For a few months during the summer of 2018, Fortis BC closed a long strip of Vancouver's East 1st Avenue to conduct gas line work. A number of businesses on Commercial Drive have since indicated they are considering whether to bring an action for loss of business revenue over those months. Not one week after East 1st Avenue fully reopened, the decision in Gautam et al v. Canada Line Rapid Transit Inc. et al, 2018 BCSC 1515 was released, which outlines the potential for claims by businesses affected by the construction of public works.
In Gautam, Mr. Justice Grauer considered whether the plaintiffs, three members of a class of owners and tenants of commercial properties along the Cambie corridor, were entitled to damages for injurious affection under the Expropriation Act, RSBC 1996, c. 125, caused by the method selected by the defendants to construct the Canada Line skytrain through Cambie Village in Vancouver between November 2005 and July 2009. He concluded that they were.
Injurious Affection, not Nuisance
Initially the plaintiffs framed their claim in nuisance, and in the alternative, injurious affection. However, in an earlier decision, 2015 BCSC 2038, Justice Grauer determined that the plaintiffs could not claim for nuisance. Particular to this decision was an assessment of the "cut and cover" method used to construct the Canada Line. The cut and cover method involved excavating a large trench in the centre of Cambie Street, constructing concrete tunnels through the trench, refilling the tunnel, restoring utilities, and repaving the surface of the road. The plaintiffs claimed that the defendants could have used "tunnel boring", an alternative method which, in theory, did not require construction to disturb the street surface.
To succeed in nuisance, a plaintiff must show substantial and unreasonable interference with its use and enjoyment of property. A defendant may still escape liability by showing that it acted under statutory authority and there were no practically feasible options to avoid the nuisance. Justice Grauer found that the cut and cover method resulted in a significant and prolonged restriction of access to the plaintiffs' properties. However, tunnel boring was not practically feasible in the circumstances, after taking into account the effect on the procurement process, the importance of completing the Canada Line before the 2010 Olympics, and the unknown geotechnical risks associated with tunnel boring through the Cambie corridor.
Therefore, while the cut and cover construction did substantially interfere with the plaintiffs' use and enjoyment of property, there were no other practically feasible alternatives available to construct the Canada Line and the defendants were absolved of liability for economic losses arising out of the nuisance.
Nevertheless, Justice Grauer found that the plaintiffs could advance a claim for injurious affection under sections 41 and 42 of the Expropriation Act. The test for injurious affection is:
- the damage must result from an act rendered lawful by statutory powers of the person performing such act;
- the damage must be such as would have been actionable under the common law but for the statutory powers;
- the damage must be an injury to the land itself and not a personal injury or an injury to business or trade
- the damage must be occasioned by the construction of the public work, not by its use.
All four elements were met in this case. However, element 3 meant the plaintiffs could not claim damages for loss of business revenue, only for injury to the land. Justice Grauer found that "injury to land" in element 3 could include the loss of rental or assessment value in the land, whether temporary or permanent, and whether sustained by the landlord or tenant. In this case, the construction substantially interfered with access to the properties, resulting in an impairment of the rental value, and ultimately the overall assessment value, of properties in Cambie Village for the duration of the construction. On this basis, he concluded that the plaintiffs could raise a claim for injurious affection.
Measuring Injurious Affection
In May 2018, three plaintiffs applied for judgment for damages for injurious affection on the basis that they overpaid for rent during the period of construction. Justice Grauer addressed two issues in this decision: the period of time for which damages could be claimed, and how to measure the plaintiffs' loss.
Section 42(1) of the Expropriation Act provides that a claim for compensation for injurious affection must be made in writing within one year after the damage was sustained or became known to the claimant. The plaintiffs provided written notice in July 2009. The defendants argued that the plaintiffs could only claim for damages sustained after July 2008, and that any damages sustained before July 2008 was time-barred.
At the heart of the plaintiffs' claim was the substantial interference with access to the plaintiffs' properties, which did not end when the tunnels immediately around the subject properties were filled. The cut and cover method meant that utilities were disturbed, roads had to be repaved and refinished, and further construction continued further along Cambie Street. Thus, the restricted access to the plaintiffs' properties did not end until the entire project was completed and the one year limitation period to provide written notice did not start to run until the Canada Line was fully constructed.
With respect to the calculation of damages, Mr. Justice Grauer found that the appropriate way to measure injurious affection for the reduction in rental value was the difference between the rent paid pursuant to their rental contracts and what the market rent would have been, taking the construction into consideration. The contract rent is set out in the leases in place before the construction of the Canada Line. The market rent is calculated by reducing the contract rent by the percentage by which the tenants' net profits were reduced.
Ultimately, each of the three plaintiffs was awarded damages for injurious affection from the construction of the Canada Line. This decision was a test case to be used to resolve the claims of the other plaintiffs in the class. It is also likely being considered carefully by those businesses on Commercial Drive in relation to Fortis BC's gas line work this summer.
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