Emera Brunswick Pipeline Company Ltd. v. Sierra Supplies Ltd.

Emera Brunswick Pipeline Company Ltd. v. Sierra Supplies Ltd.
Court (s) Database
Federal Court Decisions
Date
2018-01-09
Neutral citation
2018 FC 17
File numbers
T-1013-16
Decision Content
Date: 20180109
Docket: T-1013-16
Citation: 2018 FC 17
Ottawa, Ontario, January 9, 2018
PRESENT: The Honourable Madam Justice Elliott
BETWEEN:
EMERA BRUNSWICK PIPELINE
COMPANY LTD.
Appellant
(Respondent by cross-appeal)
and
SIERRA SUPPLIES LTD.
Respondent
(Appellant by cross-appeal)
JUDGMENT AND REASONS
I. OVERVIEW
A. Nature of the Issues
[1] Emera Brunswick Pipeline Company Ltd. [the Pipeline Company] appeals the decision of a Pipeline Arbitration Committee [PAC] appointed by the Minister of Natural Resources pursuant to section 91 of the National Energy Board Act, RSC 1985, c N-7 [NEB Act] to determine how much should be payable by the Pipeline Company to Sierra Supplies Ltd. [the Landowner] in compensation for an easement granted to the Pipeline Company [Easement] by the National Energy Board [NEB] under subsection 104(1) of the NEB Act. A decision, order or direction of a PAC may be appealed directly to the Federal Court on a question of law or jurisdiction: NEB Act s 101. This requirement is separately discussed in these reasons as it determines whether or not there is jurisdiction to hear this appeal.
[2] After a five-day hearing, in a decision dated May 28, 2016 [Decision], the PAC awarded the Landowner compensation of $466,066.23 plus interest from the date of the Decision, at a rate of 4.75%, plus costs. The Pipeline Company asks that the Court set aside the Decision and remit it to the PAC for redetermination in accordance with the directions of this Court. The Pipeline Company also asks for costs. By cross-appeal, the Landowner asks that interest be awarded from the date of the taking.
[3] The Pipeline Company alleges that the PAC misapprehended the NEB Act and its regulations as well as the evidence on whether a 30-metre area lying on each side of the Easement [the Safety Zone] devalued the land and, whether the Easement and Safety Zone affect the value of the remaining land.
[4] They also allege that the PAC erred in its reasons for rejecting the methodology of the Pipeline Company’s appraiser, and the PAC did not follow the pre-agreed formula to be used to account for the value of the temporary workroom.
[5] The Landowner contests all but one of the grounds of appeal and brings a cross-appeal on three grounds. The Landowner argues that the PAC erred by calculating the value of the Easement on an acreage of 2.44 instead of the actual agreed size of 2.5444 acres. The Landowner asks that the Court vary the award by adding $10,296 on account of this error.
[6] The Landowner also argues that the PAC erred by including the HST paid as part of the advance made to the Landowner when it deducted the advance from the award. The Landowner asks that the Court vary the award by adding that HST of $13,230.88 to the award due to this error.
[7] The Landowner finally requests that the date on which interest was calculated be set to the date of entry, instead of the date of the Decision, or otherwise that this issue be redetermined by the PAC.
[8] The Landowner asks that the Pipeline Company’s appeal be dismissed with costs, except that no costs be awarded to either party on the workroom issue given the parties’ agreement on that issue and that costs be awarded to the Landowner on the cross-appeal.
[9] The Pipeline Company argues that it should be awarded costs on the cross-appeal since the part of the cross-appeal dealing with interest is of the greatest financial magnitude.
[10] For reasons which follow, the appeal is granted in part and the cross-appeal is granted in part. The total amount of the compensation award is varied to $420,246.06. The calculation details are set out in Appendix “A”. The explanations for the changes are set out in these reasons. The issue of the interest start date is remitted to the same Pipeline Arbitration Committee, or, if the members are not all available then to such differently constituted Arbitration Committee as the Minister may appoint under the NEB Act, the PAC is to determine the date from which interest should commence to run. Costs of the appeal are granted to the Landowner. If the parties cannot agree on the amount of costs within thirty days of the date of this judgment then the Landowner may have its costs assessed in accordance with Column III of Tariff B. As the matter of interest has been remitted to the PAC for re‑determination, costs for the cross-appeal shall be in the cause.
[11] While the reasons of the PAC do contain errors, there are sufficient reasonable findings to support its conclusions. The main point of contention is whether it was reasonable for the PAC to give an award for injurious affection. In my view, notwithstanding various errors made by the PAC, that award is rationally supported by the evidence in the record and by reasonable findings of the PAC.
[12] The PAC’s determination that interest would run from the date of the Decision, although within the provisions set out in the NEB Act, did not set out its reasoning with respect to the date chosen. Due to this lack of transparency and justification this Court cannot assess whether such a start date for interest was reasonable given that the entry occurred at an earlier date.
B. Issues agreed upon by the Parties
[13] Prior to the hearing, the parties were able to agree upon and resolve three of the issues in dispute.
(1) Size of the Easement
[14] One such issue is the area of the Easement. Although the PAC originally identified it as being 2.5444 acres in size, in awarding damages it subsequently used the amount of 2.44 acres. The parties agree that the correct size of the Easement is 2.5444 acres. They also agree that 100% of the Easement has been taken so the award to the Landowner under that head of damage should be 2.5444 multiplied by the value per acre.
[15] The parties disagree however as to the value per acre for the Property. The PAC found it is $99,000, being an amount derived by taking the midpoint between the two values put forward by each of the appraisers. The Landowner’s appraiser valued the land at $108,000 per acre. The Pipeline Company appraiser valued the land at $90,000 per acre. This disagreement will be discussed later in these reasons.
(2) The value of the temporary workroom
[16] The parties also agree that the value of the temporary workroom that was used by the Pipeline Company during construction of the Brunswick Pipeline on the Property is $3,239.78 rather than the $62,458.11 awarded by the PAC. The PAC indicated it agreed with the Landowner’s formula for calculating this value but it inadvertently awarded 100% of the market value rather than the temporary use value of 2.75% per year for the two years the workroom was required.
(3) HST in the advance payment to be added to the landowner’s compensation
[17] From the total compensation it found to be payable to the Landowner, the PAC deducted the full amount of the advance previously paid by the Pipeline Company to the Landowner. The parties agree that the HST of $13,230.88 included as part of the advance payment should not have been deducted from the compensation therefore it will be added back.
[18] I have reviewed the underlying record and I am satisfied the evidence supports the agreement between the parties with respect to these issues. The judgment to be issued will include these corrections.
II. BACKGROUND FACTS
[19] The total size of the property of the Landowner on which the Easement was granted is 10.4031 acres [the Property]. It is part of the McAllister Industrial Park in St. John, New Brunswick. The Landowner purchased the Property in 2003 with the intent of subdividing the land and selling it for industrial development. The Property abuts an arterial road, which is at a different grade; Cave Court is a smaller cul-de-sac protruding into the other side of the Property that provides on grade access. The Landowner has the right to build an access entrance to the Bayside Drive public road but, given grade differences, a substantial amount of fill would be required to build it and bedrock in the area of the pipeline would require blasting.
[20] On June 7, 2007, the NEB granted the Pipeline Company a Certificate of Public Convenience and Necessity in respect of a natural gas transmission pipeline running from Canaport Liquified Natural Gas Terminal at Mispec Point, New Brunswick to a point on the US border near St. Stephen, New Brunswick [the Brunswick Pipeline].
[21] The Plans, Profiles and Book of Reference in respect of the Brunswick Pipeline, including the detailed route that would take it through the Property, was approved by the NEB on March 14, 2008.
[22] On March 26, 2008, the Pipeline Company applied to the NEB for a right of entry that would grant it an easement in perpetuity on the Property to allow it to construct and operate the Brunswick Pipeline on the Easement and that prohibited certain activities by the Landowner both on the Easement and within the thirty-metre Safety Zone. Some activities were totally prohibited to the Landowner while others could only take place with the Pipeline Company’s permission or by further order of the NEB.
[23] The Landowner filed a written objection to the Pipeline Company’s application, however on June 2, 2008, the NEB granted entry by order RE-E236-2008 [the Order], which was subsequently registered in the New Brunswick Land Titles System against the Property.
[24] On June 23, 2008 the Pipeline Company paid $115,006.88, including HST, to the Landowner on account of compensation for the taking of the easement.
[25] The parties attempted to negotiate compensation over the next two years, but were unsuccessful. As part of the negotiations, the Pipeline Company commissioned a report by Altus Group Limited [Altus Report], dated June 16, 2008, with a valuation date of May 13, 2008. The report was written by Daniel Doucet, a professional appraiser.
[26] The Landowner commissioned its own appraisal report by Craig Hennigar, also a professional appraiser [the Hennigar Report]. The Hennigar Report was dated July 19, 2010 but assessed the value of the Property as of June 8, 2008.
[27] As the parties could not agree on the appropriate compensation, on November 8, 2010, the Landowner filed a Notice of Arbitration requesting that the compensation be fixed by a PAC. The Pipeline Company filed its reply on December 21, 2010. The reply included the Altus Report as well as a Technical Review prepared by Altus that criticised the methodology of the Hennigar Report.
[28] After dealing with a number of preliminary issues, the three-member PAC heard the matter from January 20-24, 2014. Three witnesses gave evidence on behalf of the Landowner; four witnesses testified for the Pipeline Company. In addition to the oral testimony, the PAC also conducted a site visit at the Property.
[29] After all the evidence was heard, the parties made written submissions to the PAC. However, those submissions were not included in the Appeal Book and are therefore not before the Court.
A. Expert Evidence of the Pipeline Company at the PAC
(1) The Witnesses
[30] The Pipeline Company called four witnesses: (1) Rob McAdam, the President of the Pipeline Company at the relevant times; (2) Rochelle Brown, who wrote an engineering expert report in response to the report prepared for the Landowner by Stephen Perry; (3) Stephanie More, an area manager at Spectra Energy, which is the company that operates the Brunswick Pipeline on behalf of the Pipeline Company; (4) Daniel Mark Joseph Doucet, the author of the Altus Report.
(2) The Altus Report (Mr. Doucet)
[31] The Altus Report appraised the value of the Property before the taking at $90,000 per acre. The report found that the easement removed 100% of the value of the Easement. It valued the taking at $229,000. The Altus Report did not find any injurious affection to the rest of the land, as the Pipeline Company was willing to provide crossings over the pipeline at its own cost and would grant permission for any construction in the Safety Zone to such an extent that the highest and best use of the Property was unaffected by the taking.
[32] Both appraisers based their professional opinions on value as of mid-May (Doucet) or early June 2008 (Hennigar) when the Easement was created. At that time the McAllister Industrial Park, in which the Property was located, had many lots available. Mr. Doucet in his report noted that there was only 23% occupancy.
B. Expert Evidence of the Landowner at the PAC
(1) The Witnesses
[33] The Landowner’s evidence was heard first by the PAC. Three witness were called: (1) Wesley Raymond Debly, the owner of the Landowner company; (2) Stephen Perry, an engineer who prepared a report on the engineering challenges and costs that would be required to blast and excavate on the Property and to connect the Property to Bayside Drive; (3) Craig Hennigar, the author of the Hennigar Report. Stephen Perry was not qualified by the PAC as an expert because, at the time he wrote his report, the company he worked for was owned by a partner in the law firm representing the Landowner.
(2) The Hennigar Report
[34] The Hennigar Report valued the Property before the taking at $108,000 per acre and said that the Easement should be compensated at 100% of property value. Mr. Hennigar determined that because of restrictions placed on development in the Safety Zone approval may or may not be given for development which introduced an element of risk to prospective purchasers. They would want to discount the price as there was other land available in the industrial park without any such restrictions.
[35] The location of the Easement divided the Property. The Hennigar Report divided the land outside the Easement into three portions, referred to as Areas “A”, “B” and “C”. Two of the portions, Areas “A” and “C”, were discounted by 50%, and then those parts of each such piece that were within the Safety Zone were discounted by a further 50%. Effectively the land was divided into six pieces with three pieces subject to a 50% discount, two pieces subject to a 75% discount and one piece of Area “B”, outside the Safety Zone, was not discounted.
[36] The Hennigar Report found that the Property had declined in value from $1,123,535 to $557,591, for a total loss of $565,944. Of this loss, $274,795 was attributable to the Easement; the difference of $291,149 was attributed to injurious affection.
III. Applicable Legislation
[37] There are three sections of the NEB Act that are important in this appeal.
[38] Section 75 of the NEB Act provides that full compensation is to be paid to all persons who sustain damage by reason of a pipeline company exercising powers given to it under the NEB Act:
Damages and compensation
75 A company shall, in the exercise of the powers granted by this Act or a Special Act, do as little damage as possible, and shall make full compensation in the manner provided in this Act and in a Special Act, to all persons interested, for all damage sustained by them by reason of the exercise of those powers.
Indemnisation
75 Dans l’exercice des pouvoirs qui lui sont conférés par la présente loi ou une loi spéciale, la compagnie doit veiller à causer le moins de dommages possibles et, selon les modalités prévues à la présente loi et à une loi spé-ciale, indemniser pleinement tous les intéressés des dom-mages qu’ils ont subis en raison de l’exercice de ces pouvoirs.
[39] The main point of contention between the parties involves a consideration of subsection 97(1)(d) of the NEB Act:
Determination of compensation
97 (1) An Arbitration Committee shall determine all compensation matters referred to in a notice of arbitration served on it and in doing so shall consider the following factors where applicable:
(a) the market value of the lands taken by the company;
(b) where annual or periodic payments are being made pursuant to an agreement or an arbitration decision, changes in the market value referred to in paragraph (a) since the agreement or decision or since the last review and adjustment of those payments, as the case may be;
(c) the loss of use to the owner of the lands taken by the company;
(d) the adverse effect of the taking of the lands by the company on the remaining lands of an owner;
(e) the nuisance, inconvenience and noise that may reasonably be expected to be caused by or arise from or in connection with the operations of the company;
(f) the damage to lands in the area of the lands taken by the company that might reasonably be expected to be caused by the operations of the company;
(g) loss of or damage to livestock or other personal property or movable affected by the operations of the company;
(h) any special difficulties in relocation of an owner or his property; and
(i) such other factors as the Committee considers proper in the circumstances.
Definition of market value
(2) For the purpose of paragraph (1)(a), market value is the amount that would have been paid for the lands if, at the time of their taking, they had been sold in the open market by a willing seller to a willing buyer.
Détermination de l’indemnité
97 (1) Le comité d’arbitrage doit régler les questions d’indemnité mentionnées dans l’avis qui lui a été signifié, et tenir compte, le cas échéant, des éléments suivants :
a) la valeur marchande des terrains pris par la compagnie;
b) dans le cas de versements périodiques prévus par contrat ou décision arbitrale, les changements survenus dans la valeur marchande mentionnée à l’alinéa a) depuis la date de ceux-ci ou depuis leurs derniers révision et rajustement, selon le cas;
c) la perte, pour leur propriétaire, de la jouissance des terrains pris par la compagnie;
d) l’incidence nuisible que la prise des terrains peut avoir sur le reste des terrains du propriétaire;
e) les désagréments, la gêne et le bruit qui risquent de résulter directement ou indirectement des activités de la compagnie;
f) les dommages que les activités de la compagnie risquent de causer aux terrains de la région;
g) les dommages aux biens meubles ou personnels, notamment au bétail, résultant des activités de la compagnie;
h) les difficultés particulières que le déménagement du propriétaire ou de ses biens pourrait entraîner;
i) les autres éléments dont il estime devoir tenir compte en l’espèce.
Définition de valeur marchande
(2) Pour l’application de l’alinéa (1) a), la valeur marchande des terrains correspond à la somme qui en aurait été obtenue si, au moment où ils ont été pris, ils avaient été vendus sur le marché libre.
[40] The Pipeline Company has alleged that the PAC did not properly interpret s112 of the NEB Act when it considered the impact of having to seek approval from the Pipeline Company for certain activities in the vicinity of the pipeline:
Prohibition – construction or ground disturbance
112(1) It is prohibited for any person to construct a facility across, on, along or under a pipeline or engage in an activity that causes a ground disturbance within the prescribed area unless the construction or activity is authorized by the orders or regulations made under subsection (5) and done in accordance with them.
Prohibition — vehicles and mobile equipment
(2) It is prohibited for any person to operate a vehicle or mobile equipment across a pipeline unless
(a) that operation is authorized by the orders or regulations made under subsection (5) and done in accordance with them; or
(b) the vehicle or mobile equipment is operated within the travelled portion of a highway or public road.
[. . .]
Interdiction de construire ou d’occasionner le remuement du sol
112 (1) Il est interdit à toute personne de construire une installation au-dessus, au-dessous ou le long d’un pipeline ou d’exercer une activité qui occasionne le remuement du sol dans la zone réglementaire, sauf lorsque la construction ou l’activité est autorisée par les règlements pris ou par les ordonnances rendues en vertu du paragraphe (5) et est effectuée en conformité avec ceux-ci.
Interdiction relative aux véhicules et à l’équipement mobile
(2) Il est interdit à toute personne de faire franchir un pipeline par un véhicule ou de l’équipement mobile, sauf lorsque cela :
a) soit est autorisé par les règlements ou ordonnances visés au paragraphe (5) et est effectué en conformité avec ceux-ci;
b) soit se fait sur la portion carrossable de la voie ou du chemin public.
[…]
[41] When interpreting the provisions of expropriation legislation, the Supreme Court of Canada held in Toronto Area Transit Operating Authority v Dell Holdings Ltd, [1997] 1 SCR 32, 142 DLR (4th) 206 [Dell] that:
The expropriation of property is one of the ultimate exercises of governmental authority. To take all or part of the person’s property constitutes a severe loss and a very significant interference with a citizen’s private property rights. It follows that the power of an expropriating authority should be strictly construed in favour of those whose rights have been affected.
[. . .]
It follows that the Expropriation Act should be read in a broad and purposive manner in order to comply with the aim of the Act to fully compensate a land owner whose property has been taken.
(Dell at paras 20 and 23)
[42] In Smith v Alliance Pipeline Ltd, 2011 SCC 7, [2011] 1 SCR 160 [Smith], Mr. Justice Fish, writing for the majority, acknowledged the Dell decision then noted that the NEB Act is also remedial legislation and warrants an equally broad and liberal interpretation to that of provincial expropriation statutes. He specifically held that to interpret the NEB Act narrowly would “transform its purpose of full compensation into an unkept legislative promise” (at para 57).
IV. The Pipeline Arbitration Committee Decision
[43] After reviewing the relevant provisions of the legislative framework under which it was operating, the PAC set out six issues it was to determine. In addition to addressing costs and interest payable on the award, the issues were whether the Landowner was entitled to compensation under the NEB Act and, if so, the value of damages for injurious affection and for the land that was taken for the pipeline. The value of the temporary workroom established on the site was also an issue to be determined.
[44] The PAC determined that the Landowner’s whole parcel of land was a total of 10.4 acres zoned Heavy Industrial. The Easement and Safety Zone, also referred to as the Buffer Zone or Control Zone, together total 90 metres in width and run the length of the Property, effectively dissecting it into three parcels, two of which are much smaller than the third parcel.
[45] The PAC noted that the Landowner was seeking full compensation under the NEB Act for all the issues while the Pipeline Company would limit compensation to loss of use and value for the land that the pipeline was upon (Easement) and said that there should be no damages awarded for injurious affection.
[46] After an extensive review of the facts the PAC set out its analysis of the issues. As the claim arose from the construction and maintenance of the Brunswick Pipeline the PAC found that globally the Landowner was entitled to compensation under the NEB Act. It then examined each of the other issues.
A. Compensation for the Easement
[47] The Easement was found by the PAC to be 2.5444 acres in size. The PAC determined that the value of the Easement was $99,000 per acre, which it multiplied by 2.44 acres to arrive at a value for the Easement of $241,560. The parties have agreed that the size of the Easement is 2.5444 acres as originally identified by the PAC and the amount of 2.44 acres was used erroneously in the calculation of the value of the Easement. The correct value for the Easement, using the $99,000 per acre figure, is $251,896, a difference of $10,336.
[48] The PAC also noted that the Easement Agreement contained a Special Conditions Addendum and, in addition to the Easement itself, there was a Safety Zone of 30 metres in width on each side of the Easement.
[49] A significant finding made by the PAC was that given the terms of the Easement Agreement and the fact that the easement runs in perpetuity, “the obligations and restrictions on the Landowner are significant.” The PAC also found that there was no guarantee that permission to build in the Safety Zone or to blast near the Easement would be granted. This finding is a point of contention between the parties.
B. Compensation for Injurious Affection
[50] The PAC found that there was injurious affection on the remainder of the property given the requirement to obtain permission to develop it and the various obligations and restrictions imposed on the Landowner under the Order. The Order requires the Landowner not undertake a wide range of activities without prior written consent of the Pipeline Company.
[51] The PAC concluded that the total value of the property had been reduced by $518,615.90. As it had found that the value of the Easement was $241,560 the remaining amount of $277,055 was attributable to the injurious affection. The PAC deducted $115,006.88 on account of the advance that had already been paid to the Landowner and added $62,458.11 on account of a temporary workroom occupying 0.595 acres.
[52] The PAC erred by using the incorrect acreage calculation for the value of the Easement. As a “before” and “after” calculation was used the total reduction in value of $518,615.90 is not affected by the error. If the correct value is substituted then the amount of injurious affection is simply reduced $10,336, being the amount by which the Easement value was understated.
C. The Award of Interest on the Total Compensation
[53] The Cross-Appeal challenges the interest award made by the PAC. In the Decision the PAC noted that it had discretion to award interest and was governed by subsections 98(4) and (5). The PAC accepted the interest rate put forward by the parties was correct and therefore awarded interest of 4.75% to the Landowner.
[54] The PAC stated interest would run from the date of the Decision until the award is paid. The PAC did not provide any reason for choosing the date of the Decision to start interest running.
V. ISSUES IN DISPUTE
[55] The parties disagree with respect to five matters; they form the issues in this appeal:
The standard of review to be applied to the Decision.
The value per acre to be applied to the award.
The amount, if any, to be paid for injurious affection.
The date upon which interest payable on the award should commence.
The costs to be paid on the appeal and cross-appeal.
VI. STANDARD OF REVIEW
[56] The parties do not agree on the standard of review.
A. Positions of the Parties
[57] The Pipeline Company argues that the standard of review for questions of law was satisfactorily determined by the Federal Court in Bue v Alliance Pipeline Ltd, 2006 FC 713 at para 5, 293 FTR 1 [Bue] where the Court determined that pure questions of law were subject to a correctness review. The Pipeline Company has phrased all of its grounds of appeal as pure errors of law.
[58] The Pipeline Company supports its position by arguing that the PAC does not have a broad statutory mandate to regulate a complex industry in the public interest like the National Energy Board. The mandate is merely to determine how much compensation is due to a landowner. Moreover, the Pipeline Company argues that the right of appeal without leave of the Court on questions of law and jurisdiction should indicate that Parliament intended these matters to be subject to a correctness review. Finally, as each PAC is ad-hoc the Pipeline Company relies on the concurring opinion of Justice Deschamps in Smith, where she argued that an ad hoc tribunal like a PAC does not have any relative expertise in interpreting law as compared to a court.
[59] The Landowner relies on Dunsmuir v New Brunswick, 2008 SCC 9, [2008] 1 SCR 190 [Dunsmuir] to argue the standard of review is reasonableness as all of the Pipeline Company’s grounds of appeal are actually questions of fact reviewable on a reasonableness standard or, at most, they are questions of mixed fact and law where the legal questions are not extricable. In the event that there is a pure question of law, the Landowner argues that Bue has been overtaken by Dunsmuir and Smith. While Justice Deschamps in Smith said an ad hoc tribunal has no special expertise, the majority found that the fact that a PAC was interpreting its home statute was a reason to presume reasonableness.
[60] In addition, the Landowner submits that Parliament has chosen to vest the fact-finding function with a tribunal rather than having compensation determined by a court. While the PAC is ad-hoc, in this instance all the members were lawyers. They can be presumed to hold relative expertise in interpreting the statute granting the PAC its mandate.
B. Analysis
[61] The standard of review for all issues is reasonableness.
[62] Bue was determined pre-Dunsmuir; it has been overtaken by more recent jurisprudence from the Supreme Court of Canada. When an administrative decision-maker such as the PAC is dealing with an interpretation of its home statute the presumption is that the standard of review is reasonableness: Alberta (Information and Privacy Commissioner) v Alberta Teachers' Association, 2011 SCC 61 at para 30, [2011] 3 SCR 654 [Alberta Teachers]. Nothing in the facts of this case or in the legal arguments serves to rebut the presumption. None of the four exceptions to reasonableness are present.
[63] The Landowner is correct to note that in Smith eight of the nine justices who determined the case clearly found the standard of review of the decision of a PAC is reasonableness because it is interpreting its home statute. In Smith the Supreme Court satisfactorily addressed the standard of review of a PAC, as an ad hoc committee, when Mr. Justice Fish concluded that under the NEB Act an arbitration committee was entitled to deference, including when a PAC was considering a question of law (Smith at para 37).
[64] While the Pipeline Company wishes to distinguish and restrict Smith to cases involving a consideration of costs, the decision is much broader than that – the Court made it clear that the governing factor was that the PAC was considering its home statute. The Supreme Court also recently re-confirmed that a statutory right of appeal does not create a new category for which correctness is the standard of review (Edmonton (City) v Edmonton East (Capilano) Shopping Centres Ltd, 2016 SCC 47 at paras 27 – 30, [2016] 2 SCR 293).
[65] A decision is reasonable if the decision-making process is justified, transparent and intelligible resulting in a determination that falls within the range of possible, acceptable outcomes which are defensible on the facts and law (Dunsmuir at para 47).
[66] A reviewing court however is required to pay “respectful attention to the reasons [offered or] “which could be offered in support of a decision”” but, the court is not given “a “carte blanche to reformulate a tribunal’s decision in a way that casts aside an unreasonable chain of analysis in favour of the court’s own rationale for the result”” (Alberta Teachers at para 54, citing Petro-Canada v British Columbia (Workers’ Compensation Board ), 2009 BCCA 396 at paras 53, 56, 98 BCLR (4th) 1, in turn citing David Dyzenhaus, “The Politics of Deference: Judicial Review and Democracy” in Michael Taggart, ed., The Province of Administrative Law (Oxford: Hart Publishing, 1997), 279 at 286).
VII. DID THE PAC ERR IN DETERMINING THE VALUE PER ACRE?
[67] The PAC found that both Mr. Hennigar and Mr. Doucet were credible, well qualified appraisers. As the per acre value differed between them by only $18,000 the PAC simply averaged Mr. Hennigar’s $108,000 per acre value with Mr. Doucet’s $90,000 per acre value and found that an equitable value was the midpoint of $99,000 per acre.
[68] Both appraisers agreed at the hearing before the PAC that the valuation methods would come to the same result in this scenario whether the “before and after” approach was used or the “summation” method was employed. They also both agreed that 100% of the value of the fee simple interest in the Easement should be awarded to the Landowner.
[69] While the Decision contains some misstatements and errors which can make it difficult to read, those problems do not necessarily affect the conclusions drawn by the PAC. For example, in reviewing Mr. Doucet’s calculation of the market value of the Easement the PAC stated that there was insufficient data in New Brunswick to successfully apply the before and after approach. Mr. Doucet, as stated elsewhere by the PAC, used the summation approach.
[70] The Pipeline Company submits that not only did the PAC err in referring to the wrong approach, the conclusion that there was insufficient available data in New Brunswick was a conclusion made without any evidence having been presented. As such it was an error of law to make that finding of fact.
[71] The PAC used the before and after approach to calculate the value per acre but using the summation approach would produce the same result. Neither the misstatement with respect to the method of calculation nor the statement with respect to the amount of data available had any impact on the value per acre determined by the PAC. The PAC simply accepted the values of each appraiser and averaged them together to arrive at the value. There is nothing inherently unreasonable in that approach given that it is the task of the PAC to determine the value per acre and it is not required to select one of the two figures. In Koch v Altalink Management Ltd., 2016 ABQB 678, 3 LCR (2d) 123 [Koch], the Court while sitting on appeal from a denial of compensation for injurious affection in a surface rights case, observed that “[a]ppraising land value is as much an art, based on experience, as it is a science” and, using the average of two appraisals was not only reasonable, it had the additional benefit of taking advantage of the expertise of both appraisers and the totality of the information used by them (at para 145). That statement applies equally to this appeal.
[72] In my view, the value per acre of $99,000 is reasonable given the statements made by the two appraisers that using either methodology would produce the same value; nothing turns on the misstatements made by the PAC in their analysis of this issue.
VIII. DID THE PAC ERR IN ITS INJURIOUS AFFECTION ANALYSIS?
A. Overview
[73] Most of the grounds of appeal put forward by the Pipeline Company relate to the award to the Landowner of $277,055 for injurious affection. It is alleged that the PAC misconstrued and misapplied s 97(1)(d) of the NEB Act which requires it to consider the adverse effect of the Easement on the remaining lands of the Landowner.
[74] The Pipeline Company submits there is no injurious affection. It says that the PAC engaged in speculation about future impacts but there is no actual loss to the Landowner.
[75] The Pipeline Company also alleges that the PAC relied on unspecified regulatory requirements to determine that the Pipeline Company did not have discretion to approve requests for construction near the pipeline and to erroneously conclude that blasting near the pipeline would be absolutely prohibited. It is also submitted that the PAC misconstrued s 112 of the NEB Act as well as the National Energy Board Pipeline Crossing Regulations, Part I, SOR/88-528, and Part II, SOR/88-529 in these respects.
[76] Finally, it is alleged that the PAC failed to consider evidence before it with respect to the process employed by the Pipeline Company to approve requests for construction in the Safety Zone and made factual findings without any evidence. For example, the Pipeline Company says the PAC found that blasting is prohibited in the Easement and Safety Zone.
[77] The Landowner submits that s 112 creates a regulatory risk in relation to development within the Safety Zone. It relies on a decision by Mr. Justice Rothstein, when he was on the Federal Court of Appeal, in which he found that the requirement to obtain leave of the National Energy Board to excavate using power-operated equipment or explosives in the Safety Zone meant that potential purchasers of the lands might see that requirement as a regulatory risk which might diminish the value of the land. Justice Rothstein noted the onus was on the landowner to obtain approval. He rejected the claim by the pipeline owner that the possible denial of permission was speculative and that, until it occurred, there was no adverse effect on the lands (Balisky v Canada (Minister of Natural Resources), 2003 FCA 104, 239 FTR 159 [Balisky], leave to appeal to SCC refused, [2003] SCCA No 193 (QL), 2003 CarswellNat 3688 (WL Can)).
[78] The Landowner submits that the PAC did not ignore or fail to consider the evidence put forward by the Pipeline Company about prior approvals. Rather, the PAC specifically addressed this evidence and found it irrelevant because it was not clear that other lands for which prior approvals had been given were similar to the Property nor was there evidence of a consistent policy or guidelines of the Pipeline Company for granting permission.
B. Analysis
(1) The Law
[79] As previously mentioned, the Supreme Court held in Dell and confirmed in Smith that for remedial statutes “the aim … [is] to fully compensate a land owner whose property has been taken” (Smith at para 56, Dell at para 23). The NEB Act in s 75 provides that the Pipeline Company shall “make full compensation in the manner provided in this Act”; s 97(1)(d) of the NEB Act then provides that compensation shall be provided for “the adverse effect of the taking of the lands by the company on the remaining lands of an owner”. This is the concept of injurious affection.
[80] There is no definition of injurious affection in the NEB Act. The Federal Court of Appeal has noted that “[t]he principle of injurious affection flows from the overriding objective of compensation in expropriation cases, which is to make the expropriated owner “economically whole”” (Semiahmoo Indian Band v Canada, [1998] 1 FC 3 at 58, 148 DLR (4th) 523 at 565 (FCA)).
[81] As in this case there has been a partial taking, the three criteria set out below must be met in order for the Landowner to receive compensation: Eric C.E. Todd, The Law of Expropriation and Compensation in Canada, 2nd ed (Scarborough, Ont: Carswell Thomson Professional Publishing, 1992) at 335.
[82] The first criterion is that the remaining lands must have been held by the Landowner. That criterion has been met and is not in dispute.
[83] The second criterion is that the remaining lands must have been depreciated in value by activities upon the expropriated land. Under paragraph 84(a) of the NEB Act claims for compensation do not apply to “claims arising out of activities of the company unless those activities are directly related to (i) the acquisition of the lands for the pipeline […], (ii) the construction of the pipeline, or (iii) the inspection, maintenance or repair of the pipeline”. While at first blush this provision appears to prevent the Landowner’s claim for injurious affection, the Federal Court of Appeal in Balisky considered the matter and determined that it is not an impediment:
[29] Neither the excluded nor the included activities referred to in paragraph 84(a) have anything to do with the effect of subsection 112(1) on landowners adjacent to a pipeline right-of-way. Claims for compensation arising from subsection 112(1) do not arise from activities of the company as that term is used in paragraph 84(a). They arise by virtue of the presence or existence of the pipeline.
[30] The operations of the pipeline company will certainly include the activities referred to in paragraph 84(a). Howe