was not clear was when the project would proceed, how much land would turn out to be surplus once the project design was finalized, and what the principles of remuneration should be for any such arrangement.

[122]  The documents demonstrate that the claimants proceeded on the principle that they would eventually acquire some of the surplus land and then build the new access road themselves. If they acquired the surplus land, they could build the new private road as an internal road. The internal road could be placed by the claimants in a location that would maximize space for the rest of the surplus land for various mill functions other than access. The parties have agreed that a hypothetical public road would occupy 1.48 acres. We note that a private road across the surplus land did not have to meet public road standards and therefore could be narrower than a public road, leaving even more space for other non-access functions. Since the consolidated exchange parcel that was eventually transferred was 4.4 acres, then this means that the claimants would acquire about 3 acres of land in addition to the new access road, which would be available for other mill purposes. An internal road could be used by industrial vehicles such as loaders and fork lifts taking materials to storage spaces on the surplus land that became the consolidated exchange parcel.

[123]  The claimants say that the Ministry's offer to provide access in March 1999 was at the eleventh hour, shortly before the project was scheduled to begin, and in the circumstances they simply had no choice. The Ministry never intended to build the hypothetical public road and had no designs in place. The only way to ensure the mill site's operation was to acquire the consolidated access parcel and construct the access road themselves. It is true that the Ministry had no designs in place. However, we note that the existing access to the mill was not closed until October 1999. We are satisfied that as of March 1999 the Ministry could have put a public road in place by October, if it had been necessary, so that mill access would not have been interrupted.

[124]  In our view what the Ministry's last minute offer of a choice between two options did was to separate out the issues of access and the claimants' wish for more land. Until then the two issues were conflated and causation for disturbance damages related to access and the consolidated exchange parcel were unclear. The claimants were upset by this step and it is regrettable that it was so late in the day. However, we have found that it was not too late for the Ministry to have restored access if that was the only issue. Until an agreement has been made, negotiating positions of the parties at any particular time are irrelevant.

[125]  In March 1999, the claimants had been assuming for some years that they would eventually acquire the surplus land and build the new access themselves. They had made some provisional plans for how they might construct the new access road and reconfigure the mill site using the surplus land. At this time they knew that only 0.6 usable acres (2.4 acres in total) had been lost from the subject property. Only two years earlier, in 1997, the claimants had acquired the Doerr parcel, which had 18 acres usable for industrial purposes. They did not need any more land as a result of the project. But during the 1990's mill production had risen approximately 50%. Increased production required more space not only for logs, but for the lumber inventory that was being processed, dried and stored. We conclude that the real reason for the claimants' choice to acquire the consolidated exchange parcel was to do with increased production at the mill and the need for more space.

[126]  We agree that there is some safety concern about the present arrangement. But we note that the new private road has become part of the internal roadway on the mill site and its use is under the control of the claimants. For example, one reason for the mixture of civilian and industrial traffic is that the claimants now use the consolidated exchange parcel for storage. As a result loaders and fork lifts must carry lumber on the new private road to the storage site on the consolidated exchange parcel. The claimants have reconfigured the mill site choosing the route for the new private road as an internal road and choosing how to use the additional land on the consolidated exchange parcel on the assumption that they would relocate the office building nearer the new entrance to the site. On this assumption the reconfiguration did not need to take into consideration how to make the site work best leaving the office building where it was. We accept that there are good reasons for having the office building near the new entrance, but, in our opinion, some of the deficits in the existing configuration and siting of the office have been magnified by choices the claimants made knowing that the office would be moved.

[127]  The relocation of the office building was recognized as something the claimants wanted very early on. The documents show that as far back as 1991 the claimants discussed moving the existing office to a new location following the project so that it would be near the proposed new entrance to the mill site. Discussions continued in negotiations during 1999 but nothing was ever resolved with respect to this issue. Although physical moving of the existing office building was discussed, it was not pursued. We note that the new office building will be larger than the existing office building. In our opinion, the construction of a new office in a new location is in part because the claimants need a larger office building and in part because the claimants' acquired the Ministry's surplus land as the consolidated exchange parcel. If replacement of access had been the only concern of the claimants, then the Ministry would have constructed a public road across the consolidated exchange parcel. The claimants would have had no responsibility for safety issues on the public road and the existing office building would have remained near the entry point to the mill site.

[128]  We conclude that the relocation of the existing office building is not directly attributable to the taking or the closure of the highway access. Nor does the relocation of the existing office building result from the project.

[129]  Nonetheless, it is our view that the existing office building has experienced some nominal functional obsolescence as a result of the project. Before the taking the mill site layout had the existing office building beside the highway and adjacent to the access driveway from the highway. If the Ministry had constructed the public road, the entrance to the site would continue to be near the existing office building. However, the office building would have been angled differently to the access and the entranceway to the site would not have worked in the same way as it had done before the taking. We conclude a 5% reduction in the value of the building for accelerated depreciation is appropriate. The only evidence on the current costs to construct the existing office building was from Ross MacDougall. He applied his depreciation factor to $552,244 which represented the net building costs plus a 5% contingency fee. Although the accelerated depreciation occurred in November 1999 when the existing access to the highway was closed we will have to apply our depreciation to the construction costs for the existing office building estimated almost two years later in 2001. Presumably the construction costs in 2001 will be somewhat inflated over what they would have been in 1999. Applying 5% depreciation to $552,244 results in an award of $27,612.

8.  DISTURBANCE DAMAGES for various expenses and invoices

8.1  Claimants' position

[130]  The claimants are seeking reimbursement for a number of expenses that they claim were incurred as a result of the expropriation. These are set out as follows without GST or interest:

• Reid Crowther - 20 invoices	$ 38,969.73
• John MacDonald - 12 invoices	$ 26,543.64
• Emil Anderson invoices	$ 10,176.95
	$ 23,917.50
• T. Lewis 1999 invoice	$ 48,475.00
• Kent Macpherson account	$ 343.75
• DA Goddard invoice	$ 250.00
• Chip storage platform	$ 6,520.00
• Clermont Crane invoice	$ 600.00
• Paul's Fine Woodworking invoice	$ 160.00
• Mitchell Mearns invoice	$ 278.00
• Ike Stutters invoice	$ 612.50
• PPT paid for consolidated exchange parcel	$ 7,220.00
• Pro rata PPT for Doerr parcel	$ 15,580.00
Total	$179,647.07

8.2  Respondent's position

[131]  The Ministry has made partial payments on these disturbance damages as follows:

• Reid Crowther -- partial payment of 4 invoices	$6,308.10
• John MacDonald invoice dated September 9, 1999	$1,832.79

[132]  The Ministry says that the invoices can be grouped into a number of categories including:

• expenses relating to the purchase of the Doerr parcel including legal expenses, pro rata PPT, rezoning expenses, and environmental survey by Reid Crowther

The Ministry says that these should not be paid because the claimants' decision to purchase the Doerr parcel was not caused by the respondent or the project. The Ministry singled out a specific Reid Crowther invoice to do with an ALR land swap for part of the road on the Doerr parcel that led to the log storage area. This invoice was to correct a problem that pre-existed the project and was not caused by the project. As a result the Ministry says it should not be paid.

• expenses relating to the consolidated exchange parcel and the shaded areas

The Ministry says these Reid Crowther expenses should not be paid because they were not caused by the expropriation. Any obligation for the Ministry to pay these arose out of contractual arrangements between the two parties whereby the claimants agreed to purchase the consolidated exchange parcel. As a result the expenses are too remote. The Ministry singled out a specific Reid Crowther invoice to do with the shaded area. This invoice was for work made necessary because of the claimants' occupation of that area in building its access road in part on the shaded area. Since it was not the project that created the need for this work the Ministry says it should not be paid.

• expenses relating to access

The Ministry says that the parties agreed that "upon the transfer of the Consolidated Exchange Parcel on the agreed terms that the Ministry has complied with its obligations to replace the access taken with reasonable access". The Consolidated Exchange Parcel has been transferred and therefore the Ministry has replaced the lost access. Further, the Ministry has provided a credit to the Claimants for the cost of providing access to the office in the agreed formula that was part of the settlement involving the Consolidated Exchange Parcel. Any expenses incurred by the claimants in relation to the new access are to its own account because of the settlement made by the parties on this issue.

8.3  Analysis

[133]  Under sections 34 and 40 an owner is entitled to reasonable business losses that are directly attributable to the taking or the disturbance or that result from the construction or use of the project.

[134]  The board wishes to make some general comments about the claim for the disturbance damages. We appreciate that there was extensive work done on the mill site that is not being claimed. We also appreciate that it was a complex case with a number of different claims, several of which settled. However, there were over 50 invoices claimed and 20 of those invoices included over 60 different claims for a total altogether of about 100 claims. It appears that after initial difficulties the parties made little effort to sort any of these invoices out before the hearing. Because of the differences of opinion on causation on the Doerr parcel and the consolidated exchange parcel we recognize that settlement of many of these invoices before the hearing was unlikely. However, both the hearing and our deliberations would have benefited from a more organized presentation of these approximately 100 claims. In some cases the claimants were not able to provide sufficient evidence to enable us to determine what had been done, even though some of the invoices were discussed a second time after telephone calls to other employees. Given that there were about 100 claims we would have found it of assistance if schedules had been provided listing the invoices, the work done and the amount claimed without GST, preferably categorized in relation to the Doerr parcel or the consolidated exchange parcel or ancillary access issues and arranged chronologically. Although it is the responsibility of the claimants to produce the evidence at the compensation hearing, and we do not wish to encourage a multiplicity of hearings, in order to be fair, we have adjourned some claims for disturbance damages. If there are any difficulties for the parties in settling those outstanding claims, they can be brought at a future application.

8.3.1  Subject property invoices

[135]  Mr. MacDonald, the solicitor for the claimants, did the work for registering a new easement on the subject property for the Tingstad property to the south. Mr. Tracey testified that this work had only been completed a few weeks before the hearing. Although there were 12 invoices from Mr. MacDonald for which the claimants are seeking payment, there was no invoice submitted for this work. However, the Ministry acknowledged it was responsible for this work. We conclude that it was an expense directly attributable to the taking. Since we do not have this invoice, this claim is adjourned.

[136]  There was an invoice for $250 from D.A. Goddard Land Surveying Inc. dated December 1998 for "staking proposed new road boundary for subject property". It was suggested that this work was for the new Tingstad easement referred to above. Given the date of the invoice we think that it is more likely for work for the new road boundary as a result of the taking. In either event, we conclude that the claimants incurred this expense as a result of the taking and are therefore entitled to reimbursement for $250.

8.3.2   Doerr parcel invoices

[137]  Under section 34(1)(b) an owner is specifically entitled to reasonable costs that are necessarily incurred in acquiring a similar interest or estate in other land. This includes legal fees related to a purchase of a similar interest and property purchase tax.

[138]  The Ministry submits that the claimants would have bought the Doerr parcel at some future time in any event and therefore the acquisition costs in 1997 cannot be attributed to the taking. We have found that there were a number of independent reasons for the acquisition of the Doerr parcel; however, one small factor in the purchase of the Doerr parcel in 1997 was the prospect of the taking of the subject property. We accept that the Doerr parcel is in part a replacement property of a similar interest to the part of the subject property that was taken.

[139]  In Patterson v. British Columbia (Ministry of Transportation and Highways) (1997), 62 L.C.R. 89 (B.C.C.A.), the court upheld a board decision denying the claimant in a partial expropriation relocation costs under section 34. However, we conclude that the circumstances of this case are distinguishable. Gorman Bros. needed to replace any of its property that was required for the project, a fact that all parties recognized from the beginning.

[140]  The next issue is how much of the Property Purchase Tax on the Doerr parcel should be awarded to the claimants. The evidence shows that the Property Purchase Tax paid by the claimants for the Doerr parcel was $38,000 calculated at 1% of the first $200,000 plus 2% of the value over $200,000. The claimants made a pro rata claim for the Property Purchase Tax on the Doerr parcel based on the amount that they said was in excess of the market value or $38,000/$2,000,000 x $820,000 or $15,580. We have found that the market value of the subject property that was taken together with the reduction in market value to the remainder is $205,500. This board has limited the claim for Property Purchase Tax in other cases to the maximum of the Property Purchase Tax on the market value of the expropriated property. See Ferancik v. Langley (Township) (1996), 60 L.C.R. 123 (B.C.E.C.B.) and Hawk Investors Ltd. v. British Columbia (Minister of Transportation and Highways) (1999), 66 L.C.R. 94 (B.C.E.C.B.). In our opinion, with respect to this issue, it is irrelevant that at the time the Doerr parcel was purchased the claimants thought that the whole of the subject land would be taken. On the basis of the market value of the actual taking we award $38,000/$2,000,000 x $205,500 or $3,905 for the Property Purchase Tax paid by the claimants in relation to the Doerr Parcel as the appropriate percentage that is directly attributable to the partial taking from the subject property.

[141]  Mr. MacDonald billed $18,138.88 excluding GST ($15,750 in fees) over five accounts, for work done in 1997 in relation to Gorman Bros.' purchase of the Doerr parcel. Much of this work was for the rezoning of approximately 28 acres to I-3, and the imposition of the non-disturbance covenant on the approximately 8 acres that were steeply sloped. This work was necessary if any part of the Doerr parcel was to be used to replace the subject property. We have found that the potential loss of the subject property was one small factor in the acquisition of the Doerr parcel, although there were other long standing factors, one of which was urgent in 1997, that were independent of the loss of the subject property. In addition, the Doerr parcel gave the claimants much more utility than the land taken, whether it was the usable part of the entire nine acre subject property as contemplated in 1997 or the usable part of the partial taking of 2.4 acres of the subject property that eventually occurred in 1999. After consideration of these factors we conclude that 50% of Mr. MacDonald's fees or $9,069.44 should be paid by the Ministry as the appropriate percentage that is directly attributable to the taking. See Bayview Builders Supply (1972) Ltd. v. British Columbia (Minister of Transportation and Highways), (2001), 75 L.C.R. 95 (B.C.E.C.B.).

[142]  The claimants claim $48,475 for a May 1999 invoice from T. Lewis Trucking & Bulldozing Ltd. for work that was described on the invoice as "excavation of new yard -- blasting, excavating and building road". This work was evidently done on the Doerr parcel. We were told that the work was to create a new flattened area to the north of the area where logs were stored for the air drying of lumber. We also understand that it would be feasible for chips to be stored there as well, though none have been stored there to date. The claimants have not claimed an October 1997 invoice for $26,300.60 from T. Lewis Trucking that included some work to lower a gas pipeline and remove a vineyard to expand the area used for log storage.

[143]  The first thing that we note is that the claimants chose to locate the potential new chip site on a portion of the 18 acres of usable industrial land on the Doerr parcel that needed extensive excavation. The proposed new chip site was only 200 square feet or 0.9 acres and there were other areas on the 18 acres that could have been chosen for this use that would have needed no excavation or blasting or clearing. The claimants chose to store logs on much of the 18 acres and to place the potential chip site in a location that required significant earth moving work. Although the claimants may have preferred to place the potential chip site in this location, it was not a necessary outcome of the purchase of the Doerr parcel as a partial replacement for the partial taking from the subject property. Thus the expense from T. Lewis Trucking was not directly attributable to the taking nor did it result from the project. In addition, we note that there was little evidence about the work on the 1999 invoice. We did not receive any of the back up documentation providing daily hours and descriptions of the work such as had been attached to the 1997 invoice from T. Lewis Trucking that was not claimed. We do not know whether the road that was included in this work was one that served only the potential chip pile site or was the road used by all the logging trucks that accessed the Doerr parcel. Further, at the time that this invoice was incurred, the claimants knew that the respondent had only taken 0.6 acres of usable space from the subject property. We do not know the size of the new yard but the photos in evidence suggest that it is larger than the 0.6 acres of usable land that were taken. For all these reasons the claim for this invoice is denied.

[144]  The claimants have also claimed for work that they would need to do to re-establish a base for a chip pile on the Doerr property. This is claimed at 80 bone dry units of chips (to cover an area 200 feet square -- 0.37 hectares or 0.9 acres) x $81.50 per unit for a total of $6,520. This work has not been done. Chips have not been stored on site since the taking. We understand that there may be a need to stock pile them in the future if the mill that processes chips stops production temporarily. However, in the absence of clear evidence that the work will be done any claim for this work is speculative. This board has refused to award damages for losses that are speculative and may never be incurred. See Patterson v. British Columbia (Ministry of Transportation and Highways) (1994), 53 L.C.R. 88 (B.C.E.C.B.); aff'd 62 L.C.R. 89 (B.C.C.A.); Maddocks v Surrey (City) (2001), 73 L.C.R. 161 (B.C.E.C.B.); and Bayview Builders Supply.

8.3.3  Consolidated Exchange Parcel invoices

[145]  In September 1999 Mr. MacDonald billed $1,719 excluding GST ($1,305 in fees) for the transfer of the consolidated exchange parcel. The Property Purchase Tax of $7,220 for this property was also claimed.

[146]  The claimants chose to purchase the consolidated exchange parcel. We have concluded that the claimants' reasons for wanting to acquire the consolidated exchange parcel rather than permitting the Ministry to build a public road to the original mill site are to do with the increased production at the mill and the need for more space. The claimants entered into a contractual agreement with respect to the purchase of the consolidated exchange parcel. As part of the contractual agreement the claimants agreed that "upon the transfer of the Consolidated Exchange Parcel on the agreed terms that the Ministry has complied with its obligations to replace the access taken with reasonable access". The claimants did not agree to release anything further. Nonetheless when we construe the contract, the claim for the acquisition costs appears to be precluded. In any event, given our conclusion that the claimants chose the option to acquire the consolidated exchange parcel in order to gain more space, then it follows that the acquisition costs are not directly attributable to the taking (or the closure of the highway access) nor do they result from the project. We note that we have already awarded a portion of the legal fees and the PPT for the purchase of the Doerr parcel since a portion of the Doerr parcel may be treated as replacement of the subject property that was taken. The claims for legal fees and the PPT for the consolidated exchange parcel are denied.

[147]  In March 2001 Mr. MacDonald also billed $2,612.20 excluding GST ($1,935 in fees) for the cancellation of the statutory building scheme and the land use contract that were still on title after the consolidated exchange parcel had been transferred to the claimants. The contractual agreement provides that "the consolidated exchange parcel will be consolidated into a single legal parcel at the Ministry's cost". When we construe the terms of the agreement it appears to us that the Ministry was obligated to provide clear title for the single legal parcel. However, as we have indicated above, costs in relation to the consolidated exchange parcel are not directly attributable to the taking (or the closure of highway access) nor do they result from the project. Thus we cannot award this claim.

[148]  There were three small claims: Paul's Fine Woodworking $160.00; Mitchell Mearns $278.00; and Ike Stutters $612.50. Pauls Fine Woodworking billed Gorman Bros. $2,781 excluding GST on July 27, 1999 but only $160 of this sum is claimed. Similarly Mitchell Mearns invoice dated July 27, 1999 is for $2,591.50 but only $278 has been claimed. Ike Stutters' invoice dated October 1999 is for $2,340 but only $612.50 is claimed. In all three cases an employee of Gorman Bros. has assigned codes for portions of the invoice. One code is for the highway and it is the sums that were given the highway code that are being claimed. Mr. Tracey told us that the work was to clean up the consolidated exchange parcel and the panhandle property. We were not provided with any further evidence. It is not clear what work was done or why particular work was attributed to highways. In any event, we have stated that costs in relation to the consolidated exchange parcel do not result from the project. As a result these claims are denied.

8.3.4  Access issue invoices

[149]  The claimants have requested reimbursement for a total of $34,094.54 paid to Emil Anderson for construction work on the mill access in August and September 1999. This work was to construct the private road through the panhandle at the end of Dunfield Road. The invoices also included work billed to Ron and Jenifer Gorman and Ross and Eunice Gorman but the claim by the personal claimants has settled and the work that was billed to them has been excluded from what was claimed.

[150]  The claimants have not submitted a claim for the construction of the new private road on the consolidated exchange parcel. This is because they have been given a credit for the cost of constructing the hypothetical public road of approximately $259,000. In the contractual agreement for the transfer of the consolidated exchange parcel the claimants agreed that "upon the transfer of the Consolidated Exchange Parcel on the agreed terms that the Ministry has complied with its obligations to replace the access taken with reasonable access". The evidence shows that Gorman Bros. chose to locate the new private road through the panhandle as well as the consolidated exchange parcel and that this choice was made to gain more space and to improve the efficiency of the site for functions other than access. We agree with the Ministry that placing the road on the panhandle was not necessary to restore access. It was not directly attributable to the taking (or the closure of highway access), nor was it a result of the project. Therefore this claim is denied.

[151]  There was an invoice from Clermont Crane dated June 1, 1999 for $600.00 to hoist an old building that was in the path of the new access road that had been chosen. It was not entirely clear whether this building was on property needed for the public Dunfield Road or the panhandle. It was also not clear whether the building was moved to a new location on either Ross and Eunice's property or the mill site. Gorman Bros. decided to preserve this old shed in which John Gorman, one of the founders of Gorman Bros., had worked to house a museum for Gorman Bros. We have found that Gorman Bros. chose to locate the access road through the panhandle rather than placing it entirely on the consolidated exchange parcel in order to increase space and enhance the efficiency of the remainder of the consolidated exchange parcel for purposes other than access. Choosing to locate the access road through the panhandle required an extension of the public road into Ross and Eunice Gorman's property. We have already found that use of the panhandle was not directly attributable to the taking (or the closure of highway access), nor did it result from the project. Any taking from Ross and Eunice Gorman has settled and we lack jurisdiction. We must deny this claim.

8.3.5  Miscellaneous invoices

[152]  The Kent Macpherson invoice of $343.75 dated July 4, 2001 states that it was for research and assembly of historic information in preparation of Discoveries, tracking down old files and meeting with counsel. There was agreement by counsel that this was a disturbance damage rather than a claim for costs. We infer that this expense was directly attributable to the taking and award this sum.

[153]  There were five invoices from Mr. MacDonald dating between March and July 2000, which totalled $4,072.65 excluding GST ($2,570 in fees). Three of these invoices state that they were for work to do with easements. Two accounts have different file numbers and say they are to do with the Ministry of Transportation. The time frame for the work billed on these two accounts overlaps with the time frame for the work in the file that is to do with easements. We understand that the work to do with easements was for several easements necessary for properties owned by Ron and Jenifer Gorman and/or Ross and Eunice Gorman as a result of the project. The evidence establishes that one or more of these easements were through the Doerr parcel after it had been acquired by the claimant Dunfield Holdings. The Ministry clearly acknowledged it would pay for Mr. MacDonald's work to put these easements in place. We do not have evidence as to whether they were submitted to the Ministry at the time that they were incurred. There is evidence that the Ministry paid $66,844.78 for costs associated with the residential accesses but we do not know what those costs included. These invoices from Mr. MacDonald arise out of the personal claims. We were told that the claims of the four personal owners against the Ministry had settled. We do not see that we have any jurisdiction to consider them as part of the present claim. As a result these claims are denied.

8.3.6  Reid Crowther invoices

[154]  The claimants are claiming a total of 20 invoices from Reid Crowther the firm that supplied engineering services to the claimants. These invoices are dated between August 1997 and February 2001 and total $38,969.73 excluding GST. We heard evidence from David Cullen who was a civil engineer with Reid Crowther and who had done some of the work that was billed. We also had the invoices, the cover letters sent to Gorman Bros. and a breakdown of the invoices prepared by Mr. Cullen shortly before the hearing. We also had extensive documentation between the claimants and the Ministry with respect to the invoices. The claimants point out a number of references in these documents whereby the Ministry stated that it would be responsible for various engineering costs incurred by the claimants.

[155]  As indicated above the Ministry says that these invoices should not be paid. The invoices can be categorized under different headings such as being incurred in relation to access, or the consolidated exchange parcel or more recently for the shaded area and none of this work is caused by the expropriation or the project.

[156]  The evidence provided to us was that only four of these invoices have been submitted to the Ministry around the time that they were incurred. The documentation shows that the Ministry requested particulars of who had done the work on each invoice, their qualifications and hourly rate and what each of these persons had done. This information was supplied and the Ministry's Project Director, Mr. Osborne, categorized the engineering work into four categories. The Ministry agreed that three of these categories totalling $6,038.10 should be paid and this sum was eventually paid on April 11, 2000. The Ministry refused to pay the fourth category of $11,989.58 on the basis that the description for this work appeared to be for access to the mill and the contractual agreement for the consolidated exchange parcel already gave the claimant the cost of constructing the hypothetical public road including engineering services. Paying both would amount to double recovery. The claimants protested this refusal and said that the work on the hypothetical road was never done and the actual invoices for work that resulted from the expropriation should be paid. The remainder of the invoices were supplied to counsel for the Ministry a few months before the hearing, with a suggestion that they might be settled before the hearing.

[157]  A review of the 20 Reid Crowther invoices indicates that they themselves contain little detail as to what the services are that they cover. There is a project name: 13 of them are named access issues, 5 are named Gorman's advisory services, one is named site grading and one is named Gorman Bros. ESA (an environmental assessment). There is no further description on the invoice as what was done although there is breakdown of staff hours and rates and disbursements. The cover letters to Gorman Bros. enclosing the invoices do provide a brief summary of work done during the period of that invoice. Examples of these work summaries include review access options, produce site plan, site review of revised property boundary, revised drawing for property regulations, meetings with Ministry, rezoning application, engineering requirements for shaded areas, and access design.

[158]  Mr. Cullen testified that Reid Crowther's work fell into three categories: work that was done for the contractor for the project, Emil Anderson, and was billed to them; work that was done for Gorman Bros. that Gorman Bros. has claimed and work that was done for Gorman Bros. that Gorman Bros. has not claimed. Reid Crowther made no differentiation between the latter two categories. It was someone at Gorman Bros. who decided what should be claimed.

[159]  Mr. Cullen produced a further breakdown for the four invoices submitted in late 1999. Shortly before the hearing he provided a further breakdown for the remainder of the invoices. This breakdown states that a particular employee spent so many hours (at a given hourly rate) on specific activities such as to prepare base plans and calculate material volumes for the new access; to prepare rezoning and ALR application information; to meet with the Ministry and Gormans to discuss property and access issues; to review options for relocation of water line on consolidated exchange parcel; to site review of revised consolidated exchange parcel boundary and review of revised drawings; and to draft new plans for shaded area. The administrative time billed on the invoices has generally been excluded in this breakdown but the disbursements are detailed. We note that since one invoice can cover work on up to six different properties it is only with these breakdowns that allocation of work to different projects is generally possible. As Mr. Osborne pointed out some of the descriptions remain rather general. We are not in any way implying a criticism of Reid Crowther's invoicing procedures; we are simply describing what information was present and the difficulties faced by someone trying to categorize work into different headings for the purposes of seeking reimbursement. While we appreciate the information contained in the breakdowns, instead of 20 invoices from Reid Crowther, there are now over 60 separate categorizations of work for so many hours at so much an hourly rate not counting the disbursements.

[160]  It is certainly the case that the Ministry stated more than once that it would be responsible for various engineering costs incurred by the claimants. At the beginning of the project in October 1991, the minutes reflect that a Ministry employee asked Gorman Bros. to retain a consultant to verify the need for capital expenditures such as moving the office building and the scales for weighing logs. Later, in February 1996, Mr. Menu, a property services manager for the Ministry in a letter to the claimants stated that a consultant was required to address the claimants' concerns about the impact of the project. This consultant would

"work in close concert with Urban Systems to prepare an overall design of the changes that need to be made to the mill site. In addition the consultant will prepare a grading plan for the mill site and adjoining surplus Ministry land [that eventually became the consolidated exchange parcel]. It is the Ministry's preference that the consultant be retained by Gorman Bros. and be in their employ. The costs of the consultant would be reimbursed by the Ministry as part of an overall settlement."

[161]  In November 1998 a memo written by Mr. Tracey about a meeting with the Ministry says that Reid Crowther is to examine internal traffic flow and access for the claimants' property on both sides of highway and that the Ministry would pay the cost. In December 1998 Mr. Walker, a property agent for the Ministry who now has responsibility for this file, writes the following to Mr. Cosburn, counsel for the claimants:

"it is our understanding … that [Gorman Bros.] would be contracting with Reid Crowther Engineering to undertake a design for a relocated mill access. We had further indicated to Mr. Tracey that the Ministry would reimburse the reasonable costs of said engineering study."

In January 1999 Mr. Walker told Mr. Cosburn, that "the Ministry will reimburse the costs of the engineering study [for relocated access through the consolidated exchange parcel]."

[162]  However, all of these comments were made prior to the agreement in principle in March 1999, signed in June 1999, on the price for the consolidated exchange parcel that included a credit for the costs of constructing the hypothetical public road including $11,000 for engineering design services. Mr. Cullen testified that the $11,000 was calculated as a five per cent allowance on the estimated costs to construct the hypothetical public road. Mr. Cullen said that no detailed engineering design was ever done for the hypothetical public road since it was never built. He described detailed engineering designs as being between three and six separate plans and profiles containing necessary geotechnical information, as well as drainage and electrical requirements in sufficient detail so that contractors could bid on the project. He also said that no detailed engineering design was ever done for the actual private road that was built, although there were numerous general layouts prepared.

[163]  We agree with the Ministry that the claimants are not entitled to both the engineering costs incurred to build the private road and to a credit for the engineering costs to build the hypothetical public road. These costs are for equivalent things and cannot be recovered twice. In our opinion it is irrelevant that the detailed design work for the hypothetical public road that was never carried out would have involved different engineering tasks than the general layouts that were done. The claimants were given a credit for costs for detailed design work that they never needed to incur. Instead they incurred the costs for different engineering work that gave them an internal private road that integrated with the mill site. We note that the claimants made no claim for the construction costs to build the private road on the consolidated exchange parcel because they had been given a credit for the construction costs to build the hypothetical public road. While the construction of the two roads may have differed in layout and standard of construction, they were for equivalent things and the claimants are not entitled to both. The engineering costs incurred to build the private road are similar. However, it appears that Reid Crowther billed approximately $3,000 in November 1999 and January 2000 for work to calculate the area and costs to construct the hypothetical public road. These fees in our view should be treated as costs incurred to assert the claimants' claim that are to be reimbursed under section 45.

[164]  We also agree with the Ministry that the costs for engineering services associated with acquiring the consolidated exchange parcel and the shaded area were not directly attributable to the taking (or the closure of highway access) nor did they result from the project. We have already found that the claimants acquired the consolidated exchange parcel in order to maximize the space for uses other than access. It may be true that there would have been no shaded areas if the Ministry had built the project on the more usual tendered design model since all the surplus land would have been identified prior to the project having been built. However, the fact that the Ministry used a Design/Construct model does not entitle the claimants to compensation for additional expenses in acquiring more land to add to the consolidated exchange parcel.

[165]  One of the invoices was for the engineering costs for an environmental assessment of the Doerr parcel when it was acquired in 1997. Mr. Cullen stated that this was an expense often incurred for a purchaser of industrial property. We were given no further information on this expense. Mr. Cullen's breakdown stated that a copy of the proposal for Phase 1 ESA was attached but we were not provided with this attachment. We do not know if the work was only on the 2.5 acres that had been leased for log storage or if it was for the entire 18 acres with potential industrial use, some of which was a potential replacement site for the 2.4 acres that were eventually taken from the subject property. Without further information we are unable to assess whether the work on this invoice was directly attributable to the taking or resulted from the project. Since this claim has been adjourned, the claimants may be able to provide more evidence to the respondent.

[166]  We also agree with the Ministry that the costs on invoice #56464 dated March 13, 2000 for services for rezoning and ALR application were not directly attributable to the taking nor did they result from the project. The evidence established that this work was for an application on the Doerr parcel for the access road that took logs to the Doerr parcel. The land on which the access road was constructed was in the ALR and the application was for a land exchange to remove this land from the ALR and replace it with another piece of the Doerr parcel. It appears that this problem predated the project and had nothing to do with the taking or the project. Similarly, we agree with the Ministry as to the accounts to do with the application for a permit to occupy the Ministry right of way. The claimants had apparently been using the right of way in two areas for a number of years and while the Ministry did not object, it requested that the claimants acquire a permit. This work was not directly attributable to the taking nor did it result from the project.

[167]  There may be other items listed in the breakdown of the Reid Crowther invoices not covered by this analysis. Given the number of claims and the state of the evidence we adjourn the Reid Crowther invoices so that the parties can apply the analysis and work out what amount is to be paid to the claimants. If the parties are not able to agree on payment they may make an application on any outstanding invoices, preferably by written submissions and if any further evidence is necessary, by affidavit.

8.4  Summary of disturbance damages

[168] In summary the board has awarded the following invoices:

• Reid Crowther invoices adjourned		adjourned
• John MacDonald invoices	purchase of Doerr parcel	$ 9,069.44
	Tingstad easement on subject	adjourned
• Kent Macpherson account		$ 343.75
• DA Goddard invoice		$ 250.00
• Pro rata PPT for Doerr parcel		$ 3,905.00
Total		$13,568.19

9.  SUMMARY

[169]  The claimants have been awarded the following:

1.	market value of the partial taking and injurious affection to the remainder of the subject property		$205,500.00
2.	compensation for the purchase of the Doerr parcel that is in excess of market value		nil
3.	compensation for the accelerated depreciation of the office building		$ 27,612.00
4.	disturbance damages for various expenses that are directly attributable to the taking or that result from the project including:
	Reid Crowther invoices		adjourned
	John MacDonald invoices	purchase of Doerr parcel	$  9,069.44
		Tingstad easement on subject	adjourned
	Kent MacPherson account		$  343.75
	DA Goddard invoice		$  250.00
	Pro rata PPT for Doerr parcel		$ 3,905.00
	Total		$246,680 rounded

10.  INTEREST

[170]  The claimants are seeking interest under sections 46 and 47 of the Act.

10.1  Section 46(1) interest, Regular interest

[171]  We have awarded the claimants a total of $246,680. The advance payments totalled $126,870.89: $119,000 was paid on February 9, 1999, $1,832.79 was paid on October 22, 1999 and $6,038.10 was paid on April 11, 2000.

[172]  We have awarded the claimants $205,500 for the market value of the land taken. Under section 46(1)(a) of the Act, the claimant is entitled to interest on any amount awarded for the market value in excess of any amount paid by the Ministry under section 20(1) or (12), taking into account moneys paid by the Ministry to the claimant on account of compensation from time to time, with interest to be calculated annually at the rates specified in section 46(2) and (3). Under Section 46(1)(a) interest is due from the date that the claimants gave up possession which we assume was February 9, 1999, until paid, taking into account the various advance payments.

[173]  We have awarded the claimants $27,612 for the disturbance damages or business loss for the accelerated obsolescence of the office building resulting from the project. Existing access to the mill site was not lost until October 1999 and therefore we consider that it is reasonable that interest is payable on $27,612 from November 1, 1999, until paid.

[174]  We have awarded the claimants $13,568.19 for various expenses and losses claimed as disturbance damages or business losses. It appears to us under section 46(1)(b) that with respect to the date from when interest is to run that it is not only the date that costs were incurred by the claimants that is relevant but when the invoices were provided to the Ministry with a request for reimbursement. Most of the invoices that were submitted appear to have been incurred in 1999 and 2000, although some date from 1997 and some date from 2001. We know that one invoice from Mr. MacDonald and four invoices from Reid Crowther on which there was a partial payment were provided to the Ministry. There were notations on some invoices that lead us to assume that copies may have gone to the Ministry. We know that the Reid Crowther invoices went to the Ministry a few months prior to the hearing with an invitation to settle. However, it appears that some of the invoices that were claimed were presented for reimbursement for the first time at the hearing. In the circumstances we consider that it is reasonable that interest under section 46(1) on $13,568.19 run from December 31, 1999 as the approximate midpoint of the invoices until paid.

10.2  Section 46(4), Additional interest

[175]  The advance payments under section 20 of $126,870.89 were 51.4% of the total compensation awarded of $246,680. Under section 46(4) of the Act, the advance payment was less than 90% of the total compensation awarded. In Bill's Frontier Restaurant Ltd v. British Columbia (Minister of Transportation and Highways) (1994), 53 L.C.R. 175 this board determined that under section [46(4)] if business loss was to be excluded from the compensation awarded it should also be excluded from the advance payment made under section [20]. In Sequoia Springs West Development Corp. v. British Columbia (Minister of Transportation and Highways) (2000), 71 L.C.R. 153 this board found that business losses excluded under section 45(4) should be construed restrictively to mean business losses following relocation of a business under section 34(3). In our opinion, the business losses that are excluded under section 46(4) should be the same ones as excluded under section 45(4). See Pay Less Gas Co. (1972) Ltd. v. British Columbia (Minister of Transportation and Highways) unreported, June 20, 2002, E.C.B.# 8/91/223. None of the award or advance payment is in our view a business loss under section 34(3) that should be excluded. As a result the Ministry must pay additional interest, at an annual rate of five percent, on the principal amount outstanding at February 9, 1999 of $127,680 ($246,680 - $119,000) and on the new principal amounts outstanding after the further advance payments on October 22, 1999 and April 11, 2000 until the date of this decision. We note that under section 46(4) additional interest runs on the difference between the amount awarded and the advance payment from the date of the first payment even if specific portions of the award were only incurred later. This board in Richland Farms Ltd. v. British Columbia (Ministry of Transportation and Highways) (1991), 46 L.C.R. 66 established the basis upon which an award for additional interest is to be made. First, while interest under section 46(1) compounds annually, additional interest under section 46(4) provides for simple interest only. Second, the calculation of additional interest runs on the outstanding difference from the date of each advance payment.

10.3  Section 47, Penalty interest

[176]  The claimants also claim penalty interest under section 47 for what they say was the respondent's unreasonable delay particularly with respect to access and the payment of the Reid Crowther invoices. The claimants sat that they spent monies in dealing with the expropriation and the respondent took no steps in providing alternative access to the mill site. Given the findings we have made there was no reason for the Ministry to make plans to provide alternative access to the mill site. We have expressed our view that the Ministry's delay in transferring the consolidated exchange parcel or rather in offering the claimants a choice about access, was unfortunate. But we are satisfied that the Ministry could have provided access by public road between March 1999 and October 1999 when the existing access was closed. As a result we do not find any basis for unreasonable delay with respect to the provision of access. We have adjourned the claim for the Reid Crowther invoices. In any event, given the fact that the claimants did not submit any more of these invoices to the Ministry for payment until a few months prior to the hearing we do not find any unreasonable delay by the Ministry in paying these invoices.

11.  COSTS

[177]  The claimants seek costs under section 45 of the Act and the Tariff of Costs Regulation, B.C. Reg 189/99 (the Tariff) at Scale 3 while the respondent's position is that Scale 2 is appropriate.

[178]  We have awarded $246,680 in compensation which is 194% of the advance payments of $126,870.89. 194% is greater than 115% of the advance payments and as a result under section 45(4) of the Act the claimants are entitled to their costs. In our opinion the legal issues in this file were of more than ordinary difficulty. It was a partial taking of the subject property and relocated access for both the subject property and the main mill site as well. There was an easement on the subject property that had to be relocated. There were steps taken to replace one of the uses of the subject property on other land that had been acquired. There were complicated issues of causation. As a result we award legal costs on Scale 3. The appraisal issues in this file with respect to the subject property were of ordinary difficulty and therefore appraisal costs are awarded at Scale 2. We conclude that the claimant is entitled to its actual reasonable legal, appraisal, and other costs until June 28, 1999 and to its costs as prescribed in the Tariff of Costs Regulation, B.C. Reg 189/99 after that date with legal costs at Scale 3 and appraisal costs at Scale 2.

THEREFORE IT IS ORDERED THAT the respondent, the Ministry of Transportation, shall pay the Claimant Gorman Bros. Lumber Ltd.: