Alberta v. Nilsson, (1999) 246 A.R. 201 (QB)

• Judge: Marceau, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: June 04, 1999
• Citations: (1999), 246 A.R. 201 (QB);1999 ABQB 440;[1999] 9 WWR 203;246 AR 201;70 Alta LR (3d) 267;46 CCLT (2d) 158;[1999] CarswellAlta 499;[1999] AJ No 645 (QL);24 RPR (3d) 237;67 LCR 1

Alta. v. Nilsson (1999), 246 A.R. 201 (QB)

MLB headnote and full text

Temp. Cite: [1999] A.R. TBEd. JN.053

In The Matter Of An Arbitration pursuant to the Arbitration Act, being Chapter A-43.1 of S.A. 1991 and an agreement dated August 20, 1993

Her Majesty the Queen in Right of the the Province Of Alberta as represented by the Minister Of Public Works, Supply and Services (applicant/respondent) v. Thor William Nilsson (respondent/applicant)

(Action No. 9503-25991)

Indexed As: Alberta v. Nilsson

Alberta Court of Queen's Bench

Judicial District of Edmonton

Marceau, J.

June 4, 1999.

Summary:

The province planned to acquire land for building ring roads. Nilsson's land was included in one targeted area. In 1974 the Crown, which initially had no immediate plans to purchase the reserved lands save in exceptional circumstances, created Restricted Development Areas (RDAs) under the Depart­ment of the Environment Act, to preserve them for their intended future use. This use of the Act was successfully chal­lenged in 1977 and the province subse­quent­ly amended the legislation to permit the use. In 1976 Nilsson's application to develop a mobile home park on his prop­erty was refused. Negotiations to purchase Nilsson's land broke off twice, in 1976 and 1978. The Crown actively sought to pur­chase some lands from 1979 to 1981 but Nilsson was left out of the purchase rush. In 1982 Nilsson again initiated contact with the Crown and negotiations began but were not concluded until 1987 when an agreement to purchase under s. 30 of the Expropriation Act was reached. The agreement contem­plated that the issue of the amount of com­pensation would be decided by the Land Compensation Board. However, before the Board hearing was held Nilsson sued the Crown claiming de facto expropriation of his land, and the tort of abuse of public office. In 1993 the parties agreed to submit the contentious issues and the question of com­pensation (i.e., the value of the land in 1987) to arbitration. The arbitrator found that the de facto expropriation action was barred by the Limitation of Actions Act but that the tort of abuse of public office had occurred around 1976. The arbitrator fixed damages flowing from that tort (valuing the land as of May 1, 1977) and fixed compensation for the land in 1987. The arbitrator refused damages for loss of interest in an auction market as the damages were too remote to meet the foreseeability test. The arbitrator rejected Nilsson's claim for damages at large and exemplary damages. The Crown appealed and Nilsson cross-appealed. At issue was: whether there was a de facto expropriation of Nilsson's land by the Crown and if so, when; whether the Crown com­mitted the tort of abuse of public office, and if so, when; and whether the arbitrator erred in assessing market value and in ordering the Crown to pay interest to Nilsson?

The Alberta Court of Queen's Bench dis­missed the appeal and cross-appeal. No claim for disturbance damages would be allowed where the arbitration agreement did not allow for such. There was no de facto expropriation where the freeze was not a total "taking" of Nilsson's land. The arbitra­tor applied the wrong test for abuse of pub­lic office, but had he applied the correct test he should have found that abuse of public office occurred in 1976 in any event. The tort was knowingly, illegally freezing the land through establishment of the RDA, but damage did not occur until 1976 when negotiations subsequent to development refusal ensued. The court affirmed the award of damages and interest.

Editor's Note: For a prior decision in this matter, see 208 A.R. 273.

Arbitration - Topic 5702

The award - Interest - Jurisdiction - The province planned to acquire land, includ­ing Nilsson's land, for road building - The province initially had no immediate plans to purchase the reserved lands, save in exceptional circumstances, and restricted their development to preserve them for their intended future use by creating a Restricted Development Area (RDA) under the Department of the Environment Act - A consensual arbitrator held that the Crown had committed an abuse of public office and that the remedy was expropri­ation - The arbitrator fixed damages and awarded interest based on the interest that was charged to Nilsson, viewing him as a borrower - In doing so the arbitrator pierced the corporate veil as the lands were held by Nilsson through his regis­tered companies - The Alberta Court of Queen's Bench held that the arbitrator acted within his discretion - See paragraph 218.

Arbitration - Topic 5702

The award - Interest - Jurisdiction - In 1974 the province froze Nilsson's land for later highway development - In 1976 Nilsson's application to develop a mobile home park on his property was refused - Negotiations to purchase Nilsson's land broke off twice, in 1976 and 1978 - In 1982 negotiations began again, but were not concluded until 1987 when an agree­ment to purchase under s. 30 of the Expropriation Act was reached - The agreement contemplated that the amount of compensation would be decided by the Land Compensation Board - However, prior to the Board hearing, Nilsson sued the Crown for, inter alia, abuse of public office - In 1993 the parties agreed to submit the contentious issues and the compensation question (i.e., the value of the land in 1987) to arbitration - The arbitrator found an abuse of public office for which expropriation was the appropri­ate remedy - On appeal, the Crown argued, inter alia, that: the arbitrator lacked juris­diction to award pre-1984 interest (in that such interest could be justified neither under s. 15 of the Judicature Act, nor as damages); the arbitrator lacked jurisdiction to award post-1984 compound interest; and the post-1984 rate was not justifiable on the facts - The Alberta Court of Queen's Bench affirmed the interest award - See paragraphs 218 to 223.

Arbitration - Topic 7905

Judicial review - Jurisdiction of the courts - Consensual arbitrator - General - The parties agreed to arbitration, then appealed the decision - The Alberta Court of Queen's Bench stated that it would apply the "correctness" test to the arbitrator's statements of the law and the "palpable" or "manifest error" test to the arbitrator's findings of fact or mixed fact and law - Further, the court stated that "... even if I find that the law has been misstated or there is a palpable error in coming to the conclusion with respect to certain facts, if in applying the correct law and making obvious inferences as to the facts from the evidence I come to the same conclusion as the arbitrator, his decision must stand. An appeal court may affirm on any valid ground and may do so for its own reasons, ignoring the reasons of the lower court which are not persuasive" - See para­graph 32.

Company Law - Topic 310

Nature of corporations - Lifting the cor­porate veil - General - [See first Arbitra­tion - Topic 5702 ].

Damages - Topic 1337

Exemplary or punitive damages - Abuse of public office - The province froze lands, including Nilsson's land, for high­way purposes - The province initially had no immediate plans to purchase the reserved lands, save in exceptional cir­cumstances - Nilsson's application to develop his property was refused - Nego­tiations to purchase his land broke off in 1976 and 1978 - The Crown actively sought to purchase some lands from 1979 to 1981, but not Nilsson's land - Further negotiations from 1982 to 1987 yielded an agreement to sell, but no agreement on price - Nilsson sued the Crown, alleging de facto expropriation and abuse of public office - The parties agreed to arbitration - The arbitrator found that the tort of abuse of public office had occurred and that the remedy was expropriation - The arbitrator refused damages for loss of interest in an auction market (damages too remote to meet the foreseeability test) - He also denied Nilsson's claim for damages at large and exemplary damages, which would not flow from the expropriation proceedings, but from the finding of an abuse of public office - The Alberta Court of Queen's Bench agreed with the arbitra­tor respecting these three heads of dam­ages - See paragraphs 1 to 10.

Damages - Topic 4389

Torts affecting land and buildings - Occu­pation and use - Loss of opportunity - [See Damages - Topic 1337 ].

Expropriation - Topic 3

Right to compensation - General prin­ciples - Expropriation defined - The Alberta Court of Queen's Bench discussed the test for de facto expropriation - The court held that the elements necessary for expropriation were a complete taking or total extinguishment of rights, no compen­sation paid and a corresponding benefit in favour of the expropriating authority - The court discussed what circumstances could amount to a "taking", distinguishing between mere "negative prohibitions" on the use of land, and restrictions that effec­tively strip the landowner of all, or vir­tually all, of his rights in the land, and thereby entitle him to compensation - See paragraphs 35 to 52.

Expropriation - Topic 3

Right to compensation - General prin­ciples - Expropriation defined - The Alberta Court of Queen's Bench discussed the test for de facto expropriation - The court held that the elements necessary for expropriation were a complete taking or total extinguishment of rights, no compen­sation paid and a corresponding benefit in favour of the expropriating authority - The court discussed what could constitute a "benefit" - See paragraphs 35 to 36 and 53 to 55.

Expropriation - Topic 3

Right to compensation - General prin­ciples - Expropriation defined - The Alberta Court of Queen's Bench stated that "... if the legislation by virtue of which the Crown acted is valid, failure to act in accordance with that legislation does not give rise to a declaration that those illegal acts amount to expropriation de facto. Instead, failing to act in accordance with legislative directives may amount to the tort of abuse of public office" - See para­graph 73.

Expropriation - Topic 3

Right to compensation - General prin­ciples - Expropriation defined - In 1974 the province froze lands, including Nilsson's land, for highway purposes - The province initially had no immediate plans to purchase the reserved lands, save in exceptional circumstances - In 1976 Nilsson's application to develop his prop­erty was refused - In 1978, Nilsson received a bona fide offer to purchase his land, subject to removal of the develop­ment freeze - Negotiations with the Crown to purchase his land broke off in 1976 and 1978 - The Crown actively sought to purchase some lands from 1979 to 1981, but not Nilsson's land - Further negoti­ations from 1982 to 1987 did not yield an agreement on price - A consensual arbi­trator found that there was no de facto expropriation - The Alberta Court of Queen's Bench upheld the finding - See paragraphs 35 to 79.

Expropriation - Topic 1038

Measure of compensation - Methods of valuation - Market value - The province planned to acquire land, including Nilsson's land, for road building - The province initially had no immediate plans to purchase the reserved lands, save in exceptional circumstances, and restricted their development to preserve them for their intended future use by creating a Restricted Development Area (RDA) - A consensual arbitrator held that the Crown committed an abuse of public office in the process and that the remedy was expropri­ation - In fixing damages, the arbitrator rejected the use of actual sales of RDA lands as a comparable to establish fair market value - The Alberta Court of Queen's Bench agreed that using RDA lands as a comparable to establish fair market values was a process involving hiking oneself up by one's bootstraps - See paragraph 215.

Expropriation - Topic 1090

Measure of compensation - Time for valuation - General - In 1974 the prov­ince froze Nilsson's land for later highway development - In 1976 Nilsson's applica­tion to develop a mobile home park on his property was refused - Negotiations to purchase Nilsson's land broke off twice, in 1976 and 1978 - In 1982 negotiations began again, but were not concluded until 1987 when an agreement to purchase under s. 30 of the Expropriation Act was reached - The agreement contemplated that the amount of compensation would be decided by the Land Compensation Board - How­ever, prior to the Board hearing, Nilsson sued the Crown for, inter alia, abuse of public office - In 1993 the parties agreed to submit the contentious issues and the compensation question (i.e., the value of the land in 1987) to arbitration - The arbitrator found an abuse of public office for which expropriation was the appropri­ate remedy - The Alberta Court of Queen's Bench affirmed the arbitrator's conclusion that the land should be valued with reference to a reasonable time to conclude the purchase or expropriation process after the negotiations following the development refusal were at an end (November 1976) - The provision for time was largely discretionary and the court adopted May 1, 1977, the date determined by the arbitrator, as the valuation date - See paragraph 216.

Expropriation - Topic 1305

Measure of compensation - Elements of compensation - Disturbance and incon­venience - General - In 1974 the province froze Nilsson's land for later highway development - In 1976 Nilsson's applica­tion to develop a mobile home park on his property was refused - Negotiations to purchase Nilsson's land broke off twice, in 1976 and 1978 - In 1982 negotiations began again, but were not concluded until 1987 when an agreement to purchase under s. 30 of the Expropriation Act was reached - The agreement contemplated that the amount of compensation would be decided by the Land Compensation Board - How­ever, prior to the Board hearing, Nilsson sued the Crown for, inter alia, abuse of public office - In 1993 the parties agreed to submit the contentious issues and the compensation question (i.e., the value of the land in 1987) to arbitration - The arbitrator found an abuse of public office for which expropriation was the appropri­ate remedy - On appeal, the Alberta Court of Queen's Bench rejected a claim for disturbance damages where the arbitration agreement allowed for other claims arising from the amended statement of claim, but not for disturbance damages - See para­graph 9.

Expropriation - Topic 1322

Measure of compensation - Elements of compensation - Interest - [See both Arbi­tration - Topic 5702 ].

Expropriation - Topic 1653

Measure of compensation - Interest - Commencement of - [See second Arbi­tration - Topic 5702 ].

Interest - Topic 5010

Interest as damages (prejudgment interest) - General principles - Calculation of interest - Simple or compound - [See second Arbitration - Topic 5702 ].

Statutes - Topic 1644

Interpretation - Extrinsic aids - Legislat­ive history - Legislative debates - The province planned to acquire land, including Nilsson's land, for road building - The province initially had no immediate plans to purchase the reserved lands, save in exceptional circumstances, and restricted their development under the Department of the Environment Act (Act) to preserve them for their intended future use - This use of the Act was successfully challenged and the province subsequently amended the legislation to permit the use - The plaintiff alleged abuse of public office, inter alia, against the province - The Alberta Court of Queen's Bench held that excerpts from Hansard were properly admitted to deter­mine whether the amending legislation was retrospective or retroactive where the very point to be decided was actually antici­pated, debated and resolved by the Legisla­ture and the "mind" of the Crown was the key to the tort issue - See paragraphs 135 to 139.

Statutes - Topic 6703.1

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Retroactivity and retrospectivity distinguished - The prov­ince planned to acquire land, including Nilsson's land, for road building - The province initially had no immediate plans to purchase the reserved lands, save in exceptional circumstances, and restricted their development under the Department of the Environment Act to preserve them for their intended future use - This use of the Act was successfully challenged and the province subsequently amended the legis­lation to permit the use - The Alberta Court of Queen's Bench discussed the difference between retroactive and retro­spective legislation and held that the amending Act had retrospective, but not retroactive effect - See paragraphs 124 to 139.

Torts - Topic 9162

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Misfeasance in or abuse of public office - The Alberta Court of Queen's Bench stated that "... the appro­priate test for abuse of public office in Canada can be stated as follows: Has there been deliberate misconduct on the part of a public official? Deliberate misconduct is established by proving: 1. an intentional illegal act, which is either: (i) an inten­tional use of statutory authority for an improper purpose; or (ii) actual knowledge that the act (or omission ) is beyond statu­tory authority; or (iii) reckless indifference, or willful blindness to the lack of statutory authority for the act; 2. intent to harm an individual or a class of individuals, which is satisfied by either: (i) an actual intention to harm; or (ii) actual knowledge that harm will result; or (iii) reckless indifference or willful blindness to the harm that can be foreseen to result." - See paragraph 108.

Torts - Topic 9162

Duty of care - Particular relationships - Claims against public officials, authorities or boards - Misfeasance in or abuse of public office - The Alberta Court of Queen's Bench held that an arbitrator erred in law in distinguishing between civil servants and members of Cabinet, and between administrative and legislative functions, for the purposes of determining whether there was liability for the tort of abuse of public office - The court stated that while the arbitrator would be correct to distinguish between administrative and legislative actions for the purpose of applying administrative remedies, abuse of public office was an intentional tort - What mattered was whether the actor was a public official, not whether he or she performed administrative or legislative functions within the public service - See paragraphs 110 to 115.

Cases Noticed:

Willick v. Willick (1994), 158 A.R. 52; 118 D.L.R.(4th) 51 (Q.B.), refd to. [para. 27].

Seneviratne v. Seneviratne (1998), 222 A.R. 65; 159 D.L.R.(4th) 733 (Q.B.), refd to. [para. 27].

Canadian Crude Separators Ltd. v. Jacobson (1998), 226 A.R. 171 (Q.B.), refd to. [para. 29].

Toneguzzo-Norvell et al. v. Savein and Burnaby Hospital, [1994] 1 S.C.R. 114; 162 N.R. 161; 38 B.C.A.C. 193; 62 W.A.C. 193; 18 C.C.L.T.(2d) 209; 110 D.L.R.(4th) 289; [1994] 2 W.W.R. 609; 87 B.C.L.R.(2d) 1, refd to. [para. 31].

Triple Five Corp. v. Alberta (1993), 145 A.R. 161; 55 W.A.C. 161; 14 Alta. L.R.(3d) 305 (C.A.), refd to. [para. 31].

Thatcher and Merchant v. Lindskog, Bellerose, J. and Saskatchewan (Attorney General) (1983), 27 Sask.R. 68; 1 D.L.R.(4th) 763 (C.A.), refd to. [para. 32].

Trelenberg v. Alberta (Minister of the Environment) (1980), 31 Alta. L.R.(3d) 353 (Q.B.), refd to. [para. 33].

Attorney General v. De Keyser's Royal Hotel Ltd., [1920] A.C. 508 (H.L.), refd to. [para. 34].

France Fenwick & Co. v. R., [1927] 1 K.B. 458 (H.L.), refd to. [para. 38].

Simpson v. Vancouver, [1976] 1 S.C.R. 71; 7 N.R. 550, folld. [para. 39].

Hauff v. Vancouver (City) (1980), 15 M.P.L.R. 8 (B.C.C.A.), consd. [para. 40].

Hartel Holdings Co. v. Calgary (City) (1984), 53 N.R. 149; 53 A.R. 175; 8 D.L.R.(4th) 321 (S.C.C.), folld. [para. 42].

Steer Holdings Ltd. v. Manitoba et al., [1993] 2 W.W.R. 146; 83 Man.R.(2d) 171; 36 W.A.C. 171 (C.A.), refd to. [para. 44].

Manitoba Fisheries v. Canada, [1979] 1 S.C.R. 101; 23 N.R. 159; 88 D.L.R.(3d) 462, refd to. [para. 48].

Tener and Tener v. British Columbia, [1985] 1 S.C.R. 533; 59 N.R. 82; [1985] 3 W.W.R. 673, refd to. [para. 48].

Mariner Real Estate Ltd. et al. v. Nova Scotia (Attorney General) (1998), 171 N.S.R.(2d) 1; 519 A.P.R. 1; 165 D.L.R.(4th) 727 (S.C.), refd to. [para. 51].

Kramer et al. v. Wascana Centre Author­ity, [1967] S.C.R. 237 [para. 57].

Heppner v. Alberta (1977), 6 A.R. 154; 4 Alta. L.R.(2d) 139 (C.A.), refd to. [para. 58].

Westminster Corp. v. London & North Western Railway, [1905] A.C. 426, refd to. [para. 67].

Rodenbush v. North Cowichan (District) (1977), 76 D.L.R.(3d) 731 (B.C.S.C.), refd to. [para. 75].

Soo Mill & Lumber Co. v. Sault Ste.-Marie (City), [1975] 2 S.C.R. 78; 2 N.R. 429, folld. [para. 76].

Roncarelli v. Duplessis, [1959] S.C.R. 121; 16 D.L.R.(2d) 689, refd to. [para. 84].

Gershman v. Vegetable Producer's Mar­keting Board (Man.) (1976), 69 D.L.R.(3d) 114 (Man. C.A.), refd to. [para. 86].

White Hatter Limousine Service Ltd. v. Calgary (City) (1993), 144 A.R. 379; 13 Alta. L.R.(3d) 362 (Q.B.), refd to. [para. 87].

Francoeur et al. v. Canada (1994), 78 F.T.R. 109 (T.D.), refd to. [para. 89].

Bourgoin S.A. et al. v. Ministry of Agri­culture, Fisheries and Food, [1985] 3 All E.R. 585 (C.A.), refd to. [para. 90].

Odhavji Estate et al. v. Woodhouse et al., [1998] O.T.C. Uned. 573 (Gen. Div.), refd to. [para. 91].

Odhavji Estate v. Toronto (Metropolitan) Police Force - see Odhavji Estate et al. v. Woodhouse et al.

Northern Territory v. Mengel (1995), 69 A.L.J.R. 527 (Aust. H.C.), refd to. [para. 97].

Garrett v. Attorney General, [1997] 2 N.Z.L.R. 332 (C.A.), refd to. [para. 100].

Three Rivers District Council et al. v. Bank of England (No. 3), [1996] 3 All E.R. 558 (Q.B.), affd. [1998] T.N.L.R. No. 856; [1998] E.W.J. 4042 (C.A.), refd to. [para. 102].

Westminster Bank Ltd. v. Minister of Housing and Local Government, [1970] 1 All E.R. 734 (H.L.), refd to. [para. 121].

Hornby Island Trust Committee v. Storm­well (1988), 53 D.L.R.(4th) 435 (B.C.C.A.), refd to. [para. 128].

Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, [1977] 1 S.C.R. 271; 7 N.R. 401, refd to. [para. 131].

Pepper v. Hart, [1993] A.C. 593 (H.L.), refd to. [para. 136].

Mannix v. Alberta (1984), 56 A.R. 221 (C.A.), refd to. [para. 219].

111246 Construction Ltd. v. Strathmore Investments Ltd., [1988] A.J. No. 24 (C.A.), refd to. [para. 222].

Authors and Works Noticed:

Alberta, Hansard, Legislative Debates (October 28, 1977), p. 1747 [para. 137].

Bauman, R.J., Exotic Expropriations: Gov­ernment Action and Compensation (1994), 52(4) The Advocate 561, pp. 561, 574 [para. 75].

Driedger, Elmer A., Construction of Stat­utes (2nd. Ed. 1983), generally [para. 128].

Driedger, Elmer A., Construction of Stat­utes (3rd Ed. 1994), pp. 446, 448 [para. 136]; 511 [para. 129].

Driedger, Elmer A., Statutes: Retroactive Retrospective Reflections (1978), Can. Bar Rev. 264, pp. 268, 269 [para. 128].

Hansard (Alta.) - see Alberta, Hansard, Legislative Debates.

Hurlburt, William H., Case Comment on Willick v. Willick (1994), 33 Alta. L. Rev. 178, p. 183 [para. 27].

Kerans, Roger P., Standards of Review Employed by Appellate Courts (1994), generally [para. 28]; pp. 55, 175 to 181 [para. 32].

Laux, Frederick A., Planning Law and Practice in Alberta (2nd Ed. 1996), gen­erally [para. 76]; p. 245 [para. 77].

Counsel:

P.E. James Prentice, Q.C., and G.S. Fitch, for the applicant/respondent;

B.P. Kaliel and Colleen Ryan, for the respondent/applicant.

This appeal was heard by Marceau, J., of the Alberta Court of Queen's Bench, Judicial District of Edmonton, who delivered the following decision on June 4, 1999.