Public Transit Projects and Condominiums

Not surprisingly, with the expansion of transit infrastructure planning by all 3 levels of governments (federal, provincial, and municipal) to accommodate a growing population in Ontario, our office has seen a definitive spike in expropriation-related work. How and when a condominium corporation reacts to these government decisions is critical, and understanding the issues is key.

With the ongoing construction of the Eglinton Crosstown LRT in Toronto, the Confederation Line in Ottawa, and the ION LRT in Waterloo, along with the recent talk of Toronto Mayor John Tory’s SmartTrack proposal, the Toronto city council debate about the Scarborough subway, public calls for a TTC downtown relief line to be built, and the federal government’s intention to stimulate the economy by funding major public infrastructure projects, current and future governments have plenty of important public transit decisions to be made in the years ahead.

But given the limited amount of real estate in and around southern Ontario, the “4^th level of government”, i.e. condominium corporations, particularly ones located on or near lands along existing or proposed transit corridors, will be heavily impacted by these infrastructure initiatives. For example, condominiums may be approached by Crown agencies looking to take some or all of the condominium corporation’s land to use in constructing this new transit infrastructure, or a condominium’s residents may be subjected to increased traffic congestion, noise, nuisance, vibrations, or other disturbances when the government’s shovels hit the ground. A condominium corporation’s first steps when involved in expropriation was discussed in a Condocentric video titled “Expropriation: What You Need To Know” by Patricia Elia of this firm. What follows in this article is a discussion focusing on the statutory right of compensation for condominium corporations for what is known as “injurious affection”, which is often in relation to the private nuisance caused by the construction of public works.

Injurious Affection and the Ontario Municipal Board

Today, the Ontario Expropriations Act, R.S.O. 1990, c. E.26 (the “OEA”) provides for a statutory cause of action, which incorporates the common law tort of private nuisance, called “injurious affection” which is defined in Section 1of the OEA as follows:

(a) where a statutory authority [e.g. Metrolinx] acquires part of the land of an owner [e.g. a condominium corporation],

(i) the reduction in market value thereby caused to the remaining land of the owner by the acquisition or by the construction of the works thereon or by the use of the works thereon or any combination of them, and

(ii) such personal and business damages, resulting from the construction or use, or both, of the works as the statutory authority would be liable for if the construction or use were not under the authority of a statute,

(b) where the statutory authority does not acquire part of the land of an owner [e.g. but commences construction on land adjacent to a condominium corporation],

(i) such reduction in the market value of the land of the owner, and

(ii) such personal and business damages, resulting from the construction and not the use of the works by the statutory authority, as the statutory authority would be liable for if the construction were not under the authority of a statute, and for the purposes of this clause, part of the lands of an owner shall be deemed to have been acquired where the owner from whom lands are acquired retains lands contiguous to those acquired or retains lands of which the use is enhanced by unified ownership with those acquired […]

Subsequently, Section 21 of the OEA provides:

Compensation for injurious affection

21. A statutory authority shall compensate the owner of land for loss or damage caused by injurious affection.

In 2013, the Supreme Court of Canada affirmed that the OEA provides a right to compensation for injurious affection where the government has not actually acquired part of the land of a landowner (i.e. where there has been no expropriation of real property by the government).[1] The Supreme Court of Canada also affirmed that the purpose of the OEA is to ensure that individual members of the public are not forced to bear, without compensation, a disproportionate share of the cost of government works for society’s public benefit.

In Ontario, a party claiming to have been injuriously affected by a government authority can apply to the Ontario Municipal Board (the “OMB”) for monetary compensation.[2] A claimant must demonstrate 3 requirements:

1. the damage complained of must have resulted from an action taken by the government, or an agent thereof, under the authority given to it through legislation;
2. he damage complained of must result from the construction of the public works by the government (i.e. the negative impact of the public’s use of the public works, such as the day-to-day operation of a subway, will not apply); and
3. without the legislation which granted the government agent the legal authority to undertake said action (i.e. the defence of statutory authority), the action would have otherwise given rise to liability (e.g. tort liability for private nuisance).

The B.C. Precedent for Claims Against Transit Projects

In British Columbia, a regional transportation system was constructed from 2005 to 2009 with the goal of connecting downtown Vancouver, the City of Richmond, and the Vancouver International Airport. The Canada Line SkyTrain project opened on August 17, 2009 to much fanfare, and was integral to the logistics of the 2010 Winter Olympics.

Cambie Village is a commercial area located along one of Vancouver’s four major transportation corridors where the Canada Line was built. On November 6, 2015, the B.C. Supreme Court, in the class-action lawsuit of Gautam v. Canada Line Rapid Transit Inc.,[3] held that the businesses in Cambie Village could proceed with a claim for compensation for injurious affection, as outlined in British Columbia’s version of its provincial expropriations legislation, due to the disruptive method of construction used by the government agencies in building the Canada Line. The Court in Gautam was careful to distinguish its judgment from the earlier 2011 decision of the B.C. Court of Appeal in Susan Heyes Inc. v. Vancouver (City),[4] wherein it was ruled that the government agencies enjoyed a defence of statutory authority against claims for the tort of private nuisance, which was a cause of action founded in the common law and not within B.C.’s expropriation legislation.[5] The Court in Gautam further held that although a claim for injurious affection is limited to damage that comprises injury to the land itself – since it is the land that must be injuriously affected, not the person or the business on said land – interference with the utility of the land for the purpose of carrying on a business constitutes damage to the land itself, and therefore both business owners and tenants in the Cambie Village could bring claims for injurious affection.[6]

In light of these rulings in British Columbia,[7] along with the Supreme Court of Canada’s ruling in Antrim, it would appear that in Ontario, land owners and/or tenants wishing to obtain compensation for injurious affection from the government for having to bear increased traffic congestion, noise, nuisance, vibrations, or other disturbances when transit projects are being constructed, may seek recourse under the OEA with the OMB.

Special Considerations for Condominium Corporations

However, the published case law in Ontario regarding injurious affection claims primarily deal with commercial users of land – not residential condominium corporations. Condominium corporations must overcome several practical hurdles in a claim for injurious affection; for the purposes of keeping this article’s length feasible, we will discuss two.

One issue may be whether the condominium corporation has legal standing to bring a claim for injurious affection in the first place. Under Section 23 of the Condominium Act, 1998, S.O. 1998, c. 19 (the “Act”), a condominium corporation has the ability to bring a claim for damage to the common elements and the units, on behalf of itself and an owner. In fact, in order to succeed in a claim for injurious affection, a plaintiff must show that they have an interest in the land whose value has been impacted; their mere presence on the land is insufficient, since they must have a legal right to the land affected, whether as an owner or a tenant thereof. The condominium corporation is an occupier of the common elements and has a duty to manage same, and therefore is “enjoying” the land in the legal sense of the word. A government’s unreasonable interference with a condominium corporation’s right of enjoyment of said land – such as that caused by noise, vibrations or other nuisances during construction of public infrastructure – may entitle the condominium corporation to damages for injurious affection.

Secondly, and perhaps most concerning to Boards of Directors, because not every unit will be impacted in the same way by the construction disturbances (e.g. in a townhouse development, the units closer to the construction site will be impacted more than the units further away), not every unit owner may agree with spending the condominium corporation’s monies in litigation and/or have same listed on their status certificates. Although decisions made by a condominium corporation will rarely satisfy everyone, it may be useful for a condominium corporation to obtain, at the very least, the approval of a simple majority of its unit owners prior to commencing a claim for injurious affection, to help legitimize having all of the unit owners share in the legal costs while the litigation is ongoing.

Conclusion

Injurious affection claims are complex statutory remedies available under the OEA, and are made even more complex in the case of a condominium corporation, since its special legal status under the Act must be taken into consideration before commencing any claim against the deep pockets of civic governments. With the anticipated population growth in the decades ahead, the accompanying boom of condominium development, and the construction of major infrastructure projects to support that growth, condominium corporations will need to increasingly rely on the assistance of effective legal counsel and other necessary consultants (i.e. engineers, real estate appraisers) to help them navigate the inherent frictions between citizens and their governments regarding the latter’s urban planning decisions in Ontario’s metropolitan areas.

[1] Antrim Truck Centre Ltd. v. Ontario (Ministry of Transportation), 2013 SCC 13 (“Antrim”).

[2] However, such a claim must be commenced within 1 year after the damage was sustained or it became known to the claimant, pursuant to Section 22(1) of the OEA.

[3] 2015 BCSC 2038 (“Gautam”).

[4] 2011 BCCA 77 (“Heyes”).

[5] In the initial trial-level decision of Heyes, the B.C. Supreme Court awarded $600,000 in damages for private nuisance, due to the government’s construction of the Canada Line, to a maternity clothing store in Cambie Village. The government agencies and the public-private partnership defendants successfully appealed to the B.C. Court of Appeal, who ruled in Heyes that said defendants could rely on the defence of statutory authority. The Supreme Court of Canada essentially agreed with the B.C. Court of Appeal by denying the maternity clothing store’s subsequent appeal, effectively dismissing the store’s claim.

[6] In Ontario, the definition of an “owner” who is entitled to injurious affection compensation under the OEA already includes, in Section 1 of the OEA, “a mortgagee, tenant, execution creditor, a person entitled to a limited estate or interest in land, a guardian of property, and a guardian, executor, administrator or trustee in whom land is vested”.

[7] While the decisions of British Columbia’s courts are not legally binding on Ontario courts, judges in Ontario often look for guidance from their counterparts in other provinces when deciding a case with similar facts.

All of the information contained in this article is of a general nature for informational purposes only, and is not intended to represent the definitive opinion of the firm of Elia Associates on any particular matter. Although every effort is made to ensure that the information contained in this newsletter is accurate and up-to-date, the reader should not act upon it without obtaining appropriate professional advice and assistance.

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