Costello and Dickhoff v. Calgary (City), (1997) 209 A.R. 1 (CA)

• Judge: Picard, O'Leary and Hunt, JJ.A.
• Court: Court of Appeal (Alberta)
• Case Date: September 08, 1997
• Citations: (1997), 209 A.R. 1 (CA);1997 ABCA 281;152 DLR (4th) 453;[1998] 1 WWR 222;209 AR 1;53 Alta LR (3d) 15;[1997] AJ No 888 (QL);160 WAC 1

Costello v. Calgary (1997), 209 A.R. 1 (CA);

  160 W.A.C. 1

MLB headnote and full text

Temp. Cite: [1997] A.R. TBEd. SE.053

The City of Calgary (appellant/defendant) v. Elizabeth Jean Costello and Mary Ann Dickhoff (respondents/plaintiffs)

(Appeal No. CA01-15689)

Indexed As: Costello and Dickhoff v. Calgary (City)

Alberta Court of Appeal

Picard, O'Leary and Hunt, JJ.A.

September 8, 1997.

Summary:

In November 1972 the city purported to pass a bylaw expropriating the plaintiffs' land and motel. The city took title in De­cember 1972. In March 1974, the city took possession. The plaintiffs sued for a declar­ation that the bylaw was void. In 1980, the Alberta Court of Queen's Bench dismissed the action (31 A.R. 86), which was affirmed on appeal in 1981. In 1983, the Supreme Court of Canada declared the expropriation void (46 N.R. 54; 41 A.R. 318). In October 1983, the city restored possession and title to the plaintiffs. In 1985, the plaintiffs sued the city for damages for trespass. The Alberta Court of Queen's Bench ruled that the action was statute barred (81 A.R. 282). The Alberta Court of Appeal overturned that decision (97 A.R. 348). Accordingly, the action proceeded. The issues were (1) was there an action in trespass; and (2) if so, were the plaintiffs entitled to damages and what was the measure of those damages.

The Alberta Court of Queen's Bench, in a judgment reported 163 A.R. 241, allowed the action in trespass and awarded the plaintiffs $1,927,061 in damages (inclusive of interest) for the reasonable loss of cash flow from the operation of a 40 unit motel expected to be in operation on January 1, 1974 to the date title was returned on October 17, 1983 and thereafter until December 31, 1985. The city appealed against liability, the damage award and the interest awarded. The plaintiffs appealed the damage award.

The Alberta Court of Appeal dismissed the appeal, with the exception of reducing the interest awarded and dismissed the cross-appeal.

Damages - Topic 1002

Mitigation - Duty to mitigate - The Alberta Court of Appeal, in generally discussing the duty to mitigate, stated that "a decision as to whether or not the plain­tiff satisfied the duty to mitigate consti­tutes a legal conclusion. However, the question as to whether or not she acted reasonably in the circumstances is one of fact, not law. ... The onus of proof lies on the defendant to establish on a balance of probabilities that the plaintiff failed to take reasonable steps to avoid losses. ... How­ever, the court will not allow the defend­ant, in discharge of that onus, to be overly critical of the plain­tiff. ... The duty to mitigate does not invariably require action to be taken imme­diately upon breach. As the plaintiff need merely act reasonably in the circumstances, considerable delay may be permitted in some cases. ... The plain­tiff need not incur great expense or incon­venience in an attempt to stem the flow of losses resulting from the defendant's breach. ... Nor need the plaintiff incur an unreasonable risk, or embark upon a spe­culative venture, in an attempt to mitigate her losses." - See para­graph 42.

Damages - Topic 1002

Mitigation - Duty to mitigate - In Nov­ember 1972, the city purported to pass a bylaw expropriating the plaintiffs' land and motel - The city took title in December 1972 and possession in March 1974 - In 1983, the Supreme Court of Canada declared the expropriation void for failing to give proper notice - Accordingly, the city lacked lawful authority from the in­ception for intentionally taking the land - The trial judge found the city was liable in damages for trespass - The city claimed the owners failed to mitigate by not find­ing and purchasing replacement property - The Alberta Court of Appeal affirmed that there was no failure to mitigate - First, the plaintiffs were entitled to litigate to recover their property rather than mitigate by seeking substitute property to develop - In any event, mitigation was not reason­ably possible where no comparable prop­erty existed - See paragraphs 36 to 53.

Damages - Topic 1084

Mitigation - Evidence and proof - Burden of proof - [See first Damages - Topic 1002 ].

Damages - Topic 1527

General damages - Elements of - Loss of opportunity - The plaintiff landowners finally had their property returned after being held by the city for nine years under an expropriation which was ultimately ruled to be void - The plaintiffs claimed damages for the lost opportunity to sell the property during that nine year period - The trial judge rejected damages on that basis and awarded the plaintiffs damages for their lost profits on the motel operation they had intended to develop on the prop­erty - The Alberta Court of Appeal affirmed the decision - Little evidence was adduced of any intention to sell - The court stated that "relief is not available under the loss of opportunity principle if the evi­dence shows that the plaintiff mere­ly was deprived of a speculative chance of re­ceiving a benefit" - See paragraphs 88 to 92.

Damages - Topic 4212

Torts affecting land and buildings - Nor­mal measure - Trespass - A void expro­priation left a city liable to the landowner for trespass - The lands were returned - The Alberta Court of Appeal affirmed that damages were to be awarded on the basis of restitutio in integrum - See paragraphs 11 to 35.

Damages - Topic 4212

Torts affecting land and buildings - Nor­mal measure - Trespass - A 1972 expro­priation of land for a future highway inter­change was declared void in 1983, because of a failure to provide required notice - Title and possession were restored in 1983 - The owners had intended to develop the land for a 40 unit motel - The city was found liable in damages for trespass - Damages equalled lost profits from the motel operation from January 1, 1974 to the date of return in 1983, plus lost profits thereafter until December 31, 1985 (addi­tional time for development) ($572,265) - It was no defence to say that the property would have been validly expropriated if it had not been invalidly expropriated and the trial judge found that a development permit would have issued and the property would have been developed and operated as a motel - Further, the owners were entitled to interest at common law (com­pounded annually) from 1974 to the date of trial ($1,354,796) - The Alberta Court of Appeal affirmed the damage award and reduced the interest award to $518,295 - The plaintiffs were entitled to no interest before April 1, 1984 and only simple interest at the prescribed rate from April 1, 1984 to the date of judgment - See para­graphs 11 to 35, 65 to 81.

Evidence - Topic 4164

Witnesses - Privilege - Communications - Privileged communications - Elements of - The Alberta Court of Appeal restated the four principles respecting when communi­cations may be privileged: "(1) The com­munications must originate in a confidence that they will not be disclosed. (2) The element of confidentiality must be essential to the full and satisfactory maintenance of the relations between the parties. (3) The relationship must be one which in the opinion of the community ought to be assiduously fostered. (4) The injury that would inure to the relationship by the disclosure of the communications must be greater than the benefit thereby gained for the correct disposal of litigation." - See paragraph 58.

Evidence - Topic 4166

Witnesses - Privilege - Communications - Offers of settlement - [See Evidence - Topic 4245 ].

Evidence - Topic 4245

Witnesses - Privilege - Lawyer-client communications - Privilege - Offers of settlement or settlement negotiations - Several years passed before owners chal­lenged the validity of the city's purported expropriation of their land - Prior to com­mencing an action challenging the expro­priation, the owners and city exchanged eight documents in negotiations to settle compensation - Most documents were "without prejudice" - The expropriation was found to be void and the owners sued for damages for trespass - In allowing the damages action, the trial judge ruled that all eight settlement negotiation documents (except portions of the last one) were privileged and inadmissible - The Alberta Court of Appeal affirmed that decision, where (1) the documents evolved from a litigious dispute, (2) the communications were intended not to be disclosed if settle­ment negotiations failed and (3) the com­munications were for the purpose of ef­fecting a settlement - See paragraphs 54 to 64.

Interest - Topic 5008

As damages (prejudgment interest) - Enti­tlement - In March 1974, the city took possession of expropriated land intended for motel development - The plaintiffs' action challenging the validity of the ex­propriation was dismissed at trial (1980) and on appeal (1981), but the Supreme Court of Canada declared the expropriation void (1983) - The property was returned to the plaintiffs (1983) - The plaintiffs sued for damages in trespass on obtained judg­ment for $572,265 (Jan. 6/97) - The trial judge awarded compound interest for the full 21 year period ($1,354,796) - The Alberta Court of Appeal agreed that com­pound interest for the full 21 year period would be commercially fair - However, absent a right to pre-judgment interest at common law, prejudgment interest was limited to simple interest at the prescribed rate from April 1, 1984 to the date of judgment ($518,295) - The plaintiffs were not entitled to compound interest and were not entitled to any interest prior to April 1, 1984 - See paragraphs 65 to 81.

Interest - Topic 5008

As damages (prejudgment interest) - Enti­tlement - [See second Damages - Topic 4212 ].

Interest - Topic 5010

As damages (prejudgment interest) - Cal­culation of interest - Simple or compound - [See second Damages - Topic 4212 and first Interest - Topic 5008 ].

Practice - Topic 7459.1

Costs - Solicitor and client costs - Enti­tlement to - Trespass due to void expro­priation - In November 1972, the city purportedly expropriated the plaintiffs' land, intended for motel development - In March 1974, the city took possession - The plaintiffs challenged the validity of the expropriation - That action was dismissed at trial (1980) and on appeal (1981), but in 1983 the Supreme Court of Canada declared the expropriation void - In 1983, the city restored possession to the plaintiffs - In 1985, the plaintiffs sued the city for damages for trespass - In 1995 the plain­tiffs obtained judgment for damages for trespass - The Alberta Court of Appeal held that the trial judge did not err in awarding the plaintiffs costs on a solicitor-client basis - See paragraphs 82 to 87.

Torts - Topic 3000

Trespass - Trespass to land - Basis of liability - The trial judge stated that "a purported expropriation by an authority authorized to do so, but who does so with­out strict compliance with the statutory procedures required, unless expressly or impliedly consented to by the owner, resulting in a declaration of void expropri­ation, constitutes an unlawful entry on land, and, in effect, a conversion, which constitutes in law, a trespass to land, if it interferes with the owner's rights and prevents the owner dealing with it or using it as if owned" - The Alberta Court of Appeal affirmed the occupying property under authority of a void expropriation constituted a trespass - It was irrelevant that the expropriating authority did not intend to commit a trespass - See para­graphs 5 to 10.

Torts - Topic 3002

Trespass - Trespass to land - What con­stitutes - In November 1972, the city pur­ported to pass a bylaw expropriating the plaintiffs' land, upon which the plain­tiffs planned to develop a motel - The city took title in December 1972 and pos­session in March 1974 - The plaintiffs sued for a declaration that the bylaw was void - In 1980, the Alberta Court of Queen's Bench dismissed the action, which was affirmed on appeal in 1981 - In 1983, the Supreme Court of Canada declared the expropriation void for failing to give proper notice - Accordingly, the city lacked lawful author­ity from the inception for intentionally taking the land - The trial judge held that the city was liable in dam­ages for trespass - The Alberta Court of Appeal affirmed the decision - See para­graphs 5 to 10.

Torts - Topic 3015

Trespass - Trespass to land - Defences - A city expropriated land without giving proper notice, accordingly, the expropri­ation was void - The trial judge stated that "the unlawful entry arises not because the authority acted wrongly (in the absence of knowledge that its procedures were defec­tive), but because, by the declaration of the void expropriation, it never had lawful authority to take ownership and/or pos­session. Any of a: mistaken belief of fact or lawful authority (even if unchallenged for a period of time, or temporarily con­firmed by lower courts); lack of wrongful intent; lack of negligence; or lack of fault is no defence. That is, even if the authority had a right to legally expropriate, it will have no lawful authority to enter, unless it exercised its statutory right in a legal fashion (lawful execution of legal pro­cess)" - The Alberta Court of Appeal affirmed the decision - See paragraphs 5 to 10.

Torts - Topic 3050

Trespass - Trespass to land - Damages - [See second Damages - Topic 4212 ].

Cases Noticed:

Parkdale (Village) v. West (1887), 12 App. Cas. 602 (P.C.), refd to. [para. 6].

Goldie v. Oswald (1814), 2 Dow P.C. 534; 3 E.R. 957 (H.L.), refd to. [para. 6].

Maunsell v. Lethbridge Northern Irrigation District, [1926] S.C.R. 603, refd to. [para. 6].

Inverness Railway & Coal Co. v. McIsaac (1905), 37 S.C.R. 134, refd to. [para. 6].

Leahy v. North Sydney (Town) (1906), 37 S.C.R. 464, refd to. [para. 6].

Hanley v. Toronto, Hamilton & Buffalo Railway Co. (1905), 11 O.L.R. 91 (H.C.), refd to. [para. 6].

Henderson v. Volk (1982), 132 D.L.R.(3d) 690 (Ont. C.A.), not folld. [para. 7].

Bell Canada v. Cope (Sarnia) Ltd. (1980), 11 C.C.L.T. 170 (Ont. H.C.), affd. (1981), 15 C.C.L.T. 190 (Ont. C.A.), not folld. [para. 7].

R. v. East Crest Oil Co., [1945] S.C.R. 191, refd to. [para. 7].

Basely v. Clarkson (1681), 3 Lev. 37; 83 E.R. 565, refd to. [para. 7].

Turner v. Thorne & Thorne (1959), 21 D.L.R.(2d) 29 (Ont. H.C.), refd to. [para. 7].

Lensen v. Lensen, [1987] 2 S.C.R. 672; 79 N.R. 334; 64 Sask.R. 6, refd to. [para. 9].

Marson v. Grand Trunk Pacific Railway Co. (1912), 1 W.W.R. 693 (Alta. T.D.), refd to. [para. 12].

Costello and Dickhoff v. Calgary (City), [1983] 1 S.C.R. 14; 46 N.R. 54; 41 A.R. 318; 23 Alta. L.R.(2d) 380, refd to. [para. 24].

R. v. Lee (1917), 38 D.L.R. 695 (Ex. C.R.), affd. (1919), 59 S.C.R. 652, refd to. [para. 25].

Dominion Iron & Steel Co. v. Burt, [1917] A.C. 179 (N.S.P.C.), refd to. [para. 25].

Magnone, Re (1957), 23 W.W.R.(N.S.) 415 (B.C.S.C.), refd to. [para. 25].

Ruttan v. Dreifus and Canadian Northern Railway Co. (1906), 12 O.L.R. 187 (H.C.), dist. [para. 26].

Jalbert v. R., [1937] S.C.R. 51, dist. [para. 26].

Malone v. Canada (1977), 1 R.P.R. 322 (F.C.T.D.), dist. [para. 26].

Baud Corp., N.V. v. Brook, [1979] 1 S.C.R. 633; 23 N.R. 181; 12 A.R. 271, refd to. [para. 37].

Asamera Oil Corp. v. Sea Oil & General Corp. - see Baud Corp., N.V. v. Brook.

British Westinghouse Electric & Manufac­turing Co. v. Underground Electric Rail­way Co. of London, [1912] A.C. 673 (H.L.), refd to. [para. 37].

Panarctic Oils Ltd. v. Menasco Manufac­turing Co. (1983), 41 A.R. 451 (C.A.), refd to. [para. 42].

Payzu v. Saunders, [1919] 2 K.B. 581, refd to. [para. 42].

Michaels et al. v. Red Deer College, [1976] 2 S.C.R. 324; 5 N.R. 99, refd to. [para. 42].

Janiak v. Ippolito, [1985] 1 S.C.R. 146; 57 N.R. 241; 9 O.A.C. 1, refd to. [para. 42].

Banco de Portugal v. Waterlow & Sons, [1932] A.C. 452 (H.L.), refd to. [para. 42].

Costello and Costello v. Cormier Enter­prises Ltd. (1980), 28 N.B.R.(2d) 398; 63 A.P.R. 398; 108 D.L.R.(3d) 472 (C.A.), refd to. [para. 42].

Lesters Leathers & Skins Co. v. Home & Overseas Buyers Brokers (1948), 64 T.L.R. 569 (C.A.), refd to. [para. 42].

Pilkington v. Wood, [1953] Ch. 770, refd to. [para. 42].

Strass v. Goldsack, [1975] 6 W.W.R. 155 (Alta. C.A.), refd to. [para. 58].

Nova, An Alberta Corp. v. Guelph Engin­eering Co. et al. and Daniel Valve Co. et al. (1984), 50 A.R. 199; 30 Alta. L.R.(2d) 183 (C.A.), refd to. [para. 59].

Kerr v. Alberta (1981), 29 A.R. 541; 119 D.L.R.(3d) 386 (C.A.), dist. [para. 61].

Tabco Timber Ltd. v. R., [1971] S.C.R. 361, refd to. [para. 62].

Knight v. Erickson (1958), 26 W.W.R.(N.S.) 203 (B.C.S.C.), refd to. [para. 63].

Bank of Nova Scotia v. Dunphy Leasing Enterprises Ltd., [1992] 1 W.W.R. 577; 120 A.R. 241; 8 W.A.C. 241 (C.A.), affd., [1994] 1 S.C.R. 552; 166 N.R. 1; 149 A.R. 256; 63 W.A.C. 256, refd to. [para. 65].

Kamis v. Oaks and PanCanadian Petro­leum Ltd., [1988] 3 W.W.R. 428; 84 A.R. 55 (C.A.), refd to. [para. 68].

Bagby v. Gustavson International Drilling Co. et al. (1980), 24 A.R. 181 (C.A.), refd to. [para. 68].

Eyben v. K.R. Ranches (1970) Ltd. (1982), 38 A.R. 336 (C.A.), refd to. [para. 68].

Page v. Newman (1829), 9 B. & C. 378; 109 E.R. 140, refd to. [para. 73].

British Pacific Properties Ltd. v. British Columbia (Minister of Highways), [1960] S.C.R. 561, refd to. [para. 74].

Mannix v. Alberta (1984), 56 A.R. 221; 35 Alta. L.R.(2d) 289 (C.A.), refd to. [para. 74].

Inglewood Pulp & Paper Co. v. New Brunswick Electric Power Commission, [1928] 4 D.L.R. 82 (N.B.P.C.), refd to. [para. 74].

Birch v. Joy (1852), 3 H.L. Cas. 565; 10 E.R. 222, refd to. [para. 74].

Wallersteiner v. Moir (No. 2), [1975] 1 All E.R. 849 (C.A.), refd to. [para. 76].

Brock v. Cole (1983), 40 O.R.(2d) 97 (C.A.), refd to. [para. 76].

Calmont Leasing Ltd. v. Kredl et al. (1995), 165 A.R. 343; 89 W.A.C. 343 (C.A.), refd to. [para. 76].

Air Canada v. M & L Travel Ltd., Martin and Vailiant, [1993] S.C.R. 787; 159 N.R. 1; 67 O.A.C. 1, refd to. [para. 76].

Fort McMurray Roman Catholic School District No. 32 v. Fort McMurray School District No. 2833, [1987] A.U.D. 143; [1987] A.J. No. 33 (C.A.), not appld. [para. 77].

Roman Catholic Diocese of Calgary Asso­ciation for Senior Citizens and Shamrock Taxi Ltd. v. Century Insurance Co. of Canada et al. (1984), 52 A.R. 295 (C.A.), not appld. [para. 77].

Mueller (Karl) Construction Ltd. v. North­west Terri­tories (Commissioner), [1991] 1 W.W.R. 289 (N.W.T.C.A.), not appld. [para. 77].

Canson Enterprises Ltd. et al. v. Boughton & Co. et al., [1991] 3 S.C.R. 534; 131 N.R. 321; 6 B.C.A.C. 1; 13 W.A.C. 1, refd to. [para. 80].

Westdeutsche Landesbank Girozentrale v. London Borough of Islington, [1996] 2 All E.R. 961; 198 N.R. 241 (H.L.), refd to. [para. 80].

Jackson and Parkview Holdings Ltd. v. Trimac Industries Ltd. et al. (1993), 138 A.R. 161; 8 Alta. L.R.(3d) 403 (Q.B.), affd. (1994), 155 A.R. 42; 73 W.A.C. 42; 20 Alta. L.R.(3d) 117 (C.A.), refd to. [para. 83].

Westersund v. Westersund (1993), 157 A.R. 276; 77 W.A.C. 276 (C.A.), refd to. [para. 83].

Nissen v. Calgary (1983), 51 A.R. 252 (C.A.), refd to. [para. 84].

Humenuk v. Alberta (1986), 76 A.R. 161 (Q.B.), refd to. [para. 84].

Acme (Village) v. Bierele, [1993] A.U.D. 29; [1993] A.J. No. 178 (C.A.), refd to. [para. 84].

Canada (Attorney General) v. Saskatchewan Water Corp. and Souris Basin Development Authority, [1992] 4 W.W.R. 712; 109 Sask.R. 241; 42 W.A.C. 241 (C.A.), refd to. [para. 85].

Chaplin v. Hicks, [1911] 2 K.B. 786 (C.A.), refd to. [para. 90].

Hotson v. East Berkshire Health Authority, [1987] 1 All E.R. 210 (C.A.), refd to. [para. 90].

Laferrière v. Lawson, [1991] 1 S.C.R. 541; 123 N.R. 325; 38 Q.A.C. 161, refd to. [para. 90].

Mallett v. McMonagle, [1970] A.C. 166 (H.L.), refd to. [para. 90].

Athey v. Leonati et al., [1996] 3 S.C.R. 458; 203 N.R. 36; 81 B.C.A.C. 243; 132 W.A.C. 243, refd to. [para. 90].

B.P.I. Resources v. Merrill Lynch Canada Inc. and Anderson (1989), 95 A.R. 211; 67 Alta. L.R.(2d) 97 (C.A.), refd to. [para. 92].

Young v. Fletcher and Lakeburn Lumber Retail Ltd. (1995), 161 N.B.R.(2d) 116; 414 A.P.R. 116; 12 M.V.R. 147 (C.A.), refd to. [para. 92].

Statutes Noticed:

City Transportation Act, R.S.A. 1970, c. 19, sect. 5, sect. 10(1) [para. 16].

Judgment Interest Act, S.A. 1984, c. J-0.5, sect. 2(1), sect. 2(2)(b), sect. 2(2)(i), sect. 4(2), sect. 8 [para. 69].

Judicature Act, R.S.A. 1980, c. J-1, sect. 15 [para. 66].

Planning Act, R.S.A. 1970, c. 276, sect. 20 [para. 16].

Authors and Works Noticed:

Challies, George S., The Law of Expropri­ation in Canada (2nd Ed. 1963), p. 15 [para. 6].

Cooper-Stephenson, Kenneth D., Personal Injury Damages in Canada (2nd Ed. 1996), pp. 772 to 776 [para. 90].

Elder, P.S., The New Alberta Planning Act (1979), 17 Alta. L. Rev. 343, pp. 440, 441 [para. 32].

Fridman, Gerald H.L., The Law of Torts in Canada (1989), pp. 30, 31, 32 [para. 9]; 35 [para. 6].

Holmes, O.W., The Common Law (1881), p. 1 [para. 24].

Klar, Lewis N., The Law of Torts (2nd Ed. 1996), p. 85 [para. 7].

Sopinka, John, Lederman, Sydney N., and Bryant, Alan W., The Law of Evidence in Canada (1992), generally [para. 60].

Thrasher, R.J., Recovery of Interest As Damages (1984), 22 Alta. L. Rev. 154, p. 159 [para. 72].

Todd, Eric C.E., The Law of Expropriation and Compensation in Canada (2nd Ed. 1992), pp. 29 [para. 6]; 468 [para. 74].

Waddams, Stephen M., The Law of Dam­ages (2nd Ed. 1995), ¶ 7.950 [para. 67].

Waldron, Mary Anne, The Law of Interest in Canada (1992), pp. 1 to 10, 142 [para. 72].

Counsel:

E.D.D. Tavender, Q.C., A.A. Abougoush, Q.C., J.H. Gescher and L.B. Stevens, for the appellant;

R.W. Thompson and K.T. Lenz, for the respondents.

This appeal was heard on February 4-5, 1997, before Picard, O'Leary and Hunt, JJ.A., of the Alberta Court of Appeal.

On September 8, 1997, Picard, J.A., delivered the following judgment for the Court of Appeal.