Mercury v. Manitoba (Minister of Government Services), (1997) 118 Man.R.(2d) 53 (CA)

• Judge: Scott, C.J.M., Philp and Lyon, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: May 27, 1997
• Jurisdiction: Manitoba
• Citations: (1997), 118 Man.R.(2d) 53 (CA)

Mercury v. Man. (1997), 118 Man.R.(2d) 53 (CA);

    149 W.A.C. 53

MLB headnote and full text

Michael John Mercury (owner/respondent) v. Her Majesty The Queen in Right of the Province of Manitoba (authority/appellant)

(Suit No. AI 96-30-02756)

Indexed As: Mercury v. Manitoba (Minister of Government Services)

Manitoba Court of Appeal

Scott, C.J.M., Philp and Lyon, JJ.A.

May 27, 1997.

Summary:

In 1983, Manitoba expropriated 2.5 vacant lots (15,045 sq. ft.) being used as a parking lot. The land was zoned for commercial and residential use. The owner's appraiser used a modified land residual approach to find multi-family residential development and the highest and best use. Based on that use, the appraiser valued the land at $40/square foot ($600,000). The province's appraiser deter­mined that the property's highest and best use was its current use (parking lot) and that its value was $25/square foot ($375,000).

The Manitoba Court of Queen's Bench accepted the owner's appraisal and fixed compensation at $600,000 plus statutory interest. In a subsequent decision (109 Man.R.(2d) 243), the court determined the rate of interest. The province appealed the compensation award. The owner cross-appealed the interest award.

The Manitoba Court of Appeal allowed the compensation appeal and dismissed the interest cross-appeal. The court held that the trial judge erred in accepting the owner's appraisal. The modified land residual approach was inappropriate, therefore, the highest and best use and land value was overstated. The court substituted compensa­tion of $375,000, as appraised by the prov­ince's appraisal.

Expropriation - Topic 1011

Measure of compensation - Valuation of land - Value to owner - Effect of plans of expropriating authority - The Manitoba Court of Appeal stated that pursuant to s. 27(2) of the Expropriation Act, "any increase in the value of the land due to the existence or imminence of a development for which land is expropriated, even if the scheme is not precise, definite or widely known, is to be disregarded in the assess­ment of the due compensation payable" - The court held that the trial judge erred in accepting an appraisal which took into account the effect of the expropriation in determining the highest and best use of the expropriated property - See paragraphs 36 to 42.

Expropriation - Topic 1046

Measure of compensation - Methods of valuation - Vacant land - Land residual approach - In 1983, Manitoba expropriated 2.5 vacant lots (15,045 sq. ft.) being used as a parking lot - The land was zoned for commercial and residential use - The owner's appraiser used a modified land residual approach to find multi-family residential development as the highest and best use - Based on that use, the appraiser valued the land at $40/square foot ($600,000) - The province's appraiser determined that the property's highest and best use was its current use (parking lot) and that its value was $25/square foot ($375,000) - The Manitoba Court of Appeal held that the trial judge erred in accepting the land residual approach, which was to be used cautiously because of its speculative nature - The land resid­ual approach was to be used only where there were no useful comparable sales and the evidence was clear that the property was being used far below its potential - The court accepted the province's apprai­sal, with the highest and best use being a parking lot and valued at $375,000 for compensation purposes - See paragraphs 1 to 55.

Expropriation - Topic 1322

Measure of compensation - Elements of compensation - Interest - [See Expropri­ation - Topic 1656 ].

Expropriation - Topic 1656

Measure of compensation - Interest - Rate of interest - Manitoba expropriated land from Mercury - The court-ordered com­pensation amount for the expropriation was $600,000, with interest at the "statutory rate" from the date of entry into possession (June 8, 1984) - The parties disputed the rate of interest that was payable and how that rate was to be determined - Particu­larly, on September 1, 1993, there was an amendment to the Expropriation Act, s. 35(1), which provided for a calculation of interest that was higher and more certain than the old s. 35(1) - This amendment was subsequent to the commencement of the proceedings, but prior to the date of the judgment - The trial judge reviewed both sections and determined that the old s. 35(1) was to be used to calculate the rate of interest to September 1, 1993 - Thereafter, the new s. 35(1) was to be used to calculate the rate of interest - The Manitoba Court of Appeal held that the trial judge correctly determined interest - See paragraphs 59 to 61.

Expropriation - Topic 1657

Measure of compensation - Interest - Calculation of - [See Expropriation - Topic 1656 ].

Expropriation - Topic 3006

Compensation awards - Particular awards - Land - Vacant and urban - [See Ex­propriation - Topic 1046 ].

Practice - Topic 8800

Appeals - Duty of appellate court regard­ing findings of fact by a trial judge - The Manitoba Court of Appeal stated that "the law is settled that an appellate court will overturn findings of fact only where the trial judge has committed an overriding or palpable error which affects his or her assessment of the facts. The more findings of fact are based on assessment of credi­bility, the more difficult it will be to have such findings overturned." - See paragraph 16.

Cases Noticed:

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, refd to. [para. 16].

Caners v. Eli Lilly Canada Inc. (1996), 110 Man.R.(2d) 95; 118 W.A.C. 95 (C.A.), refd to. [para. 16].

Anderson v. Anderson (1994), 92 Man.R.(2d) 150; 61 W.A.C. 150 (C.A.), refd to. [para. 16].

St. James Assiniboia School Division No. 2 v. Cann et al. (1975), 9 L.C.R. 91 (Man. Co. Ct.), refd to. [para. 23].

Cunard (S.) & Co. v. Halifax (City), [1975] 1 S.C.R. 458; 1 N.R. 246; 6 N.S.R.(2d) 492, refd to. [para. 23].

Mercury Holdings Ltd. v. Manitoba (Min­ister of Government Services) (1985), 33 L.C.R. 177 (Man. L.V.A.C.), refd to. [para. 26].

Manitoba v. Gillis Quarries Ltd. (1996), 110 Man.R.(2d) 229; 118 W.A.C. 229 (C.A.), leave to appeal denied (1997), 208 N.R. 324; 115 Man.R.(2d) 159; 139 W.A.C. 159 (S.C.C.), refd to. [para. 60].

Statutes Noticed:

Expropriation Act, R.S.M. 1987, c. E-190; C.C.S.M., c. E-190, sect. 15(6) [para. 56]; sect. 25(3), sect. 26(1), sect. 27(1), sect. 27(2) [Appendix]; sect. 44(3) [para. 56]; sect. 44(4), sect. 44(5) [para. 62].

Authors and Works Noticed:

Todd, Eric C.E., The Law of Expropriation and Compensation in Canada (2nd Ed. 1992), pp. 161 [para. 36]; 222 [para. 22]; 501 [para. 57].

Counsel:

W.G. McFetridge, for the appellant;

R.A.L. Nugent, Q.C., and M.L. Grande, for the respondent.

This appeal was heard on December 5 and 12, 1996, before Scott, C.J.M., Philp and Lyon, JJ.A., of the Manitoba Court of Appeal.

On May 27, 1997, the following judgment was delivered by the Court, with supplementary reasons on costs delivered on June 5, 1997.