Supreme Court of Canada
Laidlaw v. Metro Toronto, [1978] 2 S.C.R. 736
Date: 1978-05-01
Marion Viola Laidlaw (Plaintiff) Appellant;
and
The Municipality of Metropolitan Toronto (Defendant) Respondent.
1978: February 27; 1978: May 1.
Present: Laskin C.J. and Martland, Ritchie, Spence and Estey JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Expropriation—Compensation—Residence—Market value—Added market value attributable to extension—Cost of improvements not reflected in added market value—“Cost”—“Value”—The Expropriation Act, R.S.O. 1970, c. 154, ss. 13, 14(1), 18(1)(a)(ii).
Statutes—Interpretation—Reference to extraneous materials—Ascertainment of mischief to be corrected by statutory enactments—Report of the Law Reform Commission (Ont.)—The Expropriation Act, R.S.O., 1970, c. 154, ss. 13, 14(1), 18(1)(a)(ii).
Appellant purchased in 1953 some twenty six acres of scenic land on which was a dwelling house said to be more than one hundred years old. In 1970 the appellant, who used the property as her residence, added an extension at cost of $26,000. In 1954 in order to re‑align bridge approaches the Borough of Scarborough acquired one and one-half acres of the land; in 1969 the appellant sold 19.7 acres to the Metro Toronto and Regional Conservation Authority, and gave to that authority a first right of refusal for the remaining 4.96 acres. On Feb. 13, 1973, the respondent expropriated the remainder of the lands for the establishment of zoological gardens. The appraisers who testified before the Land Compensation Board substantially agreed that the extension added only $10,000 to the market value of the lands and the Board accepted the figure of $87,500 given by the appraiser called by the appellant as that market value. Other amounts as to which no question arises and a further sum of $3,125 were also allowed. Appellant had claimed a further sum of $16,000, the difference between the cost of the extension and the added market value attributed to the extension, basing the claim on s. 18(1)(a)(ii) of The Expropriation Act, R.S.O. 1970, c. 154. The Board did not make an allowance under s. 18(1)(a)(i) but pointed out that the appellant had purchased land some miles away where she was having erected a new residence at a cost of $95,000, added its allowance of market value ($87,500)
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and the 5 per cent allowed under s. 18(1)(a)(i) and, finding that the total was less than the cost of the new residence, allowed that amount under s. 15 of the Act. On appeal to the Divisional Court both parties were in agreement that s. 15 was not applicable. The issue then became whether the provisions of s. 18(1)(a)(ii) justify an allowance to the owner when an improvement has added to the market value some amount but an amount substantially less than the cost of the improvement. The Divisional Court held that they did while the Court of Appeal held that they did not.
Held: The appeal should be allowed.
The choice between the two interpretations cannot be made by reference to the plain words of the paragraph. The Ontario Law Reform Commission submitted a report on The Basis for Compensation on Expropriation and, while such a report may not be considered in order to interpret the statute in accordance with the recommendations in the report, the Court has the right to turn to such a report in order to ascertain the mischief which the legislators must have sought to meet in the new statute. The report suggested that one method of dispelling much of the confusion and uncertainty in the determination of compensation “would be to commence with a general statement that the owner is entitled to full indemnification for all monetary loss caused by the expropriation followed by a definition of compensation that includes the market value for the land taken and damages for disturbance”. Thus s. 13(2), the definition of market value in s. 14(1), s. 18 which deals further with “allowance for disturbance” and particularly the language of s. 18 which directs payment of “such reasonable costs as are the natural and reasonable consequences of the expropriation, including’’ make it possible for the appellant to succeed without recourse to the questioned paragraph. The balance of $16,000 was a loss to the appellant and a direct cost of the expropriation which she was entitled to recover.
The same result however is also reached on an interpretation of the paragraph. The legislation was remedial. The vague concept of “value to owner” was replaced in s. 13 by “market value” and three clearly stated additions, disturbance, injurious affection and special difficulties in relocation. Such a remedial statute should not be interpreted in the event of an ambiguity to deprive one of common law rights unless that is the plain provision of the statute.
Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffenburg AG, [1975] 1 All E.R. 810
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(H.L.); R. v. Herman, [1879] L.R. 4 Q.B.D. 284; Robinson v. Local Board of Barton‑Eccles, [1883] 8 A.C. 798; Ricard v. Lord, [1941] S.C.R. 1; East Coast Amusements Ltd. v. British Transport Board, [1965] A.C. 58 (H.L.); Conger v. Kennedy (1896), 26 S.C.R. 397 referred to.
APPEAL from a judgment of the Court of Appeal for Ontario allowing an appeal from a judgment of the Divisional Court in the matter of an appeal from the Land Compensation Board. Appeal allowed.
M.P. Spearing and J.A. Olah for the appellant.
R.M. Parker and Mrs. M.G. Hordo for the respondent.
The judgment of the Court was delivered by
SPENCE J.—This is an appeal from the judgment of the Court of Appeal for Ontario pronounced on June 22, 1976—wrongly recited in the certificate of the formal order of that Court as “9th and 10th days of June 1976”. By that judgment, the Court of Appeal for Ontario allowed an appeal from the judgment of the Divisional Court of the Supreme Court of Ontario pronounced on January 23, 1976. By the latter judgment, the said Divisional Court had increased the compensation fixed by the Land Compensation Board for the expropriation of the appellant’s land by the sum of $12,875. The Court of Appeal reduced the award by $16,000, that is, the said sum of $12,875 plus a further amount of $3,125. The significance of these figures is discussed hereafter.
In 1953, the appellant had purchased some twenty-six acres of scenic land in the Rouge River Valley area. There was a brick dwelling house on these lands which was said to be more than one hundred years old and the appellant occupied it as her residence. In 1954, in order to realign the approaches to a bridge which had been destroyed by Hurricane Hazel, the Borough of Scarborough acquired from the appellant one and one-half acres of land. In 1969, the appellant sold to the Metropolitan Toronto and Regional Conservation Authority 19.7 acres and gave to that authority a first right of refusal for the remaining 4.96 acres. However, on the 13th of February 1973, the respondent expropriated the remainder of the lands by regis-
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tration of a plan. Such expropriation was in reference to the establishment of the new zoological gardens and no question arose as to the authority for the said expropriation.
The appellant, in the year 1970, had added to her residence a one-storey extension of approximately 540 square feet in area providing additional living space, a fireplace, a library and washroom facilities. The extension had a full basement. Evidence showed that this extension, erected, as I have said, in 1970, had cost about $26,000 and the items salvaged therefrom by the appellant upon her surrendering possession were of minor value.
The appraisers who testified before the Land Compensation Board were in substantial agreement that the extension added only $10,000 to the market value of the lands and that Board accepted the testimony of the appraiser called by the appellant that such market value was $87,500. The Board allowed the appellant that amount as market value, other amounts as to which no question arises and a further sum of $3,125. The appellant had claimed a further sum of $16,000 being the difference between the cost of the extension, $26,000, and the added market value attributed therefor, $10,000, basing her claim on the provisions of s. 18(1)(a)(ii) of The Expropriation Act, R.S.O. 1970, c. 154, which will be dealt with hereafter. The Land Compensation Board, for reasons which it is difficult to discern, preferred not to make an allowance under this section but did point out that the appellant had purchased lands some miles to the north and was in the process of having erected for herself a new residence at a cost of $95,000. The Board added its allowance of market value of $87,500 and 5 per cent thereof which it allowed under s. 18(1)(a)(i) of The Expropriation Act and finding that the total was $3,125 less than the $95,000 of the new residence allowed that amount under the provisions of s. 15 of The Expropriation Act.
Both the appellant and the respondent appealed to the Divisional Court. Before that Court, both parties were in agreement that the replacement provisions of s. 15 of The Expropriation Act were not applicable there being no evidence to indicate that the new residence was in any way equivalent
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to the expropriated property so the sum of $3,125 could not be allowed. Holland J. gave reasons for the Divisional Court and considered whether an allowance should be made to the appellant under the provisions of s. 18(1)(a)(ii) of The Expropriation Act.
I set out hereunder the provisions of ss. 13, 14, 15 and 18 of The Expropriation Act:
13. (1) Where land is expropriated, the expropriating authority shall pay the owner such compensation as is determined in accordance with this Act.
(2) Where the land of an owner is expropriated, the compensation payable to the owner shall be based upon,
(a) the market value of the land;
(b) the damages attributable to disturbance;
(c) damages for injurious affection; and
(d) any special difficulties in relocation.
but, where the market value is based upon a use of the land other than the existing use, no compensation shall be paid under clause b for damages attributable to disturbance that would have been incurred by the owner in using the land for such other use.
14. (1) The market value of land expropriated is the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer.
(2) Where the land expropriated is devoted to a purpose of such a nature that there is no general demand or market for land for that purpose, and the owner intends in good faith to relocate in similar premises, the market value shall be deemed to be the reasonable cost of equivalent reinstatement.
(3) Where only part of the land of an owner is taken and such part is of a size, shape or nature for which there is no general demand or market, the market value and the injurious affection caused by the taking may be determined by determining the market value of the whole of the owner’s land and deducting therefrom the market value of the owner’s land after the taking.
(4) In determining the market value of the land, no account shall be taken of,
(a) the special use to which the expropriating authority will put the land;
(b) any increase or decrease in the value of the land resulting from the imminence of the development in
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respect of which the expropriation is made or from any imminent prospect of expropriation; or
(c) any increase in the value of the land resulting from the land being put to a use that could be restrained by any court or is contrary to law or is detrimental to the health of the occupants of the land or to the public health.
15. Upon application therefor, the Board shall, by order, after fixing the market value of lands used for residential purposes of the owner under subsection 1 of section 14, award such additional amount of compensation as, in the opinion of the Board, is necessary to enable the owner to relocate his residence in accommodation that is at least equivalent to the accommodation expropriated.
…
18. (1) The expropriating authority shall pay to an owner other than a tenant, in respect of disturbance, such reasonable costs as are the natural and reasonable consequences of the expropriation, including,
(a) where the premises taken include the owner’s residence,
(i) an allowance to compensate for inconvenience and the cost of finding another residence of 5 per cent of the compensation payable in respect of the market value of that part of the land expropriated that is used by the owner for residential purposes, provided that such part was not being offered for sale on the date of the expropriation, and
(ii) an allowance for improvements the value of which is not reflected in the market value of the land;
(b) where the premises taken do not include the owner’s residence, the owner’s costs of finding premises to replace those expropriated, provided that the lands were not being offered for sale on the date of the expropriation; and
(c) relocation costs, including,
(i) the moving costs, and
(ii) the legal and survey costs and other non-recoverable expenditures incurred in acquiring other premises.
(2) The expropriating authority shall pay to a tenant occupying expropriated land in respect of disturbance so much of the cost referred to in subsection 1 as is appropriate having regard to,
(a) the length of the term;
(b) the portion of the term remaining;
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(c) any rights to renew the tenancy or the reasonable prospects of renewal;
(d) in the case of a business, the nature of the business; and
(e) the extent of the tenant’s investment in the land.
It has been the submission of counsel for the appellant throughout that s. 18(1)(a)(ii) should be interpreted to authorize the allowance, the difference between the cost of the extension, $26,000, and the lesser increase in the market value of the property, $10,000, as part of the compensation. The respondent, however, has contended that so long as the “improvement”, to use the word of the subparagraph, added any amount no matter how small to the market value then the paragraph became inapplicable. Holland J., giving the unanimous reasons for the Divisional Court, considered such an interpretation illogical and quite opposed to the legislative purpose exhibited in the sections of the statute. On the other hand, Arnup J.A. again giving unanimous reasons, for the Court of Appeal, was of the opinion that the interpretation advanced by the appellant required the amendment of the paragraph of s. 18(1)(a) by the adding of such words as “to the extent that the value of such improvements is not fully reflected in the market value” and that such amendment was beyond the function of the Court.
Thus we have in this Court the single neat question whether the provisions of s. 18(1)(a)(ii) justify an allowance to the owner when an improvement has added to the market value some amount but only an amount substantially less than the cost thereof. The relationship of “cost” and “value” will be considered hereafter.
I think I should first state that the choice between the two interpretations advanced cannot be made by the reference to the plain words of the paragraph. Arnup J.A. was of the opinion that the interpretation advanced by the appellant required the addition of a whole phrase to the paragraph. Surely it may be said with equal force that the very narrow interpretation advanced by the respondent also requires the insertion of such limiting words as, for instance, “in any way”, between the word “reflected” and the word “in”.
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The word “reflected”, in my view, is a most difficult word and one which may only be understood by considering all of the sections and, I have concluded, also by considering the legislative history and the mischief which the legislators sought to remedy.
The Ontario Law Reform Commission submitted a report on the Basis for Compensation on Expropriation. It has been established that such report may be considered not by seeking to interpret the statute in accordance with the recommendations made in the report but to determine the problem which faced the legislators and which they must have sought to meet in the new statute: The Expropriation Act, 1968-69 (Ont.), c. 36, now R.S.O. 1970, c. 154. Much authority may be cited for such proposition but I refer only to Black-Clawson International Ltd. v. Papierwerke Waldhof-Aschaffensburg AG[1], per Lord Reid at p. 814:
But the principle is that if the enactment is ambiguous, that meaning which relates the scope of the Act to the mischief should be taken rather than a different or wider meaning which the contemporary situation did not call for. The mischief which this Act was intended to remedy may have been common knowledge 40 years ago. I do not think that it is today. But it so happens that a committee including many eminent and highly skilled members made a full investigation of the matter and reported some months before the Act was passed.
I think that we can take this report as accurately stating the “mischief” and the law as it was then understood to be, and therefore we are fully entitled to look at those parts of the report which deal with those matters.
I turn to the report. It dealt with the earlier history of the determination of “due compensation” and the collision of two contradictory concepts in the ascertainment of that “due compensation”, i.e., that of “market value” and that of “value to the owner”. The first concept was earlier adopted by the courts in Ontario while the Exchequer Court and its successor the Federal Court have clearly espoused the latter. The Ontario courts, the report notes, seem to have turned of late to the “value to the owner” concept but much confusion and uncertainty remained so that the
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problem had to be resolved by the adoption of a “statement of the elements which compose compensation”. I cite a paragraph from p. 15 of the report:
The Commission believes that much of the confusion and uncertainty in this area could be dispelled if the statute were changed to provide a statement of the elements which compose compensation. One method would be to commence with a general statement that the owner is entitled to full indemnification for all monetary loss caused by the expropriation, followed by a definition of compensation that includes the market value for the land taken and damages for disturbance.
I am of the opinion that the legislators adopted such a course. Section 13(2) of The Expropriation Act sets out the four elements which compose compensation as follows:
(a) the market value of the land;
(b) the damages attributable to disturbance;
(c) damages for injurious affection; and
(d) any special difficulties in relocation.
The market value in the particular case was based on the use of the property at the time of the expropriation so the final clause of the subsection does not apply.
The market value, the subject of para. (a) in s. 13(2), is further and accurately defined in s. 14(1) of The Expropriation Act. The remaining parts of s. 14 and ss. 15, 16 and 17 do not apply in the present circumstances, so I turn to s. 18 of The Expropriation Act. It will be seen that this section, in so far as it applies to the facts here present, is the further delineation of disturbance the “element of compensation” prescribed in s. 13(2)(b) which I have just quoted. It should be noted that the direction to pay is of “such reasonable costs as are natural and reasonable consequences of the expropriation including” [the underlining is my own]. It has been established that when the statute employs the word “including” or “includes” rather than “means” the definition does not purport to be complete or exhaustive and there is no exclusion of
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the natural ordinary meaning of the words. R. v. Herman[2], per Lord Coleridge at p. 288, Robinson v. Local Board[3], at p. 800, both of which were adopted by Rinfret J. (as he then was) in Ricard v. Lord[4], at pp. 10-11. Therefore, if the sum of $16,000, the difference between the $26,000 cost of the extension and the $10,000 by which it increased the market value of the property, were a “reasonable cost of the natural and reasonable consequence of the expropriation”, the effect of s. 18(1) would be to direct that sum to be added to the compensation whether or not it could be fitted into the words of paras. (a), (b) or (c) which follow the general words of the said s. 18(1). The appellant proved that the improvement cost $26,000. It was the unanimous opinion of the appraisers that the expenditure of that sum only increased the market value by $10,000. Therefore, I am of the opinion that the appellant’s loss of the difference of $16,000 was a “cost” and was the natural result of the expropriation. The appellant had spent the $26,000. Due solely to the expropriation, she could not enjoy the fruits of that expenditure. If she could only recover the market value she would only be reimbursed to the extent of $10,000. The balance of $16,000 was a loss to her and a direct cost of the expropriation. I am of the view that the appellant is entitled to succeed on this interpretation of the section without the use of the questioned para. s. 18(1)(a)(ii).
I reach the same result, however, when I turn to that paragraph. Again, I stress the new design of The Expropriation Act. The vagueness of “value to the owner” is replaced in s. 13 by “market value” and three clearly stated additions thereto and the first is “disturbance”. “Disturbance” is wide enough to cover special values to the expropriated owner which cannot be covered by “market value” and s. 18 extends the outline of what may be allowed for “disturbance”. Again I turn to the report of the Ontario Law Reform Commission and I quote the paragraph at the top of p. 29:
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E. UNMARKETABLE IMPROVEMENTS
Sometimes an owner will make improvements on his property which are of special value to him but which will not be reflected in the market value of the land. On the principle that he should be indemnified for his loss, the owner should receive compensation for the unmarketable improvements he has made. The examples given previously were that of a paraplegic who installed ramps in his home or an owner who constructs a bomb‑shelter. Such improvements would only be of special value to them, or at the most, an insignificant group of prospective buyers. There might be some who would exclude paying compensation in these instances to the eccentric home-owner who has made what may appear to the rest of society as either a frivolous or otherwise unwarranted expenditure. It is the view of the Commission, however, that the eccentric is as much entitled to be indemnified for his home as the non-eccentric. Compensation in these cases, however, should be restricted to residential properties. When such improvements are made on industrial or commercial property, they should be considered to be at the risk of the business.
[The underlining is my own.]
It is to be noted that the heading is “Unmarketable Improvements” and the respondent has submitted, with success in the Court of Appeal and again to this Court, that s. 18(1)(a)(ii), the legislation enacting the provision as to this category should be confined to improvements which add nothing whatsoever to the market value of the property. Surely this is too much to draw from the title to a paragraph in a report. The title is really only a nickname for it is not the improvement which anyone would seek to market; the improvement is part of the building and the question is whether the market value of the whole property has been increased. Moreover, the words which I have underlined demonstrate to me that the commission was considering in the same class improvements which would add to market value much less than their costs because they would attract such a small number of prospective purchasers. It is also important that when the legislators turned to enact legislation to deal with the problem they omitted from the paragraph the word “unmarketable” as descriptive of the improvement but utilized the very words of the report “but which will not be reflected in the market value of the land”. The words of the paragraph are difficult: “…improve-
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ments the value of which is not reflected in the market value of the land”. What does “value” mean? The respondent in argument suggested “market value” but how could the word mean “market value” when those very words appear in the same sentence and in the very following line? If one replaces the word “value” where it first appears with the two words “market value” then the clause becomes absolutely meaningless. In my view, the word “value” following the word “improvement” refers to the worth of the improvements to the person who erected it for her enjoyment and had no relation at all to market value. The citizen fearful of air raids found value to himself in the bomb shelter, the disabled person found real value to him in the ramps. It is the rank injustice of depriving such persons of the value of their improvements by confining them to the market value which the legislation seeks to avoid. The fact that a few people might think the bomb shelter of some little value as a root cellar or the ramps as a handy way to move in heavy furniture matters not.
Then let us consider the word “reflect”. Its source is evident by reference to the report. But as I have said, it is a difficult word. If ten per cent of the cost of an improvement increases the market value by that amount, is the value of the improvement “reflected” in the market value? The Shorter Oxford Dictionary gives some dozen main meanings for the word “reflect” and not one of them fits accurately into the clause in question. Surely there must be an element of completeness in the addendum to market value wrought by the reflection. I do not think that it could be said that a mirror reflected the image of a man if he could see only the one side of his face and none of the rest of his body. That mirror would reflect only one side of his face. The improvement which increases the market value of the property only ten per cent of its costs is not “reflected” in the increase of the market value but only in a limited fashion augments it.
The interpretation put forward by the respondent and adopted by the Court of Appeal results in the obvious injustices which have been mentioned in the report of the Ontario Law Reform Commis-
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sion and in these reasons. When one realizes that the legislation was intended to replace the vague concept of “value to owner” then it becomes apparent that such a narrow interpretation fails to carry out the obvious purpose of the legislation. There would seem to be no doubt that by the application of the “value to owner” principle, the appellant would have been entitled to recover compensation for the “unmarketable improvement” had the expropriation occurred while the previous statute had been in effect. A remedial statute should not be interpreted, in the event of an ambiguity, to deprive one of common law rights unless that is the plain provision of the statute: East Coast Amusements Ltd. vs. British Transport Board[5], per Viscount Simmonds at p. 81. The same principle has been expressed in this Court as long ago as 1896: see Conger v. Kennedy[6], per Strong C.J.C. at p. 405, and thereafter both in this Court and the Courts of Appeal of various provinces.
For the above reasons, I would allow the appeal, annul the judgment of the Court of Appeal, and restore the judgment of the Divisional Court, resulting in the appellant recovering the sum of $108,751.50 together with interest at 6 per cent from August 3, 1973 on the sum of $87,500. The appellant is entitled to her costs as awarded by the Land Compensation Board and in the Divisional Court, the Court of Appeal for Ontario and this Court.
Appeal allowed with costs.
Solicitors for the appellant: McKeown, Yoerger, Spearing & Champlin, Toronto.
Solicitor for the respondent: A.P.G. Joy, Toronto.