Truck Stop Awarded Damages for Injury to its Business from MTO

The Supreme Court of Canada released a decision today, that reversed the decision of the Ontario Court of Appeal and confirmed the decision of the Ontario Municipal Board ("OMB") to award damages to a truck stop operation as a result of the construction of highway 417.

Antrim Truck Centre Ltd. owned property on highway 17 and operated a truck stop that included a restaurant and gas bar. In 2004, the Ontario Ministry of Transportation ("MTO") opened a new section of highway 417 running parallel to highway 17 near the truck stop's property. The construction of highway 417 significantly restricted access to the truck stop's land and it was effectively put out of business. The truck stop brought a claim for damages for injurious affection before the OMB under the Expropriations Act. The OMB awarded $58,000 for business loss and $335,000 for loss in market value of the land. The Divisional Court upheld the OMB's decision on appeal. However, the Court of Appeal set aside the OMB's decision on a number of grounds.

In allowing the appeal, the Supreme Court held that the main question to be decided was whether an interference with the private use and enjoyment of land is unreasonable when it results from construction which serves an important public purpose. The reasonableness of the interference must be determined by balancing the competing interest, as in all other cases of private nuisance. The balance is appropriately struck by answering the question of whether, in all of the circumstances, the individual claimant has shouldered a greater share of the burden of construction than it would be reasonable to expect individuals to bear without compensation. In this case, the construction caused significant and permanent loss to the truck stop.

The court held that the Expropriations Act provides a right for compensation for injurious affection if a claimant can meet three requirements:

1. the damage must result from action taken under statutory authority;

2. the action would give rise to liability but for that statutory authority; and

3. the damage must result from the construction and not the use of the works.

In this case, the only unresolved question was whether if the highway construction had been taken under statutory authority, the truck stop could have successfully sued for damages under the law of private nuisance.

The court held that nuisance consists of an interference with a claimant's occupation or enjoyment of land that is both substantial and unreasonable. Substantial means, non-trivial, amounting to more than a slight annoyance or trifling interference.

Where activity is carried out by a public authority for the greater public good ( like MTO), the court held the focus of the balancing exercise is on whether the interference is such that it would be unreasonable in all of the circumstances to require the claimant to suffer it without compensation. The focus in nuisance is on whether the interference suffered by the claimant is unreasonable, not on whether the nature of the defendant's conduct is unreasonable, although that is not an irrelevant consideration.

The Supreme Court held that the Court of Appeal erred in finding that the OMB's application of the law of nuisance to the facts was unreasonable. In fact, it was reasonable for the board to conclude that in all of the circumstances, the truck stop should not be expected to endure permanent interference with the use of its land that caused significant diminution in the land's market value in order to serve the greater public good.

Regards,

Blair