In February of 2015, the Ontario Municipal Board (the “Board") issued its first decision applying the law of injurious affection with no taking of land since the Supreme Court of Canada’s (“SCC”) pronouncement in 2013 in Antrim Truck Centre Ltd. v. Ontario (Transportation) [2013] S.C.J. No. 13 (“Antrim”). In R. Jordan Greenhouses Ltd v. Grimsby (Town) (“Jordan”), the Claimant was successful and recovered damages of $115,000.

The Supreme Court’s decision in Antrim had overturned an Ontario Court of Appeal decision which had drastically narrowed the availability of injurious affection cases where no land is taken, putting a heavy emphasis on the public utility of infrastructure projects when considering whether interference with a claimant was unreasonable. The Supreme Court in Antrim re-stated the public interest issue as “whether, in light of all the circumstances, it is unreasonable to expect the claimant to bear the interference without compensation”. In Jordan, the Board found that the careless timing, implementation and supervision of the Project formed the basis for compensation.

Facts

In Jordan, the Claimant was a small family run business — a garden centre — situated in a largely residential neighbourhood. The Town of Grimsby planned to install a sewer line in the Main Street area. There was no urgency for this work, and from the date of construction in 2009 to the date of the hearing in 2015, only four residences had hooked into the new sewer line.

The Claimant was the only business in the construction zone and had been located there for 80 years. The Claimant had recently switched from primarily wholesale to primarily retail operations and was therefore dependent upon vehicular access and had its peak sales in the spring season. The Board found the Town to be aware of all of these facts, particularly because the owner of Jordan’s Greenhouses had, just a year prior to the construction, been solicited by the Town to produce an advertising video to be posted on the Town’s website. The Board also found that a reasonable person would have known a garden centre would have peak sales in the spring.

Construction was originally planned to commence in November 2009, which timing would have had minimal impact. The construction was delayed until April 2010 at the request of the contractor. This delay was not communicated to the Claimant (nor to the general public). The first mention of the timing of the spring road closures in front of the Claimant’s business did not occur until late March 2010, just ahead of the busy spring sales season and days before construction. During construction, traffic control was riddled with issues, such as no traffic plan, no construction schedule, non-functioning traffic lights, long delays, and failure to remove construction signs on weekends, all causing a substantial loss of business to the Claimant.

The Board’s Decision

Injurious affection is governed by Ontario’s Expropriations Act. For injurious affection where there is no taking to be successful under the Act, a claimant must meet the following statutory requirements:

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

The Board found that the first and third prongs of this test were clearly met. The analysis focused on the second prong and framed the issue as follows: “if the highway construction had not been done under statutory authority would Jordan’s Greenhouses have been able to successfully sue for damages caused by the construction?”1 In other words, would the Claimant have been able to sue for damages caused by private nuisance?

Antrim established that the statutory definition of injurious affection required the test for common law nuisance to be met. Thus, the interference with the enjoyment of the property must be both substantial and unreasonable, a two-part test.

In addressing whether the interference was substantial, the Board swiftly drew the conclusion that it was:

Addressing the issue as to whether the interference with the Jordan’s Greenhouses use or enjoyment of the subject lands was substantial, the Board would note the following: first that the Town initiated a sewer construction program to commence in the Spring of the year during the Jordan’s Greenhouses busiest season to extend for a period of 40 working days which would include for those 40 days closure of at least one lane and closure for two weeks of the entire road, for a business that relied on direct vehicular access. The Board finds that there was substantial interference with the convenience of Jordan’s Greenhouses in the conduct of their business during their busiest season of the year.2

In addressing reasonableness, the Board assessed whether the interference was unreasonable by balancing the gravity of the harm against the utility of the Town’s conduct, by considering factors such as:

  • The severity of the interference,
  • The duration of the interference,
  • Public utility,
  • The character of the neighbourhood, and
  • The sensitivity of the Plaintiff.

With regards to the severity of the interference, the Board characterized it as severe, as the construction required laterals running 90 degrees to the main, construction was done on a narrow right of way, and depths exceeded 3.5 metres. The significant impairment was heightened by an unrequired road closure for two weeks.

In awarding damages for temporary interference, the Board followed the SCC 2013 decision inAntrim, which outlined a new approach to claims for injurious affection where no land is taken. The SCC stated:

... while temporary interferences may certainly support a claim in nuisance in some circumstances, interferences that persist for a prolonged period of time will be more likely to attract a remedy.3

Regarding the character of the neighbourhood, the Board held it was a residential area with only one business, being the Claimant. The Board found that the Town of Grimsby knew that the Claimant’s business was located at that site since it had been there for 80 years, since the Claimant solicited a $5,000 video advertisement for the Town’s website, and since both the Director and the Assistant Director acknowledged that they both knew the Jordan’s Greenhouses’ business was located there:

A reasonable person would have said that this area was largely a residential community with the one outlier being the Jordan’s garden centre, which would have as its height of season the Spring season.

Based on this, the Board also found that the Claimant was at its height of sensitivity, as it was dependent on sales during the spring season.

The Board’s comments on the utility of the Town’s conduct were of particular interest. While the conduct was not found to be malicious, the Board considered carelessness in their analysis:

[123] ... However, with regard to the test of careless [sic], the Board notes that the Supreme Court of Canada looked upon with favour this quotation from the editor of Flemings, The Law of Torts:

…The “duty” not to expose one’s neighbours to a nuisance is not necessarily discharged by exercising reasonable care or even all possible care. In that sense, therefore, liability is strict. At the same time evidence that the defendant has taken all possible precaution to avoid harm is not immaterial, because it has a bearing on whether he subjected the plaintiff to an unreasonable interference, and is decisive in those cases where the offence of activity is carried on under statutory authority … [I]n nuisance it is up to the defendant to exculpate himself, once a prima face infringement has been established, for example, by proving that his own use was “natural” and not unreasonable.

[124] The Supreme Court indicated that not every substantial interference arising from a public work will be unreasonable. The Court states that everyone must put up with a certain amount of temporary disruption caused by essential construction. One factor in this consideration is the duration of the interference. While in the Antrim case, duration was not a factor, as the injury was permanent, the Supreme Court of Canada stated that some sort of temporary inconveniences are more obviously part of the “normal give and take” than are more prolonged interferences. The Court said “while temporary interferences may certainly support a claim in nuisance in some circumstances, interferences that persist for a prolonged period of time will be more likely to attract a remedy.” (See paragraph 42).

[125] To sum up on that point the Supreme Court said “…my view is that in considering the reasonableness of an interference that arises from an activity that furthers the public good, the question is whether, in light of all the circumstances, it is unreasonable to expect the claimant to bear the interference without compensation”. (See paragraph 45).

[126] In this case, it is clear that Jordan’s was the only business within the construction area, that Jordan’s was known by the Town and its officials to be in the construction area, that Jordan’s was known as a garden center/nursery, that a lay person would have said that a garden center’s peak season would be the Spring, that the Town failed to have anyone meet with Jordan’s or to take into account the prospective impacts that the Main Street Sewer construction would have on the Jordan’s business, that the construction, although temporary in nature, was for 40 construction days, during which it effectively denied all but the hardiest motorist to venture there, and at the critical period of the Jordan’s business cycle, such that it caused substantial and unreasonable interference with Jordan’s use and enjoyment of its land.4

The case is also noteworthy for the comments rendered on the sufficiency of public notices given for the project. The Board accepted the evidence from the Claimant’s expert engineering consultant that although the notices issued by the Town met the minimum standards under the Class Environmental Assessment, the pursuit of minimum standards led to further problems which the Board found the Town could not remedy:

In this case, the pursuit of minimum standards has led to a situation where the Town could not remedy a fundamental timing issue that was arbitrarily made at the outset without due care and attention to the area and the properties in that area. Moreover, the Board finds that this approach led to the careless implementation and supervision of the Project where the contractor provided not even a preliminary construction schedule until after the Project had commenced, provided no fixed construction start date, manipulated the signing of the contract to facilitate a start date to suit the contractor, provided no traffic plan, failed to comply with the Ontario Traffic Manual, and in essence managed the Project with the convenience, welfare, and best interests of the contractor only at heart.5

The Board also found the Town’s approach was “reactionary”, as illustrated by the Director of Engineering’s discovery answer as follows:

434. Q. Do you think that the – letter that was sent on March 24th accurately conveyed the extent of the disruption that would arise from the project for the residents within the project area?

A. I don’t believe it identified any impact that they should expect.  We wouldn’t normally try to get into that detail.

435. Q. Why is that?

A.  Ahm, we just notify them the project’s ongoing. They have a contact number if they have a problem and, ah, that’s the way we approach the project. If you — if you stick your hand in a jar of snakes you’re gonna get bit and to tell them they’re gonna have problems and concerns is only — it’s not a positive approach to it. We deal with their issues if they have any. I and most people recognize what the impact of a construction on their road might be, not – not that they necessarily seen it, but certainly they’ve driven through it in the past, other projects. [emphasis added]

Ultimately, the Board concluded the interference met the test for a substantial and unreasonable interference:

...it would be unreasonable to expect Jordan’s to bear all the interference that was caused to its business by the careless construction planning, careless construction supervision and careless contract enforcement actions of the Town of Grimsby without compensation. The Board finds that the circumstances of this case of temporary inconvenience fall well outside the normal give and take of life that should be properly accepted as an individual’s part of the cost as living in an organized society.6

This case should alert municipalities as to their obligations under the Expropriations Act to avoid an unreasonable interference by proactively implementing best practices for construction projects, rather than trying to rely upon only meeting minimum standards and a reactionary approach to project implementation.