April 11, 1991,  E.C.B. 3/90/021 (45 L.C.R. 121)

ORDER

1. INTRODUCTION

This is an application pursuant to the provisions of the Expropriation Act, S.B.C. 1987, c.23 (the "Expropriation Act") by The British Columbia Corporation of the Seventh-Day Adventist Church (the "Claimant") for an order of the Expropriation Compensation Board (the "Board") fixing the compensation to be paid by Her Majesty The Queen in Right of the Province of British Columbia (the "Respondent") arising from the acquisition by the Respondent of 4.42 acres of land (the "acquired land") legally described as:

That Part of Lot 34 lying East of the North Thompson Highway as shown on Plan H68, Section 17, Township 21, Range 17, West of the 6th Meridian, Kamloops Division, Yale District, Plan 529 except:
(1) Plan 26776
(2) Parcel X on Plan H68

The hearing of evidence and oral argument took place in Kamloops, B.C. on October 23, 24, 25 and 26, 1990 and January 8, 9 and 10, 1991.

2. BACKGROUND

The Claimant purchased the acquired land in 1981 as a site on which to build a new school for members of its congregation. These plans were placed in abeyance in 1983 due to a decline in enrollment. The acquired land is on the east side of the Yellowhead Highway at Rayleigh, a satellite community within the City of Kamloops and located approximately eight miles north of its downtown core. The Rayleigh area is primarily residential with an estimated population base of 2,250 residents most of whom, if not all, reside in a large subdivision located between the west side of the highway and the North Thompson River. A domestic water supply is provided by the Rayleigh waterworks District to service residential growth within this area; that is, between the highway and the North Thompson River. Its policy does not permit service connections on the east side of the highway due to insufficient reservoir capacity. Property owners on the east side obtain water from on-site wells. Waste disposal is handled by septic tank and field.

At the time of purchase by the Claimant, and on the date of acquisition by the Respondent, the acquired land was zoned General Urban Reserve ("GUR"), a holding zone category. The minimum parcel size authorized is 19.768 acres. Permitted uses in this category are limited but do include, inter alia, recreation facilities, utility installations and single family residential. The City of Kamloops Official Community Plan has not designated a land use for the acquired land which is considerably smaller in size than the minimum area stipulated by the holding zone category. The Claimant had never applied to rezone its land nor had it applied to the City of Kamloops for permits of any kind.

The acquired land has a very moderate downward slope from east to west; it is vacant, unimproved, irregular in shape, and is not within the Agricultural Land Reserve. It has 561 feet of highly visible and easily accessible highway frontage with a publicly dedicated but unconstructed road right-of-way along the entire southerly boundary and part of the northerly boundary. General services that are available include natural gas, electricity, and telephone; municipal utilities such as water, storm and sanitary sewer are not. The 1989 actual value of the acquired land as assessed by the B.C. Assessment Authority is $26,550.

The realignment and widening of the Yellowhead Highway (the "highway") commencing north of the Thompson River to Heffley Creek, the northern boundary of the City of Kamloops, had been in the planning stages for a number of years. In 1976 the Respondent designated this arterial as a controlled access highway, approximately five years prior to the Claimant's purchase of the acquired land. The purpose of the designation was to secure control over access, siting, subdivision, rezoning and development on those lands which fronted either the existing highway or the proposed new highway if the proposed change in land use was to be located within 800 metres from a controlled intersection.

The precise location of the new highway was unknown until the latter part of the 1980's when realignment plans were completed. The new highway, presently under construction, is located on the east side of the former highway which will now be used as a frontage road to service the Rayleigh community.

During 1989 the Respondent initiated negotiations to purchase the acquired land. In September, 1989 the Claimant and the Respondent entered into an agreement pursuant to section 3 of the Expropriation Act. Section 3, in part, provides:

3.	(1)	Where an owner or, where there is more than one owner, all owners agree to transfer or dedicate land to an expropriating authority without expropriation, but cannot agree with the expropriating authority on the compensation to be paid,
		(a)	Parts 2 to 4, other than section 19, do not apply,
		(b)	the board shall determine the compensation to be paid to the owner as if the land had been expropriated under this Act, and
		(c)	unless the parties to the agreement otherwise agree, compensation shall be determined effective the date the owner agreed to transfer or dedicate his land to the expropriating authority.
	(2)	An agreement under subsection (1) shall be in writing and shall state
		(a)	that the owner consents to the transfer or dedication,
		(b)	that compensation shall be determined by the board,
		(c)	the date fixed for possession of the land,
		(d)	that the owner shall take the necessary steps to transfer or dedicate the land to the expropriating authority, and
		(e)	that the expropriating authority shall make an advance payment under section 19.

Under this agreement the Claimant agreed to transfer the acquired land without expropriation and the Respondent agreed to make an advance payment in accordance with s.19 of the Expropriation Act. The parties also agreed that compensation shall be determined by the Board. An advance payment in the amount of $40,000 and the Respondent's appraisal report were delivered to the Claimant on January 8, 1990 in accordance with ss.3 and 19 of the Expropriation Act.

A transfer of the acquired land from the Claimant to the Respondent was delivered and subsequently registered in the Kamloops Land Title Office on April 5, 1990. Pursuant to s.3(1) of the Expropriation Act the parties agreed that compensation would be determined effective September 15, 1989 save and except that interest on compensation awarded shall commence on November 30, 1989, the date on which the Claimant agreed to surrender possession.

3. ISSUES

The issues to be determined by the Board are:

(a)	highest and best use of the acquired land,
(b)	compensation for the acquired land,
(c)	interest, and
(d)	costs.

4. PRELIMINARY MOTIONS

Counsel for the Respondent, Mr. Cosburn, filed with the Board on October 10, 1990 a Notice of Motion pursuant to Rule 7 of the Expropriation Compensation Board's Practice and Procedure Regulation 452/87 asking that the hearing to determine compensation scheduled to commence on October 23, 1990 be adjourned. Counsel were advised that the motion would be heard on the date on which the hearing had been set. The basis of the motion was that the Respondent required additional time to review the Claimant's expert reports which concluded that the highest and best use of the acquired land was potentially commercial whereas its expert had concluded that the acquired land did not have any distinguishing features indicating a commercial use and that its highest and best use was residential. Mr. Cosburn submitted that the Claimant's reports ought to have been served at an earlier date since the potential use on which value was based, that is, commercial, should have been stated in the Claimant's pleadings. The Respondent alleged surprise; hence the request for an adjournment.

Mr. Cosburn further submitted that to respond to the Claimant's evidence it was necessary to commission two additional reports. These reports were completed and delivered to Claimant's counsel on the morning of the hearing. The first report was prepared by Mr. Peter Hume, a commercial realty opportunity analyst with Thomas Consultants Inc., and the second, by Mr. Danny Grant, an appraiser with Interwest Property Services Ltd. Mr. Grant's report had appended to it several documents which counsel for the Claimant had requested some weeks prior to the hearing date. Mr. Cosburn asked that the Board exercise its discretion pursuant to s.11(l.1) of the Evidence Act, R.S.B.C. 1979, c.116 (the "Evidence Act") and allow the reports to be admitted. In support of his argument he cited Haida Inn Partnership et al v. Touche Ross & Co. and Bannerman (1989), 34 B.C.L.R. (2d) 80 (B.C.S.C.) where the court exercised a statutory discretion pursuant to s.11(1.1) of the Evidence Act and permitted the opinion of an expert to be admitted in spite of the failure to comply with the notice rules. The court stated at p . 87 that "sub-section 1.1 was introduced in 1981 to mitigate the harshness of the rule in s. 11." Mr. Cosburn stated that if the Board should rule the reports admissible in evidence, he would abandon the motion to adjourn.

Sections 10 and 11 of the Evidence Act read, in part, as follows:

10.	(2)	A statement in writing setting out the opinion of an expert is admissible in evidence in a proceeding ... if a copy of the written statement is furnished to every party to the proceeding who is adverse in interest to the party tendering the statement at least 30 days before the statement is given in evidence.
11.	(l)	No person shall give, within the scope of his expertise, evidence of his opinion in a proceeding unless a statement in writing of his opinion and the facts on which the opinion is formed has been furnished, at least 30 days before the expert testifies, to every party who is adverse in interest to the party tendering the evidence of the expert.
	(1.1)	Notwithstanding subsection (1) the judge or other person presiding in a proceeding may, on application of a party or on his own initiative
		(a)	where no statement has been furnished, order that the expert may testify,
		(b)	where the statement was furnished less than 30 days before the expert is to testify, order that he may testify,
		(c)	order that the expert shall be allowed to testify where the statement is furnished within a time less than 30 days before he is to testify, and specify the time, or
		(d)	where it appears that a party will tender the evidence of an expert in the proceeding, order that a statement be furnished at a time earlier than 30 days before the expert is to testify and specify the time by which the statement shall be furnished.

As to be expected and not without reason, counsel for the Claimant, Mr. Burke, objected to both the adjournment and the reports being admitted in evidence. He contended that the evidence contained within both reports is not in the nature of a reply but direct evidence addressing the issue of highest and best use of the acquired land and as such the Respondent "was obligated to prepare that evidence well in advance." Proceedings: October 23, 1990, p.117.

The Claimant delivered its reports on September 20, 1990 in compliance with both s.10 of the Evidence Act and Rule 13 of the Expropriation Compensation Board's Practice and Procedure Regulation, Rule 13 states:

13.

In complying with sections 10 and 11 of the Evidence Act, R.S.B.C. 1979, c.116, a party intending to call an expert shall also furnish to the board a copy of each report or statement in writing setting out the opinion of the expert at least 30 days before the report or statement is given in evidence.

Mr. Burke submitted that while relief from strict compliance with s.11(l) of the Evidence Act is discretionary pursuant to s.11(1.1), such relief extends only to the expert if called to testify but it does not extend to a statement in writing by that expert. As authority, he cited Pedersen v. Degelder (1985), 62 B.C.L.R. 253 (B.C.S.C.). In Pedersen the court stated that one of the objectives of s.11 was to avoid the necessity for granting adjournments which would otherwise be necessary so that the opposite party could prepare for cross-examination of an unexpected expert witness.

Mr. Burke strongly objected to the admission of Mr. Grant's report on the grounds that is was argument disguised as opinion, and that it is for the Board to weigh the evidence and draw its own conclusion on the opinions given by experts. As authority he cited Emil Anderson Construction Co. Ltd. et al. v. British Columbia Railway Company (1987), 15 B.C.L.R. (2d) 28, 32-3 (S.C.B.C. ) where the court refused to admit a report authored by experts which contained, inter alia, opinions mixed with evidence, and when examined in detail and "viewed in its totality, the report is more appropriate as argument than it is as evidence." At p.33 the court stated:

Where the issue before the court involves other elements in addition to the purely scientific, the experts must confine themselves to the latter and must not express opinions on the legal or general merits of the case: see Phipson on Evidence, 12th ed. (1976), p.488.

Counsel further submitted that the Respondent had been served with interrogatories pursuant to Rule 12 of the Expropriation Compensation Board's Practice and Procedure Regulation in June, 1990 and to which it did not adequately respond. The reply was in the nature of a deposition given by Brian K. Davies, a qualified appraiser and agent of the Respondent. Interrogatory No. 7 and the answer given is as follows:

Q.	What has the Minister of Transportation and Highways paid for other lands east of the Yellowhead Highway in the vicinity of the subject?
A.	That unknown.

On the day of the hearing the Respondent was now offering for the first time particulars of settlements and/or purchases that it had entered into with property owners whose land was needed for the new highway in the vicinity of the acquired land. This information was specifically requested several weeks before the date of the hearing by interrogatory, discovery of documents and a letter.

After hearing submissions from both counsel, I concluded that most of the difficulties encountered by the Respondent were self-induced and dismissed its application for an adjournment. However, the submissions of counsel on admissibility of the reports required time to consider. The hearing was adjourned until the following morning at which time counsel were advised that a decision as to the admissibility of these reports would be delivered.

5. THE BOARD'S DECISIONS ON PRELIMINARY MOTIONS

a) The Hume Report (on behalf of Respondent)

Section 10(2) of the Evidence Act states that a report of an expert is admissible in evidence in a proceeding provided it is furnished to a party adverse in interest 30 days before it is given in evidence. What s.10 does not state is that a report is inadmissible where there has been non-compliance with the notice rules. It is silent in this respect. It would be fair to state that there are occasions when a tribunal should exercise its discretion to abridge the 30 day period and admit a report when there has been non-compliance provided procedural fairness remains paramount.

Section 11 of the Evidence Act states that an expert shall not be permitted to give opinion evidence at the hearing unless there has been compliance with the notice rules; however, s.11(1.1) introduces a discretion, either upon application or upon the Board's own initiative, allowing an expert to testify in the event of non-compliance. The notice period does not apply to the Respondent's expert when called to reply to the expert evidence of the Claimant.

Strict compliance with the statutory sections in this area could cause confusion and interminable delays in the trial process. Hence.. they do not apply to expert evidence called by a defendant to reply to the expert evidence given by a plaintiff, (Pedersen, supra, p.260.)

In Fitzgibbon v. Swart (April 13, 1989, S.C.B.C., unreported, Vancouver Registry No. 8871452) the court held that it is "given a discretion to abridge the length of time requested or required for delivery of an expert's report." In the Fitzgibbon case the court stated at pp.3 and 4 that it

... would have been inclined to give consideration to that but for the approach taken by the defendant in refusing to deliver these reports to the plaintiff, and in fact persisting up to the very middle of this trial in failing to disclose them. I suppose it, in many ways, is a retreat to the days when trials of this nature were called "trial by ambush".

But the court did state in Fitzgibbon that if the defendant had delivered the reports "at the earliest available opportunity and then [applied] for an abridgement of time" it probably would have been successful. In these proceedings the Respondent did make the Hume report available at the first opportunity and then applied for an abridgement of time.

I find that it is implicit within the meaning of s.11(1.1) of the Evidence Act that the discretion given to a tribunal extends to the admissibility of the report and is not limited to the expert's viva voce evidence. In addition it would be helpful to have the Hume report before me during the delivery of this expert's evidence.

Paragraph 3 of Form A as prescribed by Rule 2 of the Expropriation Compensation Board's Practice and Procedure Regulation states that an application for determination of compensation shall set out the following:

The claimant should set out in this paragraph clearly and concisely in subparagraphs lettered consecutively the amount claimed under each element of compensation, the basis on which each claim is calculated and the facts in support of each element of compensation claimed.

Mr. Cosburn requested an adjournment because the Claimant did not precisely plead the highest and best use of the acquired land as being potentially commercial. Without having to decide whether the alleged commercial potential should have been pleaded, I have concluded that in the absence of a more specific claim, the element of surprise raised by the Respondent is a possibility and accordingly will admit in evidence the Hume report. By way of comment only, I am of the view that the nature of the claim would have become evident to the Respondent if a forthright exchange of full particulars and all relevant documents had taken place during the early stages of these proceedings.

Since I have ruled that the Hume report is admissible, the Claimant is entitled to request an adjournment and at the Respondent's expense. In their text, the New Law of Expropriation, (Richard De Boo, 1985), Messrs. Coates and Waque state at p. 10-247 that where a party does not deliver a report within the time prescribed by the rules

... the [Ontario] Board's almost invariable practice is to admit the evidence and offer the other party an adjournment either before the hearing or immediately after the introduction of the evidence: e.g. Head Construction and Supply Ltd. v. City of Windsor (1981), 23 L.C.R. 69, 70

Mr. Burke did not request an adjournment and the hearing to determine compensation proceeded on October 24, 1990.

b) The Grant Report (on behalf of Respondent)

The firm with which Mr. Grant is associated had prepared the Respondent's appraisal report. This report concluded that the highest and best use of the acquired land was residential. Upon receipt of the Claimant's appraisal reports the Respondent retained Mr. Grant to do a critique of them and according to Respondent's counsel "comment where he agreed with the contents and comment as well where he did not." Proceedings: October 23, 1990, p.130.

An examination of the contents of the Grant report (excluding the appendices) could lead only to the conclusion that it was heavily laced with argument dressed up as opinion as to why the Claimant's experts were wrong. The report read as though it was argument prepared by an appraiser under legal direction rather than argument by counsel with the benefit of appraisal advice. Such argument is not to be presented by way of an expert's report. The Supreme Court of British Columbia, in dealing with this situation, has found as follows:

Inferences which should be drawn from the proven facts are for the court, not the experts, in most situations. The report draws many inferences which are then used to support the opinions expressed. (Emil Anderson, supra, p.32.)

It is unnecessary ... for experts to perform the court's function or for counsel to adduce arguments in the guise of evidence. Sengbusch v. Priest et al (1987), 14 B.C.L.R. (2d) 26, 40 (B.C.S.C.)

[An expert] may not assess the value or justifiability of the [Claimant's] claim. Quintette Coal Limited v. Bow Valley Resource Services Limited (1988) 29 B.C.L.R. 127, 130 (B.C.S.C.).

These comments are particularly apt when reviewing the Grant report. The following is an example of the opinions offered on the reports submitted by the Claimant's appraisal experts: "... once again society's role in the land-use process has been ignored."; "The evidence is then relatively clear ..." "... he fails to mention ... which, of course, is not development."; "This statement is not comprehensible considering that there has been no commercial development whatsoever east of the highway."; "... was on hold ... is misleading."; "Misleading when in fact ..."; and "... hardly indicative ..."; and "not useful in valuating a property." This commentary is not indicative of objectivity on the part of Mr. Grant.

The decisions in Emil Anderson, Quintette and Sengbusch state with clarity that an expert should not become embroiled in a party's quest for victory nor adopt the role of advocate by advancing argument under the guise of evidence. Mr. Grant's report was a brief prepared for Respondent's counsel to be used as a source of information and to assist in cross-examination of the Claimant's experts. While the Respondent may call Mr. Grant to give evidence, his report is not admissible for the reasons set out above.

6. THE HIGHEST AND BEST USE

a) The Claimant's case

The evidence to be considered in determining the highest and best use is that of Messrs. David Cavazzi, A.A.C.I., and Michael Flynn, A.A.C.I., both qualified appraisers, and Mr. Harry Harker, M.Sc., M.C.I.P., a qualified planner.

Mr. Cavazzi expressed his opinion of highest and best use at p.19 of his report:

... the physical characteristics of the site and the trends within the area lead us to conclude that the potential for the property is for commercial purposes rather than for residential use. It is difficult to define the extent of demand for commercial development within the area at the date of appraisal primarily because highway reconstruction has been pending for a number of years and rezoning or subdivision of land within the area has not been possible. However, commercial development has occurred south of Rayleigh along Highway 5 on the Kamloops Indian Reserve but is restricted to land lease only. Similar forms of development are considered compatible with the highway strip through Rayleigh with the advantage of fee simple lands available. Overall it is considered that the Highest and Best Use of the property is for holding purposes with a commercial potential. (Emphasis added)

His conclusion was based on a number of factors. Firstly, the City of Kamloops' director of development services indicated in 1985 that he would be prepared "to consider commercial uses [on the east side of the highway] that would service the needs of local residents [but that] servicing concerns in this area ... must be addressed prior to the approval of any future development." Secondly, the municipal council had approved in principle a rezoning application from GUR to C-7 (neighbourhood commercial) of Lot 42, a parcel located south of the acquired land and one lot removed. The rezoning by-law was given three readings and forwarded to the Respondent for approval as the proposed development was on land that would be fronting a controlled access highway. To date, approval has not been given, but as will be mentioned below, not without reason. Thirdly, the City of Kamloops intended to build a firehall on the east side of the highway on land which it then owned adjoining the acquired land. The proposed site for the firehall was moved as the land on which it was intended to be built was required for the new highway. And fourthly, the physical characteristics of the acquired land offered a high degree of visibility and highway frontage which would encourage the prospect of commercial utilization.

Mr. Flynn, testifying on behalf of the Claimant, expressed his opinion of highest and best use at p.12 of his report.

Reviewing the acts and statements concerning the land surrounding the subject property, we conclude that in all probability, the Municipal Council of the City of Kamloops would have rezoned the subject property to commercial use, either highway, neighbourhood or tourist commercial use. We also conclude that the subject property is suitable for a more intensive use than was permitted by GUR zoning. In fact it was suitable for commercial use. Therefore, the most probable use (highest and best use) as of September 15, 1989 is to develop the subject property commercially.

However, he did express some reservation about demand for commercial use. At p.11 of his report he stated that "It is difficult to measure demand for commercial development of the subject property. The City's economy has experienced a recession from 1982 to about 1987..."

The evidence of Mr. Flynn on the issue of highest and best use was similar in many respects to that of Mr. Cavazzi and therefore need not be repeated. However, Mr. Flynn placed emphasis on why the acquired land was zoned General Urban Reserve. At p.11 of his report he stated that

... the reason for this zoning was to place the area within a holding zone until an adequate land use and servicing strategy had been developed and implemented.

He referred to the City of Kamloops Official Community Plan, 1990 (a policy statement) that identified commercial areas with highway exposure where commercial development would be encouraged to locate. One such location is the commercial node at the junction of the new highway and the Puett Ranch Road, approximately one-half mile north of the acquired land, which accesses the Rayleigh residential community.

Mr. Harker's opinion of highest and best use was from the perspective of a planner. He stated that the Official Community Plan, now in the final stages of revision, indicated that the acquired land is part of the Rayleigh suburban area and its future use will be determined by "local development demands, as well as the capability/potential of the site." At pp.5 and 6 of his report, he stated:

The current City Zoning Bylaw, which designates the subject parcel as GUR- General Urban Reserve, reflects the same regulatory perspective. This zone is largely a "holding zone" for lands with future, but currently unspecified, urban development potential. Any future request for a Zoning Bylaw amendment would, therefore, be evaluated on the basis of the physical capabilities/limitations of the property, and the compatibility of the proposed use with existing adjacent uses. Based on City Council's willingness in 198[5] to rezone a nearby parcel (Lot 42, Plan 529) from "GUR" to "C-7 Neighborhood Commercial" use, and their more recent decision to rezone parcels at the intersection of Puett Ranch Road and Highway 5 for Highway Commercial uses, it is likely that a proposal to rezone the subject property for commercial use would be supported by City Council.

In his opinion the absence of a community water supply and a waste disposal system would not inhibit commercial utilization as distinct from residential development which is a high consumer of water and a large generator of liquid waste, He stated at p.7 of his report that certain neighbourhood commercial uses "tend to place periodic demands on domestic water supply and waste disposal systems rather than the sustained load of residential uses" which indicated that "a commercial use would likely be better suited to the physical and locational characteristics" of the acquired land. He further stated that well water had been established in the area and that waste could be handled by septic tank and field as percolation was satisfactory. His conclusion as to highest and best use is found at p.8 of his report:

The relationship of the subject property to Highway 5, together with the transition of land uses along its Rayleigh frontage, strongly mitigate (sic) [militate] against any residential development to the east of the Highway. As tourism and recreation generated trips along the "Yellowhead" route gradually increase the demand for "highway commercial" support services will grow accordingly. Properties, such as the subject property, which offer convenient highway ingress and egress, as well as a high degree of visibility will be sought after for these uses.

The evidence of Messrs. Harker, Flynn and Cavazzi was that residential demand in the area would be absorbed by land readily serviceable and available for development.

b) The Respondent's case

The evidence to be considered in determining highest and best use is that of Mr. Brian K. Davies, A.A.C.I., a qualified appraiser with Interwest Property Services Ltd., and Mr. Peter Hume.

Counsel for the Claimant objected to the admissibility of the Respondent's appraisal report on the basis that Mr. Davies had been assisted in the preparation of his report by others employed by Interwest Property Services Ltd., namely his associate, Mr. Grant, and two research assistants. Mr. Burke stated that in response to a demand for discovery of documents he was provided with a statement of account sent to the Respondent for the preparation of Mr. Davies' report. The statement reflected time spent by Mr. Grant and two research assistants on this file. Counsel thus submitted that the findings in the report may include the opinions of others as well as those of Mr. Davies.

Mr. Davies testified that the opinions expressed were his own. I found his evidence on this matter to be satisfactory and his report was admitted in evidence. It can be fairly concluded that time spent by others in his firm related to material and information which he had reviewed and which he may or may not have considered in the preparation of his report. In the event counsel for the Claimant does have reservations concerning its content and the opinions expressed the opportunity to explore those matters is available during cross-examination.

In the City of Saint John v. Irving Oil Co. Ltd. (1966), 58 D.L.R. (2d) 404, 414-15, [1966] S.C.R, 581, 592, 52 M.P.R. 126 the Supreme Court of Canada examined the relationship between research data acquired from others and an expert's final opinion and in accepting the submission of counsel acting on behalf of the expropriating authority stated as follows:

Counsel on behalf of the City of Saint John pointed out that if the opinion of a qualified appraiser is to be excluded because it is based upon information acquired from others who have not been called to testify in the course of his investigation, then proceedings to establish the value of land would take on an endless character as each of the appraiser's informants whose views had contributed to the ultimate formation of his opinion would have to be individually called. To characterize the opinion evidence of a qualified appraiser as inadmissible because it is based on something that he has been told is, in my opinion, to treat the matter as if the direct facts of each of the comparable transactions which he has investigated were at issue whereas what is in truth at issue is the value of his opinion.

The nature of the source upon which such an opinion is based cannot, in my view, have any effect on the admissibility of the opinion itself. Any frailties which may be alleged concerning the information upon which the opinion was founded are in my view only relevant in assessing the weight to be attached to that opinion, and in the present case this was entirely a question for the arbitrators ...

In Minister of Housing for Ontario v. Bambrough et al (1976), 11 L.C.R. 187, 189 the Ontario High Court held that even though an appraiser retained by the Respondent authority had not done all of the work in connection with preparation of the report submitted under his signature, it was accepted as "an appraisal report within the full meaning of s.25 of the Expropriations Act and that it fulfills the requirements of that section." An application by the claimants for leave to appeal to the Ontario Court of Appeal was refused.

The Alberta Land Compensation Board in Paterson Park Ltd. v. Town of Grand Centre (1983), 28 L.C.R. 288, 299 stated that while the

... board is aware of the practice whereby accredited appraisers may use research assistants and others to assist in accumulating data and preparing appraisal reports and it may be that such is an accepted practice in the appraisal profession

... where such reports are presented in compensation hearings before this board the appraiser presenting the report must be prepared to answer questions regarding the content of that report. It should be obvious that the purpose of presenting the report and the appraiser at a compensation hearing is to provide the opportunity to test and explore the data and information contained therein and the conclusions reached therein. The absence of such opportunity renders the probative value of the conclusions reached unreliable as a source upon which to found a sound decision.

These authorities are supportive of my ruling that the Davies report be admitted in evidence.

Mr. Davies opinion of highest and best use is found at p.19 of his report.

Although some commercial development is underway to the north at the Puett Road Hwy. 5 corner, the subject has no distinguishing features which would indicate a potential commercial use.

The highest and best use of the subject property is for residential development in a location on the site that would not preclude possible future subdivision.

The evidence of Mr. Hume was from the perspective of a hypothetical developer. He conducted an analysis of the acquired land as a potential location for commercial development and whether a demand was present for such development in the Rayleigh area. Under cross-examination he conceded that his report was not an analysis of highest and best use but "an opinion as to the commercial suitability and opportunity" for the acquired land. At p.1 of his report Mr. Hume stated:

The opportunity for viable commercial development is extremely sensitive to a number of fundamental factors including the site's physical characteristics, locational characteristics, the competitive environment, surrounding land uses, sources and magnitude of potential demand and zoning/planning issues. If a site can satisfy the fundamental requirements for commercial success (i.e. good location, sufficient demand, limited competition, and zoning or planning restrictions), then its commercial potential can be confirmed. Conversely, if the site is significantly lacking in one or more of these areas, its suitability for commercial development is unlikely.

The following is a summary of his conclusions found at pp.9 and 10 of his report.

For these reasons, it was Mr. Hume's opinion "that no unique or significant commercial opportunity attaches to the subject site" although it possesses good highway frontage and provides strong visibility to traffic passing in both directions.

c) Conclusion of the Board

This issue, that is, highest and best use, is whether the acquired land at the date of acquisition by the Respondent was either residential or a holding property with a potential for commercial use. The land on the east side of the highway in the Rayleigh area has remained dormant for a considerable period of time. The evidence, though not conclusive, would seem to indicate that one reason for inactivity may have been caused by the controlled access designation imposed by the Respondent whose policy, according to the evidence of Mr. William Puhallo, its then Regional Approving Officer, was to delay rezoning applications until the right-of-way boundaries for the new highway had been firmly established. Mr. Puhallo testified that land required for the new highway must be protected. He stated that any owner who intended to develop property fronting the new highway must either dedicate the land needed for the right-of-way or enter into a binding covenant not to build on future right-of-way lands. This policy was in force in 1985 although tentative plans to widen the new highway were being considered in 1981.

Lot 42, as stated above, is located on the east side of the highway south of and one lot removed from the acquired land. This lot figures prominently in the evidence. The owner of Lot 42 planned to build a gas station, convenience store and neighbourhood pub on this parcel. In order to do so an application to rezone from GUR to C-7 (neighbourhood commercial) was necessary. Although municipal council approved the rezoning in principle, the proposed development required approval by the Respondent as to siting, parking, access and assurance that the land required for the new highway right-of-way would be preserved. Mr. Puhallo stated that it was not the Respondent's intention to frustrate the proposed development but he did have a duty "to ensure that the functional integrity of that provincial highway [be] protected ..." Proceedings: January 9, 1991, p.38. This did not mean that an accommodation with the owner was not achievable. Mr. Puhallo stated that the Respondent would agree to access provided it was safe and that as a matter of policy "We had no qualms about commercial development." Proceedings: January 9, 1991, p.22. He also agreed that the approval process could not proceed if the information requested was not delivered. In this case the owner had been asked on two occasions (1983 and 1985) to file plans relating to parking, access and development but had failed to do so. Perhaps the reason for not doing so was the fact that its application for a pub license had been rejected by regulatory authorities (Exhibit 22).

I have some difficulty with the evidence of Mr. Davies. Although aware of the current status of Lot 42, an obvious comparable, he chose to ignore it and stated in his report that he relied on the opinion of the City of Kamloops' planning department notwithstanding his knowledge that their recommendation against rezoning had been tempered by municipal council who had given three readings to a rezoning by-law in 1985. Under cross-examination he conceded that "perhaps I should have commented more directly on it." Proceedings: January 10, 1991, p.74. The inclusion of Lot 42 is even more compelling because Mr. Davies selected the acquired land as a comparable. Lot 42 is located on the same side of the highway, one lot removed and exhibits similar characteristics. His testimony that the rezoning application was a "project oriented development ... driven by the highway realignment" does not detract from its importance as a comparable.

Mr. Davies opinion as to highest and best use is rejected primarily because of the absence of comparables which in my opinion ought to have been included in his report. With the notable exception and key reference to the acquired land, his opinion was based on comparables that were either agricultural or residential. The use of comparables having highway exposure not within the agricultural land reserve, and which were available, would have contributed to a balanced report.

In May, 1990 Mr. Cavazzi conducted an appraisal of a commercially zoned highway retail outlet located on the east side of the highway approximately one mile north of the acquired land. This parcel, known as the Hik property, is privately serviced with a proven private water supply, a waste disposal system, and is similar in size and topography to the acquired land. A portion of this parcel was purchased by the Respondent for the new highway right-of-way. In the Hik appraisal report he stated at p.18 that had this property "not been utilized for commercial purposes in the past the current commercial zoning would probably not be achievable" because the adjoining lands are zoned general urban reserve or agricultural. He also stated that "subdivision of the [Hik] property is considered difficult because of the lack of public water service. At p.27 of the same report he stated:

However, the growth within the commercial/ industrial market has not been evident to the same extent [i.e. the residential market], and we anticipate that there will be a stronger demand for this type of land closer to the central core of the City, with a weakening market further out. (Emphasis added)

Mr. Cavazzi's conclusion, in part, as to the highest and best use of the acquired land found at p.19 of his report (September, 1989) is that

the trends within the area lead us to conclude that the potential for the property is for commercial purposes rather than for residential use. (Emphasis added)

Under cross-examination Mr. Cavazzi was asked to explain why his conclusions in these reports were not similar.

Q.:	Is there any particular reason why that statement [in the Hik appraisal] isn't included in your appraisal on the subject?
A.:	No particular reason I can think of. Proceedings: October 25, 1990, p.177.

Under re-examination by Claimant's counsel, Mr. Cavazzi was asked if he had considered in his analysis of highest and best use those factors raised by Mr. Cosburn during cross-examination, namely, profitability, market demand, financial constraints and regulatory controls. The questions and answers are as follows:

Q.:	What about those factors? Are there any of those factors that you did not consider in the preparation of your report that's [the] subject [of] this hearing?
A.:	I think I indicated that I did not specifically consider profitability and financial constraints.
Q.:	Why would you do that in Hik and not in this one?
A.:	... Profitability was not something I considered simply because I had no idea what specific type of commercial development might occur on it. And financial constraints, I recognized that there were some financial costs that would have to be incurred, perhaps, to achieve some development on the property. I didn't pursue the extent of them. I knew that there were some general costs. Proceedings: October 25, 1990, p.178.

In a letter dated September 3, 1987 the approving officer for the City of Kamloops advised the owner of Lot 42 that its proposal raised a number of concerns. In addition to providing access acceptable to the Respondent, the approving officer stated that the access road bordering the southerly boundary must be dedicated and the roadway is to be constructed to city standards. In addition, the following items were raised in the same correspondence:

The properties are outside of the Rayleigh Waterworks District boundaries, and water service and fire hydrants, etc. must be supplied to City and Rayleigh Waterworks District standards.

A geotechnical report is required to verify acceptability of the soils for ground disposal sewage systems, and a system designed for sewage disposal from the proposed commercial lot must be submitted.

Storm drainage from the proposed lots must be addressed along with the possible impact on downstream components of the existing storm sewer system.

He advised the owner in the same letter that his department was unwilling to proceed with the application until the highway alignment was finalized and access had been resolved, after which the matter of "water supply, sanitary sewage disposal and storm drainage matters will ... be addressed prior to consideration being given to conditional approval of the subdivision."

It must also be noted that an internal memorandum from the director of development services to the City administrator, dated February 17, 1988 (Exhibit 19) relating to Lot 42 stated that the area on the east side of the highway in the vicinity of the acquired land has "significant servicing deficiencies" and that since water service is not available "major off-site improvements to sustain peak flows and to provide adequate fire protection capacities" would be required. He also raised in his memorandum that since adequate percolation was questionable the acceptance of septic discharges would be of concern.

In August, 1987 the owner of Lots 1 (Plan 6551), 35, 36, and 41 (Plan 529) submitted an application to rezone these parcels to C-7 (neighbourhood commercial). Lot 35 borders the southern boundary of the acquired land and Lot 41 is contiguous to and west of Lot 42. All of these parcels, with the exception of Lot 42, have highway frontage. The owner of Lot 41, as the did the owner of Lot 42, planned to develop a neighbourhood pub on this parcel. Apparently, development plans were not submitted with the application but the owner was of the opinion that rezoning would permit the highest and best use of these parcels "since the continuation of an agricultural land use is not practical or feasible." (Exhibit 16). On February 23, 1988 the municipal council rejected the rezoning application and advised the Liquor Control and Licensing Branch that it is not "in favour of granting a pre-clearance approval to a ... neighbourhood public house on Lot 41 ... at this time." (Exhibit 18). However, municipal council did pass a second resolution on the same date that the Liquor Control and Licensing Branch be advised "that Council would not be opposed to dealing with an application for a neighbourhood pub on Lot 41 ... at a time when the application meets all the criteria (Emphasis added)." (Exhibit 17).

The criteria, as set out in various memorandums and correspondence, related to the right-of-way needed for the new highway, servicing deficiencies, and the residual size of Lot 41 after providing for the highway right-of-way and existing B.C. Hydro rights-of-way. (Exhibit 19).

Neither the approving officer nor the director of development services gave evidence viva voce and as a consequence their opinions were not subjected to cross-examination.

The concern with the absence of services was also raised by Mr. Flynn, the Claimant's expert, who at p.9 of his report stated:

The subject property falls outside the area designated as having potentially higher percolation rates, but a geotechnical investigation would still be required in the event the subject property is developed. The Rayleigh Waterworks District extends east only to the westerly boundary of the Yellowhead Highway. To extend this boundary to the eastern side of the highway, all the property owners from Art Knapps south to Shirley Devick's property would have to apply to the Trustees for inclusion. After approval by the Trustees, a reservoir of sufficient capacity to service this side of the highway must be built at the applicants expense. Potable well water is probably available on the east side at a depth of about 100 feet. Unless otherwise approved by the City, according to Bylaw No. 10-16, it is required by the Fire Department that the well have sufficient capacity for fire protection or an equivalent system be installed.

On balance, the evidence indicates that the municipal planning and development services departments and municipal council would be receptive to applications for commercial uses provided that statutory and regulatory requirements were satisfied not the least of which would be adequate servicing for water, waste disposal and access.

The occurrence of some type of urban development coming to pass is not necessarily dependent upon nor restricted to a finding that rezoning is a probability. There are many other factors which come into play before a property can be classified as being a candidate for development. In the instant case, marketability, profitability, financial constraints, regulatory and statutory controls and physical and functional limitations are factors each of which have some bearing when conducting a highest and best use analysis. For example, and as stated above, demand, the absence of services, their cost of installation, and the possibility of securing permits from regulatory and statutory authorities must be factored into the equation governing highest and best use.

The opinion of Mr. Harker on behalf of the Claimant is persuasive to the extent that it confirms from the perspective of an independent planner the reason why the acquired land has been captured by the General Urban Reserve classification. As stated by Lincoln North at p.10 of his paper entitled "The Concept of Highest and Best Use" published by the Appraisal Institute of Canada, May, 1981,

While marketability is the singular most important factor upon which a proposed development should be analysed, the aspects of supply and demand tend to receive the least attention during a highest and best use study.

This opinion is strengthened in this case by the evidence of Messrs. Hume and Cross. Mr. Cross is a developer who at the time of valuation had an interest in six lots zoned C-7 (neighbourhood commercial) serviced with water and positioned in a much superior location on the southwest corner at the intersection of the highway and Puett Ranch Road approximately one-half mile north of the acquired land. These lots have remained undeveloped for a number of years. Mr. Cross testified that he failed to secure any proposals for development with the exception of a possible gas station which proposal had recently collapsed. He sold his interest in this parcel to the owner-operator of a Petrocan station located on the northwest corner who wanted control of the site to eliminate any possibility of competition. Mr. Cross' evidence was a true reflection of the marketplace - if there is no demand, do not build.

It was this property that Mr. Hume was referring to when he stated at p.8 of his report that notwithstanding "proximity to an established commercial use and a strategic position relative to the local population, approved commercial zoning and existing water servicing ... the owners have been unable to find a suitable commercial use."

After considering all of the evidence, I have concluded that the acquired land as of September 15, 1989 has the features of a speculative or holding property with a long term potential for urban use. The acquired land has been placed within GUR, a holding zone assigned to lands with future but currently unspecified urban development potential, and for the present time it would seem to be the appropriate classification. While a use for the acquired land for urban development may occur, the evidence indicates that the probability of it being utilized for such purposes within a reasonable period of time is remote. In his paper entitled "The Concept of Highest and Best Use", supra, Lincoln North refers to undeveloped land in suburban fringe areas and near urban rural land. I find that the passages sited below have particular application in this case. At p.7 of his paper he states:

The pursuit of an opinion of highest and best use often ignores the possibility that the highest and best use of a vacant site may simply be to leave it in this state of condition for a prescribed or indefinite period of time.

Hence, it may be concluded that the highest and best use of a property ... may simply be to leave it in a dormant state until such time as all the forces which come to bear on highest and best use dictate a definitive productive use. Such interim use, therefore, may be referred to as a holding use if nothing else, even though the length of the holding period is indeterminable at the date of analysis.

... trends in urban growth and development may not be sufficiently definitive to indicate the most likely use to which these lands will eventually be developed. Consequently, the highest and best use of "rurban" land may be an exceptionally difficult problem to resolve.

7. THE MARKET VALUE OF THE ACQUIRED LAND

a) The Claimant's case

Mr. Flynn valued the acquired land at $137,000 (rounded) which is equivalent to $32,500 per acre. He adopted as the best evidence his comparable No. 3 (Lot 42) in terms of size, location and features and "chose to give this [comparable] most weight and drew [his] conclusions from that." Proceedings: October 26, 1990, p.321. Mr. Flynn was under the impression that this comparable was a 5.50 acre parcel which, according to his evidence, sold in October, 1983 for $210,000 or $38,180 per acre. At a later stage in these proceedings, it became evident that an error had been made. The size of this parcel was in fact 10 acres and not 5.50 acres as previously reported. Accordingly, the per acre value now became $21,000 and, as the evidence unfolded, this amount was again significantly adjusted downward. I have referred to the location of Lot 42 above. It has the same physical characteristics and services as the acquired land but does not have physical access to the highway. It is similarly zoned GUR although the City of Kamloops municipal council had approved in principle rezoning to C-7 (neighbourhood commercial).

Mr. Flynn referred to his comparable No. 2 (the Cross property) as his second best indicator of value but concluded that reducing the unadjusted price of $81,168 per acre to $32,500 per acre required sizeable adjustments for zoning, risk, location and timing with which he was not comfortable. He testified as follows:

I had to weigh that against making these sizeable adjustments on the other indicators to arrive at the value and I chose, on that basis, that it was right next door and it was so similar to the subject property that I concluded I couldn't ignore it ... and I relied on it and gave it [the] most weight.

Proceedings: October 26, 1991, p.324.

As an alternative to estimating market value as potentially commercial, Mr. Flynn suggested that the acquired land be valued on its intended church related use. As comparables he selected five church sites in highly populated areas exposed to high volume traffic counts. Each comparable was serviced with sidewalks, street lamps, curbs, city water, sewer and storm sewer. The price range of these indicators was between $75,600 per acre and $110,090 per acre. Mr. Flynn made sizeable downward adjustments for the absence of services, size, location, zoning and the cost and risk of achieving zoning. His adjusted values show a range between $25,000 to $35,000 per acre which he stated supported his findings of commercial value for the acquired land.

Mr. Cavazzi valued the acquired land at $132,600 which is equivalent to $29,865 per acre. He adopted as his best indicators of value his comparables Nos. 7, 8 and B.

Comparable No. 7 is a 19.64 acre parcel serviced with water and purchased by Imperial Oil in March, 1986 for $30,295 per acre subject to obtaining rezoning to heavy industrial. This comparable was traversed by a petroleum pipeline into which Imperial Oil could tap which made this parcel ideally suited for the construction of a tank farm. Mr. Cavazzi adjusted the purchase price downward to offset lack of zoning and the absence of a water system.

Comparable No. 8 consists of four individual lots on a public water system comprising 1. 362 acres zoned C-3 (highway commercial) which sold for $45,742 per acre in January, 1990. It is located approximately 15 miles from the acquired land in a larger built-up residential neighbourhood on the Trans Canada Highway, a generally superior transportation route when compared to the Yellowhead Highway. At p.26 of his report he stated that in "these respects the property is considered superior to the subject although access is via a frontage road which is easily missed while the subject is located directly adjacent to the highway" and at p.30 of his report he concluded that this comparable

... is considered to provide a good market comparison to the subject as it is within a satellite residential area, is a holding property, and adjustments are required only for the commercial zoning in place and the presence of a public water system. Adjusted for these factors we estimate the market value of the property in the order of $27,500 per acre.

Comparable "B" is a parcel of land approximately one mile north of the acquired land which had previously operated as a retail garden centre. A 1.05 acre portion of this parcel was purchased by the Respondent for the widening of the new highway at an estimated price of $43,500 per acre. According to Mr. Cavazzi the parcel is considered superior to the acquired land in that it is zoned C-4 (service commercial) and has a proven private water and waste disposal system in place. It is similar in overall size and topography to the acquired land. There was no evidence of the circumstances surrounding this purchase by the Respondent nor a breakdown of the purchase price as between land values, business loss, or injurious affection, if any.

b) The Respondent's case

Mr. Davies at p.30 of his report concluded that

The highest unit price is that paid for the subject during the boom period of 1981. These value levels have not been re-achieved. A $40,000 site value equates to $9,050 per acre, well above the range of unit values for development sites. However, the subject is smaller than most of the comparables with highway exposure which may provide for alternative uses at some future time. $40,000 is concluded as the before value.

On a rate basis, the $40,000 equates to $9,050 per acre.

The matter of the interrogatories was again raised when Mr. Davies was giving evidence on market value. When asked when he first obtained information relating to land purchases by the Respondent from owners in the vicinity of the acquired land, he testified that he became aware of some transactions shortly before, and others during, the hearing. He stated that when preparing his appraisal report on behalf of the Respondent he requested but was denied any "information of settlements that Highways had in the area." Proceedings: January 10, 1991, pp.35 and 36. The Respondent placed its agent and expert in an untenable position. An interrogatory was directed to him as the Respondent's agent and he was denied that which was required to properly respond to the Claimant's valid request for information. This is not a practice which ought to be encouraged. In expropriation proceedings an authority must be prepared to release information which may assist in the determination of fair compensation. As stated by Laskin J.A. in Re Silverhill Realty Holdings Ltd. (1967), 1 O.R. 357, 366-7 (Ont. C.A.) when commenting on the nature of expropriation proceedings:

Reduction of the surprise element in litigation and narrowing of the issues, which are among the objectives of discovery, have particular importance in a case where a landowner must yield to an unwilling but compelled surrender of his land for public use. (Emphasis added)

However, there is also an obligation upon an expert who accepts a retainer from a statutory agent to be fully informed of the germane issues and facts. (See Dempsey Brothers Ltd. v. Municipality of Metropolitan Toronto (No. 1) (1976), 12 L.C.R. 185.) When an expert is placed in this position by the party who retains him, he should bring to his client's attention the difficulty created and the adverse effect it will have on the validity of his report.

c) Selection of appropriate comparables

Thirty-one properties in total were included within the appraisal reports, very few of which were common to the appraisers. Each of the Claimant's comparables with the exception of two were zoned commercial and serviced with water.

I summarily reject Mr. Flynn's evidence of church site comparables as indicators of value. The adjustments applied reduced on average the price of each indicator by two-thirds. The comparables are incapable of comparison to the acquired land, each being without a solitary similar feature. It is inconceivable to me how Mr. Flynn's appraisal compass could point to these indicators "as being truly comparable" on the basis of location and physical characteristics alone. (See Real Estate Appraising in Canada, 3rd ed. (1987) at pp.110 and 111.) With adjustments of this magnitude, estimates of value are unreliable. As was stated by the former Ontario Land Compensation Board in George Frye Holdings Ltd. v. St. Clair Region Conservation Authority (1980), 21 L.C.R. 310, 317:

Sales which require a 50% adjustment as to time and location cannot be regarded as particularly reliable comparables.

It is difficult to be convinced when reviewing comparables

that true market value can be established by a multiplicity of adjustments when there are no comparable sales to support the figure resulting from such an exercise. [See Petrofina Canada Ltd. v. Municipality of Metropolitan Toronto (1978), 16 L.C.R.1 42, 146]

The three comparables (Nos. 7, 8 and "B") advanced by Mr. Cavazzi as being the most reliable were not particularly helpful.

Both Messrs. Flynn and Cavazzi referred in their reports to transactions in which one of the parties was the Respondent authority. No evidence was introduced of the circumstances surrounding these transactions, each of which were related to the acquisition of land by the Respondent for the new highway. Mr. Burke submitted that while all appraisers admitted some knowledge of these transactions, neither party attempted to rebut the presumption that they were not freely negotiated. With this, I concur.

While evidence of these transactions is admissible, there must also be evidence that each transaction was freely negotiated and that market value was paid. As Mr. Justice Rand stated in Gagetown Lumber Co. Ltd. v. The Queen and A-G. N.B. (1956) 6 D.L.R. (2d) 657, 666, [1957] S.C.R, 44, 56,

"The primary question is of freedom in the negotiation as a fact, and it is for the tribunal, in the light of the circumstances, to say whether the price was influenced by extraneous elements, or whether the parties were concerned only to reach agreement on a figure deemed to be the fair value of the property."

This point was similarly considered by the former Ontario Land Compensation Board in Smegal v. Oshawa (1972), 2 L.C.R. 109 at p. 122:

the ... principle enunciated by Rand J. in the Gagetown case, comes into play after evidence, if any, has been adduced as to circumstances surrounding sales to or transfers following settlement with, the expropriating authority with reference to lands in the area of and at or about the date of the expropriation. In the opinion of the Board the onus of adducing such evidence is on the ... party introducing the registry office records and relying on them as comparable sales.

And in Nowell et al v. Minister of Environment (1984), 30 L.C.R. 255, 259 where the Ontario Municipal Board stated:

Although admissible, such sales are presumed to be not free and voluntary and the person introducing and relying upon them must rebut that presumption through evidence of surrounding circumstances.

The comparables submitted by the Respondent were zoned either agricultural or residential, save and except the acquired land which was zoned GUR. In my view Mr. Davies' report is notable for its absence of comparables that ought to have been included. For example, the Leonie Estates Inc. purchase (Lot 42), that is, Mr. Flynn's comparable No. 3, and the recent transactions relating to the acquisition of land for the new highway should have been aggressively pursued by him. Comparables similar to the acquired land were scarce. By not providing evidence of these transactions potential evidence of market value near the date of taking was not provided and which, depending upon weight, may have been of some assistance. In addition, it is fundamental that an expropriating authority's appraisal report contain all relevant information. As was stated by the Ontario High Court of Justice, Divisional Court in Bambrough et al v. Ministry of Housing for Ontario et al (1974). 7 L.C.R. 104, 105:

The person whose property is being expropriated should be able to determine from the appraisal report if he should proceed to arbitration or should accept the offer which has been made. This is not possible on the basis of the document which was served on the applicants.

The only comparables within the Rayleigh area which are reliable indicators of value and to which the greatest weight should be given are Mr. Flynn's comparable No. 3 (Lot 42) and the acquired land. As the evidence unfolded, Mr. Flynn's comparable No.3 became an important indicator but for reasons that he had not advanced. Both parcels are located on the east side of the new highway and zoned GUR. They are topographically similar and separated by one parcel of land. The acquired land has the distinct advantage of being highly visible with frontage on the highway. Lot 42 has legal but is without physical access. Neither properties are within the Rayleigh Waterworks District and both would require the installation of waste disposal systems.

d) Conclusion as to market value by the Board

The Board accepts and agrees with the general opinion of all experts that the best and most reliable method to determine market value in this case is the direct sales comparison approach.

All experts agreed that the real estate market peaked in 1981 and was followed by a decline during the years 1982 to 1987 inclusive. Mr. Flynn stated "there was insufficient evidence to conclude a time adjustment although ... the market in general ... has strengthened since '88, '89." Proceedings: October 26, 1990, p.315. Mr. Cavazzi suggested at p.28 of his report, and with which I agree, that a time adjustment factor of 1.25% per month would be appropriate beginning in 1988 with "no adjustment for time as the market was relatively static prior to that date." Mr. Davies was of the opinion that market values had not yet been "re-achieved".

In this case the reliability of the appraisers' comparable sales with the exception of Mr. Flynn's comparable No. 3 cannot match the unequivocal evidence of the price paid for the acquired land which requires an adjustment for time only. (See West Kootenay Enterprises Ltd. v. City of Castlegar, (1986) 35 L.C.R., 329, 339.)

The acquired land was purchased in January, 1981 at a price of $8,145 per acre. The evidence indicated that this transaction occurred near or at the top of the real estate market. On the basis that land values had recovered as of January, 1988, the value of the acquired land as of September 15, 1989 would be $45,675 [($36,000 x .0125 x 21.5 months) + $36,000] which is equivalent to $10,334 per acre.

Mr. Flynn's comparable No. 3 (Lot 42) requires three corrective adjustments. Firstly, the size of this parcel is 10 acres and not 5.50 acres as originally stated; secondly, the sale price was $150,000 and not $210,000 as originally stated (see exhibit 35); and thirdly, the value of a substantial improvement estimated by Mr. Davies to have a value of $90,000, and not referred to in Mr. Flynn's report, must be deducted from the verified sale price of $150,000. This fact was not given in evidence until the last day of the hearing. Notwithstanding my reluctance to accept improved sales as evidence of land sales, there was no other evidence upon which to rely. The value of the improvement at $90,000 was not disputed by the Claimant. I am left with no alternative other than to accept this figure. The per acre value of this parcel as of October, 1983 has now been confirmed to be in the order of $6,000. Applying the same calculations as above, the estimated value of this comparable as of September 15, 1989 is $76,125 [($60,000 x .0125 x 21.5 months) + $60,000] or $7,612 per acre. This per acre rate, when applied to the acquired land (4.42 acres), results in a value of $33,647 without adjustments for direct highway access and a premium for a smaller parcel. Mr. Flynn stated that an adjustment for size must be recognized "because it does occur in the marketplace." Proceedings: October 26, 1990, p.316.

Counsel for the Respondent asked the Board after the case had been closed, but prior to presenting his argument, to admit into evidence a copy of a land conveyance obtained from the Kamloops Land Title Office which confirmed the purchase price paid by Leonie Estates Inc. for Lot 42. Mr. Flynn stated that his comparable No. 3 was an "unreported transaction", that is, it had not been registered in the Land Title Office. In October, 1990 counsel for the Respondent had requested particulars of this transaction. Mr. Cosburn stated that his expert could not track it down until "they had access to the second document which my friend filed yesterday [January 9, 1991]. And it's as a result of that that this [exhibit] has now been produced." Proceedings: January 10, 1991, p.151. When this comparable was first introduced I advised counsel for the Claimant that documents relating to the purchase of Lot 42 would have to be produced.

Since the document requested was not produced to the Respondent until the second to last day of the hearing, I accepted the copy of the registered land conveyance in evidence (Exhibit 35). This document, which verified the purchase price of Lot 42 to be $150,000 and not $210,000 as had been reported, corroborated the testimony of Mr. Davies. As authority for admitting new evidence I referred to a decision of the Ontario Court of Appeal, Re Valley Improvement Co. Ltd. and Metropolitan Toronto & Region Conservation Authority (1965), 51 D.L.R. (2d) 481, 491, (1965), 2 O.R. 587, 599 which stated that:

So long as the Board is seized of the case if there is any new evidence that was not previously available to either party, the Board in my respectful opinion should hear it.

Based upon an analysis of the two best comparables and making adjustments for all factors including size, time, and location, I have concluded that the market value of the acquired land was in the order of $10,500 per acre as of September 15, 1989. I therefore find that the compensation to be paid for the acquired land (4.42 acres) is $46,400 (rounded).

8. THE DEVELOPMENT

The new highway is now nearing completion. It was Mr. Burke's submission that the planning period for the new highway which extended over several years decreased the value of the acquired land. Section 32 of the Expropriation Act states that any increase or decrease in value cannot be assigned to land if values are affected, either up or down, by the development. Section 32 reads, in part, as follows:

32.	In determining the market value of land, no account shall be taken of
		* * * * *
	(d)	an increase or decrease in the value of the land resulting from the development or prospect of the development in respect of which the expropriation is made,
	(e)	an increase or decrease in the value of the land resulting from any expropriation or prospect of expropriation,

Counsel for the Claimant argued that the Board should disregard as comparables the acquired land and Lot 42 as both parcels were purchased at a time when it was known that the Respondent was planning the new highway. He submitted that the development had a negative impact on land values on the east side of the new highway because the Respondent's control over access and land use inhibited development opportunities. In his closing argument Mr. Burke stated that due to the scheme, that is, the highway development, I must speculate as to what the east side of the highway in the Rayleigh area would have looked like in the absence of the project. He stated that it is speculation which must be attempted since evidence of or demand for commercial use on the east side of the highway had been frustrated by the scheme.

I do not accept counsel's submission. As a preliminary matter, as early as 1981 when the Claimant purchased the acquired land, it was known that the highway had been impressed with a controlled access designation and that the Respondent was planning to widen and realign this arterial.

There was no evidence that there was any demand for commercial use on the east side of the highway which was frustrated by the development. Further, even if there was evidence of demand for commercial use, there is evidence that such development would have been accommodated by the Respondent. For example, City of Kamloops by-law No. 5-1-566 rezoning Lot 42 from GUR to C-7 (commercial neighbourhood) was given three readings and then forwarded to the Respondent for approval. The Respondent's reply of December 20, 1985 requested that a portion of Lot 42 must be dedicated for the new highway and that plans, including a detailed traffic site plan, be submitted for review. The issue of road dedication was the subject of some dispute. After reviewing the matter the Respondent advised the owner of Lot 42 by letter of December 18, 1987 that it will not require dedication but "we will require the necessary [right-of-way] to be protected ... and that once the right-of-way is protected, I [William Puhallo] will be happy to approve the by-law." This statement is consistent with Mr. Puhallo's testimony that he would proceed with the approval process relating to subdivision and rezoning provided that 1) development plans were filed; 2) land be made available for the highway right-of-way; and 3) safe access to and egress from the site would be assured.

In addition, I find that the proposed rezoning of Lot 42 was triggered by the anticipated realignment and widening of the new highway. This parcel is to the east of Lot 41 which fronts the highway. I accept the evidence of Mr. Davies who stated under cross-examination by Claimant's counsel that

... it appears to be a project oriented development. No one would build a service station off the existing highway that didn't even have a physical access to it. It was evident that that application was being driven by the highway realignment.

Proceedings: January 10, 1991, p.75.

... the whole concept of placing a gas station in the middle of nowhere is totally illogical. That is what twigged me to the fact that it had to be related to the highway. Why would anyone propose to put a gas station that wasn't on the highway or any road?

Proceedings: January 10, 1991, p.90.

Finally, it must be noted that the by-law rezoning Lot 42 requires a fourth reading before being adopted. The evidence indicates that this final step in the rezoning process may be a hurdle not easily overcome for reasons unrelated to any approval given by the Respondent, those being the absence of services.

After reviewing all of the evidence I am unable to conclude that in the absence of a new highway there would have been urban development on the east side of the highway. I note that land zoned C-7 (neighbourhood commercial) situated in a superior location at the junction of the highway and Puett Ranch Road has remained vacant not having attracted any commercial development since being rezoned in 1982.

I have reviewed the authorities to which Mr. Burke referred. There is a common thread throughout those cited including Wilson et al. v. Liverpool City Council [1971], 1 All ER 628 (Court of Appeal, Civil Division) and Kramer v. Wascana Centre Authority (S.C.C.), unreported, when considering the issue raised by section 32 of the Expropriation Act; namely, the effect that a "scheme" may have on the value of land that is expropriated. The authorities cited use the word "scheme" which is equivalent to the word "development" found in s.32. The common thread is that there must be evidence that the scheme in fact affects the value of land taken. The authorities cited are distinguishable in that in this case there was no evidence that the value of the acquired land was in fact affected by the scheme. It would be inappropriate to speculate, as invited to do so by counsel, as to whether the highway realignment either increased or decreased the value of the acquired land without first having been satisfied that the planning for realignment and widening had an impact on land values. For the reasons given, I cannot make such a finding.

9. INTEREST ON COMPENSATION PAYABLE

The interest and rate of interest payable from November 30, 1989 to the date of payment is governed by s.45 of the Expropriation Act which reads, in part, as follows:

45.	(1)	The expropriating authority shall pay interest on any amount awarded in excess of any amount paid by the expropriating authority under section 19(l) or (11) or otherwise, to be calculated annually,
		(a)	on the market value portion of compensation, from the date that the owner gave up possession, and
		(b)		on any other amount, from
			(i)	the date the loss or damages were incurred, or
			(ii)	any other date that the board considers reasonable.
		(2)		Interest shall be payable at an annual rate that is equal to the prime lending rate of the banker to the Crown in right of the Province.
		(3)	During the first 6 months of a year, interest shall be calculated at the interest rate under subsection (2) as at January 1, and, during the last 6 months, interest shall be calculated at the interest rate under subsection (2) as at July 1.
		(4)	* * * * *

The prime lending rate of the banker to the Crown in the right of the Province as at July 1, 1989 was 13.25%; as at January 1, 1990 was 13.25%; as at July 1, 1990 was 14.75%; and as at January 1, 1991 was 12.75%.

10. PENALTY INTEREST

Section 45(4) of the Expropriation Act states as follows:

(4)

Where the amount of the payment under section 19(l) or (11) or otherwise is less than 90% of the compensation awarded, excluding interest and business loss, the board shall order the expropriating authority to pay additional interest, at an annual rate of 5%, on the amount of the difference, calculated from the date that the payment is made to the date of the determination of compensation. (Emphasis added)

The amount of compensation advanced by the Respondent excluding interest and business loss totalled $40,000 based on a taking of 4.42 acres at $9,050 per acre. The compensation awarded excluding interest totals $46,400. Since the advance payment was less than 90% of the compensation awarded, excluding interest, the Respondent shall pay additional interest at an annual rate of 5% on the amount of the difference, that is, $6,400 from the 8th day of January, 1990 up to and including the date of this award as provided for in s.45(4) of the Expropriation Act.

11. COSTS

The Claimants shall have their actual reasonable legal, appraisal and other costs.

THEREFORE IT IS ORDERED THAT

The Respondent shall pay to the Claimants

(1)	For the market value of the expropriated land the sum of $46,400;
(2)	Interest on the aforesaid amount in (1) from November 30, 1989 until paid as set out below with adjustments to take into account any moneys paid by the Respondent either to or on behalf of the Claimants. Interest shall be calculated annually at the following rates:
	(a)	Thirteen and one-quarter per centum (13.25%) from July 1, 1989 to December 31, 1989;
	(b)	Thirteen and one-quarter per centum (13.25%) from January 1, 1990 to June 30, 1990;
	(c)	Fourteen and three-quarters per centum (14.75%) from July 1, 1990 to December 31, 1990; and
	(d)	Twelve and three-quarters per centum (12.75%) from January 1, 1991 until the total amounts due and owing are paid.
(4)	Interest on the amount of $6,400 at the rate of 5% per annum from January 8, 1990 up to and including the date of the award; and
(5)	Their actual reasonable legal, appraisal and other costs of and incidental to the application and hearing before the Board in such amount as may be agreed upon and failing such agreement in such amount as may, upon application to the Board, subsequently be taxed and allowed by the Board.

EXPROPRIATION COMPENSATION BOARD

John H. Heinrich, Q.C.,
Chairman