August 12, 2003, ECB Control No.: 12/00/240

REASONS FOR DECISION

1.  Introduction

[1]    Donna and Gary Chivers are owners of the subject property, an 84 hectare (208 acre) cattle, hay and horse ranch, 50 kilometres north of Kamloops on the Yellowhead Highway. The Yellowhead Highway bisects the property and runs along a bench above the North Thompson River. Approximately half the subject property lies north of the Highway; some of this property is on the bench at the same elevation as the Highway and some of it slopes down to hayfields that are at the same level as the River. This north section of the property contains the main residence, a secondary residence, and various outbuildings. The other half of the subject property lies south of the Highway. There are some relatively flat bench areas near the Highway, and a small gravel pit. However, much of this south section rises in steep slopes above the Highway with some benches. The entire south section was heavily treed although it has now been selectively logged. The majority of the subject property (about 60 hectares) is in the Agricultural Land Reserve ("ALR").

[2]    The respondent, the Minister of Transportation, expropriated 1.77 hectares (4.374 acres) of the subject property to widen the Yellowhead Highway on June 30, 1999. The construction work created two passing lanes through the subject property and was known as the "Badger Passing Lanes" ("the project"). A long crescent shaped strip measuring 1.62 hectares was taken from the south side of the Highway. The remaining 0.15 hectares was taken from the north side of the Highway near the eastern boundary. An advance payment of $11,201 was made in accordance with the provisions of the Expropriation Act, R.S.B.C. 1996, c. 125 ("the Act") on June 28, 1999 in which $6,615 was allocated to land and $4,586 to improvements (fencing and a corral). This advance payment has been accepted as compensation for the land and improvements that were taken including timber.
[3]  The primary outstanding issue was the claim for reduction in market value of the remaining land as a result of the taking. The claimants say that as a result of the taking they have lost legal access to the southern section of the property. This, they claim, significantly reduces the market value of the south side including the loss of being able to extract the gravel resource. In addition, the widening of the Highway from two lanes to four lanes has made their use of the south section of their property more difficult. They say that it is no longer safe to cross the Highway with trucks transporting cattle or hay to the south side. Neither is it safe to ride horses across the widened Highway to trails on the southern portion. In addition to the reduction in market value, the claimants have claimed for various disturbance damages and business losses related to the changes in the farming practices made necessary by the project. The claims can be summarized as follows:

[4]  At an earlier stage in the proceeding there was a claim for $140,000 for the royalty value of gravel that was taken by the respondent and used in the project. As a result of an interlocutory application in this matter heard on November 1, 2001 by the Chair, Robert Shorthouse, this claim was dismissed under Rule 18A of the Rules of Court. See decision dated December 28, 2001 at 76 L.C.R. 49 (B.C.E.C.B.). There were also further amendments of the Statement of Claim allowed in this same application.

[5]  The compensation hearing occupied seven days between October 29 and November 6, 2002 in Kamloops, British Columbia. Argument was heard in Vancouver on November 18, 2002.

2.  BACKGROUND

2.1  Subject property

[6]  The subject property is described as:

P.I.D. 004-487-427,
D.L. 47,
Kamloops Division,
Yale District,
Except Plans A221, A249, 17504 and H914

Although the assessment records state that the property is 208.23 acres (84 hectares), Mr. Grant reports that it appears it is as much as 5% larger. The Chivers also own an adjoining 5.3 hectares (13 acres) on the north side of the Highway, immediately to the east of the subject property.

[7]  Donna and Gary Chivers purchased the subject property in 1988. Gary Chivers is a tow boat skipper who works two weeks on and two weeks off and therefore resides on the property part time. Donna Chivers was a realtor for 20 years and continues to work part time as a realtor now. The Chivers had lived in Maple Ridge before moving to the Kamloops area. They kept approximately 20 head of cattle on the subject property. There have also been between 12 and 22 horses on the property over the years. Ms. Chivers raced some of these horses at Hastings Park in Vancouver, or in Kamloops or Osoyoos. Ms. Chivers does most of the work associated with the animals on the property.

[8]  As described above the property is bounded on the north and west by the North Thompson River. There are hayfields that are level with the River and a secondary residence. The property rises some 30 metres (about 100 feet) to a bench where the main residence, outbuildings, a riding ring and more fields are found. At the base of this rise, between the hayfields by the River and the main residence on the bench, the property is crossed by the main line of the Canadian National Railway. Above the river on the bench, the Yellowhead Highway divides the property into two. On the north side of the Highway are the residences and all the outbuildings, the fields located level with the Highway on the bench and the hayfields down near the river. On the south side of the Highway there are some relatively flat bench areas near the Highway crossed by two BC Hydro Rights of Way with power lines. However, much of this south section rises in steep slopes above the Highway (with some benches) and has been selectively logged. The most south easterly part of the property is about 150 metres (about 500 feet) above the Highway.

[9]  About 70% of the property (60 hectares) is in the ALR and about 30% (24 hectares) is outside the ALR. The excluded land is the land nearest the southern boundary. It has the highest elevation and is characterized by steep slopes and trees. The property is designated Agricultural in the Kamloops North Official Community Plan and the zoning by the Thompson Nicola Regional District is Small Holding-1 which has a minimum parcel size of two hectares (five acres).

[10]  The land on the subject property shows considerable variation with respect to its agricultural capability. According to Lawrence Davies, the appraiser for the respondent, the Canada Land Inventory for Agriculture (CLI) shows about 17 hectares (43 acres) of the subject property near the North Thompson River as Class 1 soil (where 1 is the highest or best class) with no limitations on crop use, assuming that it is irrigated. This is the area that is used as hay fields. Danny Grant, the appraiser for the claimants, says that 25 hectares (62 acres) are irrigated. The land on the bench area on either side of the Highway is stony with a small gravel pit on the south side of the Highway. This area is 80% Class 6 and 20% Class 5 on the CLI map. The partial taking was from this area. Mr. Grant reports that making these lands adjacent to the highway arable or even creating a permanent pasture is not practical. Much of the southern part of the subject property that is steeply sloped is Class 6T on the CLI map which means that it is suitable only for grazing and timber. Some of this Class 6T land is the part excluded from the ALR. Mr. Grant says that the south half of the subject property is among the lowest productivity land in the ALR that he has ever seen.

2.2  Project

[11]  The project was to widen the Yellowhead Highway in the vicinity of the subject property to four lanes and was described as the Badger Passing Lanes. Before the taking there were some safety concerns with respect to the Highway in this area. Excerpts from the 1997 Ministry of Transportation and Highways' Planning and Evaluation Report indicated a concern about a substandard curve in the Highway adjacent to the subject property. There was a recommendation to correct certain aspects of this curve. There was also a recommendation to construct a new southbound passing lane of 1500 metres. Finally there was a recommendation that the existing northbound climbing lane that ended near the intersection with Badger Creek Road be extended 600 metres for a total length of 1400 metres.

[12]  Frank Dacho, Manager of Highway Engineering in the Thompson -- Okanagan Region and the person in charge of the project, gave evidence on some of the steps in the procedure. There was also correspondence in evidence about the project. From these two sources we have ascertained the steps in the project to be as follows:

• In November 1996 the Ministry of Transportation and Highways had presented three different options for passing lanes on the Highway to the Provincial Agricultural Land Commission ("the Commission").
• In October 1997, the Ministry of Transportation and Highways revised its Planning and Evaluation Report for the passing lanes.
• On January 21, 1998, the General Manager of the Commission wrote the Ministry of Transportation and Highways with comments about the three options for passing lanes. The Commission favoured one of the options apparently because the soil rating for this option was lower than for the other two options. The Commission advised on the procedure for the Ministry applying as agent for the owner and stated that one of the enclosed brochures should be given to the land owner before the application is filed.
• Sometime in the spring of 1998 Ms. Chivers reported that a Ministry employee telephoned her to tell her about the proposed project. Ms. Chivers told the Ministry employee that she would like an underpass.
• On September 22, 1998, the Ministry of Transportation and Highways had a Design and Engineering Meeting about the passing lane project and the various options and issues are recorded in the minutes, including a possible underpass under the Highway that had been requested by the Chivers. An employee was assigned to do a benefit cost analysis with and without an underpass. The minutes report discussion about the timelines necessary in order to get Commission approval at its November 23, 1998 meeting. The application was to be submitted by October 19, 1998. There is reference to an approval in principle for the Badger Creek option from the Commission on June 23, 1998.
• On October 8, 1998, a further Design and Engineering Meeting was held. There is again reference to the underpass and the cost of the underpass.
• Later in October 1998, James Walker, a property agent with the respondent, met with the Chivers to discuss the proposed project. Ms. Chivers stated that she told him she wanted an underpass and a left turn lane. During Mr. Walker's examination for discovery he said he told Ms. Chivers during this first meeting that the engineers had decided that an underpass was not warranted.
• On October 27, 1998, Mr. Burke advised Mr. Walker that he had been retained by Donna Chivers and asked that future correspondence and communications be directed to him.
• On October 29, 1998, Mr. Walker wrote the Project Manager Technician projecting monies required for compensation and legal and expert costs now that counsel was retained in the amount of $157,500 and asking for additional funding, if available.
• On November 12, 1998, Mr. Walker advised Mr. Burke that it was uncertain at present whether the project would proceed.
• On February 22, 1999, Mr. Dacho, Manager of Highway Engineering in the Thompson - Okanagan Region, wrote the Commission to state that the Ministry of Transportation and Highways wished to proceed with the Badger Passing Lane option.
• On the same date, February 22, 1999, Mr. Dacho wrote Donna and Gary Chivers to advise them that the Ministry was applying (as agent) to have a portion of their land classified as "Special Cases" in order to widen the Highway. A copy of the application was said to be included.
• On March 16, 1999, the Chair of the Commission, wrote Mr. Dacho saying that the Commission had allowed the Ministry's application to construct passing lanes on what was the subject property. A copy of this letter was sent to Donna and Gary Chivers.
• On April 27, 1999, there was an email from Mr. Walker to another Ministry employee that reported that the Ministry's appraiser, Lawrence Davies, had been told by Tony Pellett, an employee of the Commission, that if the Chivers had told the Commission they wanted an underpass, the Commission would have required the Ministry to supply one. Mr. Walker went on to report that he had instructed the appraiser not to include this comment in his report.
• On May 12, 1999, Mr. Walker wrote Mr. Burke enclosing a copy of an appraisal from the Ministry's appraiser, Lawrence Davies and apparently offering to purchase the required property from the Chivers.
• On May 14, 1999, Mr. Burke replied to Mr. Walker. Mr. Burke stated that the Chivers were not prepared to sell the land required by the Ministry, nor did he advise a section 3 agreement.
• On June 8, 1999, Mr. Walker wrote Mr. Burke offering to rebuild the Chivers' driveways because as a result of the project the Highway would be at a higher elevation after the taking. The Chivers would have to sign a License Agreement if they wished the Ministry's contractor to do the work.
• On June 13, 1999, the Expropriation Notice was filed in the Land Title Office.
• On June 30, 1999, the Vesting Notice was filed in the Land Title Office.
• At some point during 1999 BC Hydro carried out work on their two easements on the subject property including the addition of telephone lines to the overhead power lines and the relocation of three poles.
• On August 5, 1999, Donna and Gary Chivers signed the License for the contractors to reconstruct the driveways.
• Construction on the project commenced sometime in August 1999 according to Mr. Grant.
• In or about October 1999, construction on the project was completed.
• On November 16, 1999 the Commission acknowledged receipt of the Chivers' application to extract gravel from the south side of the property. A report was requested with specified information.
• On June 9, 2000 the Chivers replied with at least some of the information requested.

Mr. Dacho confirmed that the posted speed on the Highway was the same before and after the taking at 90 kilometres per hour and that the design speed of the widened Highway after the project was 90 kilometres per hour.

2.3  Access

[13]  The Highway was a controlled access highway both before and after the taking. Before the taking there was a driveway from the Highway to the north section of the property and the Chivers' residence. This driveway did not have a legal access permit. As indicated above, as a result of the project, the Minister of Transportation and Highways entered into a License Agreement with the claimants to reconstruct accesses. On the north side a portion of the driveway near the Highway was reconstructed in order to tie in with the Highway at its higher elevation. This reconstructed driveway to the north section continues to have no access permit.

[14]  Before the taking there was a public road, Badger Creek Road, which ran from the Highway up the steep slopes of the south section of the property until it joined Oliver Creek Forest Service Road, a road on the neighbouring Crown land to the east. Badger Creek Road left the Highway at a point where the earlier northbound passing lane on the Highway was tapering back to a single lane. This intersection was somewhat over 100 metres south west along the Highway from the Chivers' driveway to the north side of their property and the residence and hayfields. Although Badger Creek Road was a public road, at its intersection with the Highway there was a locked gate and a cattle guard to prevent cattle escaping when the gate was open. It was not clear who had installed the gate and the lock but the Chivers knew where the key was kept. Beyond the gate Badger Creek Road was a very rough track with some slopes in excess of 10%. It was plainly not in general public use and it appeared to be only the Chivers and their "invitees", and occasionally BC Hydro that used Badger Creek Road. Even the Regional Manager of Highway Engineering who had responsibility for the project did not know that Badger Creek Road was a public road until quite late in the day. Some "invitees" had bought or bartered gravel from the Chivers and used Badger Creek Road to reach the small gravel pit on the south side. Ms. Chivers stated that they had sold or bartered gravel on about six occasions since 1988. BC Hydro used Badger Creek Road to access its two easements. At the other end of Badger Creek Road, it exited the eastern boundary of the subject property near the south-east corner and connected to the Oliver Creek Forest Service Road a short distance from the subject property boundary. At the boundary between the Chivers' property and the Crown land next door, Badger Creek Road had a second gate. Oliver Creek Forest Service Road joins the Highway about one kilometre north east of the subject property.

[15]  The License Agreement also covered reconstructing the access to the south side of the property. The Ministry's contractor constructed a new driveway on the south side of the property that left the Highway opposite the driveway to the Chivers' residence. Initially, the contractor used the licence area on the south side for an asphalt plant for the new pavement required for the project. The contractor's trucks used the newly constructed driveway to access the asphalt plant. This driveway on the south side led to Badger Creek Road and provided the new connection of Badger Creek Road with the Highway. The former intersection of Badger Creek Road with the Highway was blocked with a ditch and a fence. The Ministry installed a cattle guard at the gateway of the new driveway to the south section near the end of the project. Ms. Chivers testified that she put a lock on the gate after the project. There is no legal access permit for the new driveway to the south side of the subject property.

2.4  Cattle Operation

[16]  In June 1999, at the time of the taking the Chivers had 20 cows, 19 calves and one bull on the ranch. The calves would be sold every year so the herd size was about 20 head of cattle. Before the project they pastured the cattle on the south side of the property during the summer (May through early October). The south side of the property was fully fenced. They had ferried the cattle across the highway in a horse trailer that took five cattle at a time until mid 1998 when they had purchased a livestock trailer that took 10 at a time. The cattle were loaded into the trailers with the assistance of a cattle chute. Before the project the truck and trailer had to turn right from the Chivers' driveway onto the Highway and drive about 100 metres down the Highway to the intersection with Badger Creek Road.

[17]  The south side was dry and stony and only had sufficient feed for about a month. For all but the first two to four weeks Ms. Chivers told us that she would transport 10 to 15 bales of hay across the highway every day in a three quarter ton truck. The Chivers also checked on the cattle periodically. When they were on this south part of the property the cattle would come to meet the feed truck so that it was relatively easy to check on them.

[18]  Construction of the project commenced in the summer of 1999 after the cattle had already been taken to the south side for pasturing. The construction on the highway eventually made it too difficult to take the daily trips across the highway with hay so Ms. Chivers opened the top gate leading into the Crown land next door to give the cattle more grazing room. Although she did not hold a grazing license for this adjoining land, no one complained.

[19]  In the summer of 2000, Donna Chivers told us that they decided to keep the cattle on the north side of the property rather than transport them across to the south side. The cattle fed on the hay fields and as a consequence there was less hay harvested and more hay had to be bought. Ms. Chivers stated that as a result she bought 800 extra bales at $5.00 each. Although Ms. Chivers specifically denied that the cattle had been on the south side in 2000 (or 2001) there was a letter in Mr. Grant's file from her husband, Gary Chivers, dated September 2000 that said they were continuing to take the cattle to the south side but for shorter periods. In addition, there was evidence by Ms. Chivers that fences had to be replaced in 2000 because of cattle knocking over the Ministry's new fence on the south side trying to reach rye grass planted by the Ministry on the Highway right of way.

[20]  In the summer of 2001, the Chivers transported the cattle to a neighbours' range some 3 to 4 kilometres away. During the time they were there, the Chivers did not have to transport hay to the cattle. However, Ms. Chivers would check on the cattle every two or three weeks. It appears that during this time she would take a horse to the range in a trailer (in fact usually two horses) and she and another person would check on the cattle with the use of the horses.

[21]  In the summer of 2002, the neighbours had sold their property and taking the cattle to this property was no longer possible. About two thirds of the cattle were again transported across to the south side of the property for the summer. One third of the cattle were left on the north side. Hay was delivered to the south side to supplement the limited grazing. Some of the cattle on the south side got "lost" and were on the Crown land for some time. During this time they did not need to deliver as much hay. There was some evidence that the Chivers sold several head of cattle at some point after the project.

2.5  Horse Operation

[22]  The Chivers kept between 12 and 22 horses on the subject property at various times. Most of these horses were thoroughbreds that had some racing history. Some of the former race horses were now used as brood mares or studs. Some horses were boarded for other owners. Ms. Chivers had considerable experience with race horses dating back to a period before she moved to the subject property in 1988 when she lived in Maple Ridge.

[23]  Some of the horses raced at Hastings Park in Vancouver. The racing season there runs from April to October but the horses were sent to Vancouver by the end of January in order to have sufficient time for training. Ms. Chivers' sister did the training in Vancouver, not only during February and March before the season started, but also during the racing season in between the races. Sometimes a horse would be raced at one or more of the four B tracks in British Columbia such as Kamloops or Osoyoos where racing occurred for only a few weeks each year. Sometimes a horse might become injured and return to the Chivers' ranch for a few weeks. The horses usually returned to the ranch for two to three months from late October through mid to late January, although in October 1998 the horses spent the winter in Osoyoos with Ms. Chivers' sister. In Osoyoos they trained on the race track. Ms. Chivers said that she and her sister worked together in the racing and it appears from Ms. Chivers' testimony and the financial records that she boarded her sister's horses in the winter months in exchange for her sister's training Ms. Chivers' horses at Hastings Park.

[24]  There was evidence about the race horses doing aerobic training on the hills on the south side of the property. This training was only for those relatively few horses that had some future prospects as race horses and were living on the ranch subject property. It was not for the horses that used to race nor for the ones that were actually racing off the property in Hastings Park or Osoyoos. There were some trails on the steep slopes on the south side that had been cleared. These provided a location to give uphill and downhill training for the race horses. There were also areas for flat training. Ms. Chivers said that before the project she would take each race horse for training every three or four days, weather permitting. Clearly, in certain winter conditions the hill riding was unsafe.

[25]  Ms. Chivers described the changes in her ability to use the south side of the property for aerobic training for the race horses as a result of the project. Before the project she would ride a horse across the two lane Highway in front of her driveway, and proceed into a gully behind a concrete barrier alongside the road. She was able to ride the horse down the gully for about 100 metres until she reached the gate at the intersection of Badger Creek Road and the Highway. She would open the gate and proceed into the south side of the property. After the taking the Highway was four lanes. She had to cross the Highway in front of her driveway to reach the gate for the driveway connecting to Badger Creek Road across the road. Because the thoroughbred race horses were temperamental and "hyper" Ms. Chivers stated that there were safety issues in crossing the new four lane Highway. Although the horses were not a problem when she was waiting in her driveway to cross to the south side, when she reached the south side and the gate to the new driveway the horses had a tendency to suddenly shy or change direction. She was concerned that they might head back into the highway. Although she had crossed the new four lane Highway on horseback she stated that she had decided to stop. Putting the horses into a horse trailer to cross the Highway was inconvenient as one had to bandage each leg of the horse to go into the trailer and change the bandages on the other side to ones that were appropriate for running. Ms. Chivers said that this aerobic training was not possible on the slopes on the north side of the property since the other horses in the paddocks would be a distraction.

3.  UNDERPASS

[26]  The key underlying issue in this case was the failure of the claimants to obtain an underpass under the Highway for the movement of cattle, horses and vehicles. Ms. Chivers had indicated she wanted an underpass but was told at her first meeting with Mr. Walker, a property agent with the Ministry, in October 1998 that the engineers had found that it was not warranted. After this meeting Ms. Chivers retained Mr. Burke who wrote the Ministry and asked that all future communications be directed to him. A few weeks later on November 12, 1998 Mr. Walker said that the project was on hold.

[27]  On February 22, 1999, Mr. Dacho, the regional Manager of Highway Engineering, wrote the Commission and said that the Ministry wished to proceed with the passing lane option that the Commission had indicated it favoured over a year earlier in January 1998. The Ministry was applying to have the area of the subject property that it intended to take (and that was in the ALR) re-categorized so that Highway improvements could be constructed on it. The reason provided for this construction project was to improve safety in this stretch of Highway which had substandard curves and limited passing opportunities. In addition the existing truck climbing lane was too short so that the trucks were still travelling too slowly when they were forced to merge with the higher speed passing traffic. Mr. Dacho sent the Chivers a letter on the same date advising them that the Ministry was applying to the Commission to have a portion of their land shown on an attached map classified so that the Ministry could construct a portion of the Highway on it. He referred them to Mr. Walker if they had any questions. Mr. Walker as the property agent stated that his office communicated with counsel rather than the land owners directly and he knew that Mr. Burke had been retained. Mr. Dacho, who was in a different office than Mr. Walker, testified that he did not know that Mr. Burke had been retained. However, a copy of Mr. Dacho's letter was sent to the property agent, Mr. Walker, for his approval. Mr. Dacho also confirmed that he was aware that Ms. Chivers had requested an underpass and a left turn lane.

[28]  Ms. Chivers was confused on the question as to whether she received the February 22, 1999 letter from the Ministry, what was included with the letter and what she did as a result. She agreed that the letter was addressed to her regular post office box number, although the attached application that was sent to the Commission listed the address for the Chivers that was on the Land Title print out and was only a general delivery address. At one point in her testimony she said that she did receive the letter. At another point she said that she assumed the project was on hold in February 1999 because of the earlier letter in November to Mr. Burke. Later she said she could not recall it properly. She said that she believed a map was included with the letter, but she could not recall whether the application to the Commission was present. She testified that she understood the letter was to enable the Ministry to construct a road on a portion of her property. She agreed that she did not contact the Commission. Nor does it appear that she contacted Mr. Burke. She testified that she thought she may have talked to Mr. Walker as the letter suggested.

[29]  At a meeting held in March 1999, the Commission considered the Ministry's application and voted to allow the Ministry to construct passing lanes on the specified 1.77 hectares of land of the subject property. A copy of the Commission's letter to the Ministry dated March 16, 1999 was sent to the Chivers by the Commission at the general delivery address that had been on the application.

[30]  An internal email within the Ministry six weeks later indicated that an employee of the Commission had said that if the Chivers had told the Commission that they wanted an underpass that the Commission would have supported the request.

[31]  The project proceeded without an underpass or a left turn lane. There was some evidence about costs for some type of underpass being in the range of $150,000 to $200,000. In a memo from Mr. Grant to Mr. Burke that came from Mr. Grant's file and was dated November 2000, Mr. Grant conceded that an underpass costing $250,000 could not be justified for the use of the subject lands, with a total market value before the taking for the land without improvements of between $323,500 and $363,600. However, he went on to state that such a cost benefit analysis has not always been a criterion of the Commission.

[32]  With respect to left turn lanes, Mr. Dacho testified that they are provided when certain minimum requirements of vehicle volumes are met. A standard named "Two Lane Roadway Left Turn Warrant" was put into evidence. This standard measures the number of vehicles advancing in the same direction as the left turning vehicle, the number of vehicles turning left and the number of vehicles heading in the opposite direction that the left turning vehicle has to cross. At a posted speed of 90 kilometres per hour the number of vehicles in any of these three categories required to trigger a requirement for a left turning lane is several times higher than the existing traffic counts on the Highway in the vicinity of the subject property. Mr. Dacho explained that for four lane highways there could be a higher warrant or more vehicles to trigger a requirement for a left turning lane because for any given volume of vehicles four lanes provide more room than two lanes. We accept the respondent's submission that four lanes are inherently safer for left turns.

[33]  Once the claimants realized that the project was proceeding without an underpass or left turn slot they were disappointed. There were allegations that the Ministry's communications in the period leading up to the approval by the Commission left much to be desired. The Ministry had indicated that the project may not proceed and then had contacted the claimants directly instead of their lawyer, as Mr. Burke had requested. There was a claim that the Ministry had failed to provide the Chivers with a brochure from the Commission as requested by the Commission. The Ministry knew the underpass would be a costly enterprise. It was suggested that the Ministry's strategy in communicating with the Chivers was part of a deliberate effort to thwart the Chivers' right to participate in the application and decrease the likelihood of an underpass being required. While counsel recognized that the board has no jurisdiction under the Act to compensate the claimants for the Ministry's behaviour he urged us to criticize the Ministry.

[34]  First we note that it appears to us that the project was on hold for a while, given that the minutes reflect an original intention that an application be made to the Commission on October 19, 1998 for approval at a November 23, 1998 meeting of the Commission. This was not done and the most recent Design and Engineering meeting for which we have the minutes, October 8, 1998, indicates that there were continued issues with respect to the design and other matters. Later there was an internal request within the Ministry for an increase in allocation of money for the project. Eventually the application was forwarded to the Commission in February, 1999, some four months after the original tentative date. Although we have no further information, we have no reason to doubt Mr. Walker's letter dated November 12, 1998 saying that it was uncertain at present whether the project would proceed.

[35]  Second, we are satisfied that the Chivers did receive the letter from the Ministry dated February 22, 1999 saying that the Ministry was making application to the Commission with respect to the designated portion of their property in order to widen the Highway. For whatever reason, Ms. Chivers did not contact anyone with respect to this letter. In the circumstances the Ministry ought to have contacted Mr. Burke with this information as he had formally notified the Ministry that he was counsel of record and that further communications should be directed to him. The Ministry's failure to contact Mr. Burke at this juncture may have been inadvertent or it may have been deliberate; we are unable to say. However, even if it was deliberate such a step would only be to the Ministry's advantage if it had reason to think:

[36]  With respect to the likelihood of the Commission's requiring an underpass, it is true that there was an email in evidence that reported a Commission employee had stated this to be the case. However this purported position of the Commission was never confirmed. There were other third party reports that the same Commission employee had said release from the ALR to facilitate subdivision of a portion of the subject property was very unlikely and yet later when the poor agricultural capacity of this land had been emphasized the Commission employee appears to have reversed the Commission's likely position. Given the poor quality of the land and the less than satisfactory evidence as to the Commission's position we are uncertain as to whether the Commission would automatically have ordered an underpass for these subject lands on Ms. Chiver's request. Finally, there was evidence that the Commission expected the Ministry and the landowners to generally work out rehabilitation measures between themselves in these situations.

[37]  As a result, we are unable to conclude that in February 1999 there was much basis for the Ministry to link a failure to notify Mr. Burke with the ultimate result of an underpass not being required. Nonetheless the Ministry ought to have notified Mr. Burke that this project had resumed and in particular that the application was being made to the Commission.

[38]  Mr. Grant provided us with considerable literature about culverts and underpasses. He stated that if an underpass had been provided there would have been no net loss in property value and in fact the underpass would have created a benefit for the property. It would have compensated not only for the widening of the Highway in this project but also for the two lane Highway that was in existence before the project. Under section 44(1.1) of the Act any benefit to the owner from the construction or use of the works must be deducted from any compensation payable, but in these circumstances there would have been little or no compensation for the benefit to be set off against. We note that an underpass would have been a benefit only so long as the farm use of this marginal land continued. To the extent that at any time in the future there was a change in use of the south side to either gravel extraction or subdivision as proposed by the claimants (see the section on highest and best use below), any underpass would have been rendered redundant.

[39]  While there was no claim associated directly with the failure to obtain an underpass, as we indicated above, the Chivers' ongoing perception that the Ministry may have deliberately undermined their chance of obtaining an underpass by neglecting to notify counsel is a primary factor underlying their claim for compensation.

4.  ACCESS

[40]  Another preliminary issue is whether the subject property has lost legal access as a result of the project.

4.1  Claimants' position

[41]  The claimants submit that there has been a significant change in access as a result of the project. Before the project Badger Creek Road was a public road that passed through the southern section of the subject property and intersected with the Highway. Therefore the south side had access to the Highway via a public road. After the project Badger Creek Road has been altered. There is now a driveway that connects Badger Creek Road to the Highway. The claimants point out that this driveway is not a relocation of the end of Badger Creek Road because it is on land that continues to be owned by the Chivers which could not be the case if it was a public road. Thus, the south side now accesses the Highway using a private driveway.

[42]  Controlled access highways restrict the common law right of a property owner to access the highway at any point at which the land actually touched the highway. Under section 54 of the Highway Act, R.S.B.C. 1996, c. 188:

The claimants say that before the project the south side had legal access to the Highway via a public road and section 54(1) of the Highway Act did not apply. However, after the project, the south side only has access to the Highway by a driveway or private road and the claimants say that they cannot use this access under section 54(1) as they do not have a valid and subsisting permit. Further, the claimants say that even if there was a permit, it would be inadequate since the access permit is personal and must be renegotiated with any subsequent purchaser, and it can be cancelled at any time by the Minister without compensation.

4.2  Respondent's position

[43]  The respondent says that compensation should be determined on the basis that the claimants have permanent access from the highway to the south side after the taking. The respondent points to the physical similarity of the access to the south side both before and after the project. The new driveway access to the south side was built under a contract "to re-construct accesses" signed by the claimants and the respondent. The Design Plans showing the new driveway were signed by the regional director who is authorized by the Minister to issue a permit under section 54(1) of the Highway Act. The respondent acknowledges that there is no access permit, but says that the Minister's physical construction of the access (through his authorized agent) has permitted access. In the alternative, the Chivers have failed to mitigate their loss by failing to apply for an access permit. Finally, the respondent referred us to several board decisions in which the board has concluded that access to controlled access highways did exist or would exist despite the lack of an access permit. See Gorman Bros Lumber Ltd. v. British Columbia (Minister of Transportation and Highways) unreported (September 17, 2002) ECB #33/99/227 (see board website) para 62; leave to appeal refused 2003 BCCA 74; Maddocks v Surrey (City) (2001), 73 L.C.R. 161 (B.C.E.C.B.) para 26-37.

4.3  Analysis and Conclusion

[44]  First of all we will consider the access to the north side where the residence and outbuildings and hayfields are located. This driveway lacked an access permit both before and after the project. Theoretically the Chivers are in breach of section 54 of the Highway Act in their continued use of this driveway. However under this section there are two activities that are prohibited unless a person has a permit: i) construction of a private road as a means of access to a controlled access highway and ii) use of a private road as a means of access to a controlled access highway (emphasis added). In this case, the claimants entered into a contract with the Ministry of Transportation and Highways that was styled a "license for construction access". The terms of the License Agreement state that in consideration of specified compensation "The Licensee [the Minister]  has, for the Term of this License, the right to enter and occupy the [specified areas of the]  Property for purposes of completing the following project: Heffley to Avola - Badger Passing Lanes ("the Project"), specifically to re-construct accesses". The Design Plans showing the location of both new driveways and details as to their construction was signed by the regional director who under the Highway Act, Part 6, Regulation, B.C. Reg. 7/89 is authorized by the Minister to issue a permit under section 54(1) of the Highway Act. Although there is no access permit for use, the Minister has authorized, designed, constructed and paid for reconstruction of the former access in a manner that complies with section 54(1) of the Highway Act and the claimants continue to use this access on a daily basis.

[45]  With respect to the south side of the property the situation is somewhat different. Before the project, the Chivers had legal access to the south side of their property as a result of the fact that Badger Creek Road turned out to be a public road, despite its appearance to the contrary. After the project, the Chivers have a private driveway to the south side and they do not have a permit. However, the License Agreement signed by the claimants covered the reconstruction of access to the south side as well as the north side. The Design Plans also show the new driveway on the south side and other design details. Again the Minister has authorized, designed, constructed and paid for the new driveway in a manner that complies with section 54(1) of the Highway Act.

[46]  The claimants submit that this new driveway to the south side does not appear to have been constructed for their benefit. They say that they did not ask for it. Ms. Chivers referred to the new driveway as a construction access road and suggests it was for the benefit of the paving contractor and access for the contractor's trucks to the temporary asphalt plant. However, the claimants signed a License Agreement with the Minister that said it was specifically to re-construct accesses (our emphasis). We note that accesses is in the plural. We interpret the use of the word re-construct to mean rebuilding former accesses that had been used by the Chivers before the project. If the purpose of the new driveway was only for the paving contractor we would have expected the wording for the License Agreement to have been something like "to construct a temporary access". In our view, the interpretation of the wording in the License Agreement clearly provides for reconstructed accesses for the Chivers to both sides of their property.

[47]  Further, the Chivers have used the access and continue to use the access to the south side. Ms. Chivers stated that they had taken some of their cattle to the south side in the summer of 2002. They had also delivered hay. She confirmed that a Mr. Horn had bought gravel from the gravel pit on the south side since the project. A letter in Mr. Grant's file from Mr. Chivers in September 2000 indicated that the claimants continued to use the south side for their cattle but for shorter periods than before the project. Ms. Chivers also told us that they had spent $5,000 in re-fencing the southern boundary of the south side in 1999 or 2000. We assume that such a sizeable project would not have been undertaken if the Chivers did not have any expectation to ever use the south side of the property for cattle again. BC Hydro must still access their easements on the south side of the property. Most if not all of this use of the south side depended on the new gate and driveway.

[48]  We also note that the Ministry installed a cattle grid on the new driveway near the completion of the project. Clearly the cattle grid was installed on the Ministry's assumption that the gate to the south side would be used by the Chivers and their invitees from time to time while they continued to keep cattle on the south side.

[49]  The claimants also submit that the regional director has deliberately refused to issue an access permit and that therefore the only conclusion that can be drawn is that the use of the entrance to the south side remains prohibited by section 54 of the Highway Act. We are assisted by the cases of Maddocks and Gorman. In both these cases the board refused to accept the respective authorities' submissions that the terms of the access permit or the lack of an access permit limited the claims put forward by the respective claimants. In Maddocks the board decided that the subject property had legal access at the time of expropriation despite the lack of an access permit. In Gorman the board decided that it was reasonable for the appraiser to assume that a purchaser would have obtained a new access permit on the sale of a property even though access permits are tied to a particular owner and do not run with the land. We agree with the principle that underlies the decisions in Maddocks and Gorman: the board is reluctant to construe the absence of an access permit or the terms of an access permit too strictly to the detriment of the claimant when it appears that in fact access to a property from a controlled access highway has been a longstanding practice and will almost certainly continue on any sale of the property. In this case it is the claimants, rather than the authority, who are relying on section 54 of the Highway Act to argue that the lack of an access permit to the south side after the taking means that access is prohibited (and as a consequence there is a significant reduction in market value to the remainder). Again, there is a longstanding history of actual access to the north side of the property despite the lack of a permit, both before and after the taking and a shorter history of actual access to the south side after the taking. In addition in this case, we have the Minister entering into a contract with the claimants in which he (or she) authorized, designed, constructed and paid for the two new driveways in a manner that complies with section 54(1) of the Highway Act. In these circumstances we are not persuaded that the claimants can use section 54(1) to argue that access to the property is prohibited. As in Maddocks and Gorman we are reluctant to accept a party using this regulatory provision to artificially enhance its position on the market value of the property.

[50]  In any event, claimants have an obligation to mitigate damages arising from injurious affection. See Re Gordon, [1954]  O.R. 863 (C.A.) and E.C.E. Todd, 2nd ed. The Law of Expropriation, (Carswell, Toronto: 1992) p. 368. The Chivers have apparently never applied for an access permit for either the north side or the south side of their property.

[51]  Finally, the claimants say that even if they had an access permit, either provided by the Minister as they have demanded or on their own application, it would be of very limited value since it would not run with the property and any purchaser would have to arrange for a new access permit and it would contain a term permitting cancellation at any time without compensation. The claimants referred us to Hill v. Nova Scotia (Attorney General) (1997), 60 L.C.R. 161 (S.C.C.) as authority that the driveway to the north side of the property had legal access. The facts in Hill have some similarity to those in the present case, although it was the expropriation of a strip of land through the middle of the owner's farm for the creation of a new controlled access highway. Compensation included an indication to the farm owners that they could continue to transport livestock and equipment back and forth across the highway. Over the years the Minister had built ramps and gates to facilitate the farm owners crossing of the highway. Cory J. speaking for the Court found that this action amounted to part performance and created an equitable interest to the access that could not now be denied by the Minister despite statutory provisions similar to section 54(1) of the Highway Act. While the claimants submitted that this case applied only to the driveway on the north side and work done on the driveway in the 1960's, we see the Ministry's actions in 1999 in its partial expropriation, its acknowledgement of the existing accesses (despite the lack of a permit to the access on the north side) and the need for replacement accesses, along with its rebuilding of the accesses on both the south side and the north side of the property and the claimants continued use of the accesses as being essentially the same as those facts in Hill that invoked the principle of part performance and an equitable interest to the access. As a result the cases put to us by the claimants, Burke v. Nova Scotia (1984), 30 L.C.R. 8 (N.S.S.C.) and Gerald J. Ryan Co. Ltd. v. Minister of Transportation (1983) 29 L.C.R. 29 (N.B.C.A.), which involved verbal promises by the crown to provide access at some time in the future are of no relevance.

[52]  After reviewing all of the evidence and the authorities, including Hill, we conclude that the Chivers too have a right in equity to the existing physical access to both the north side and south side of their property after the project. There does not seem to be anything in law that would prevent an equitable interest such as a right to access from running with the land. We also note that the respondent's written submissions urged us to value the property as if it had permanent access to the south side after the taking (emphasis added).

5.  SAFETY

[53]  The circumstances underlying this claim led to many allegations about safety on the Highway and changes in the safety for the Chivers' use of the Highway before and after the project. The Chivers had wanted an underpass for livestock and vehicles and a left turn lane for north bound traffic on the Highway for reasons to do with enhancing safety in their use of the Highway. When these two items were denied the Chivers pointed to the safety concerns they had in crossing the Highway. Since they said their use of the south side of the property necessarily decreased because of safety concerns, this issue is connected to the claim for reduction in market value of the remainder as a result of the project. We heard evidence from Donald Bowins, a civil engineer consultant with D.K. Bowins & Associates Inc. who was called by the claimants.

[54]  The respondent said that the issue of safety after the project must not be viewed in isolation, but must be compared to the situation that existed before the project. Frank Dacho, Manager of Highway Engineering for the Thompson Okanagan region, provided rebuttal evidence for the respondent.

[55]  Mr. Dacho testified to the Ministry's task in general in balancing increased mobility of traffic with public safety concerns. We note that it is not our role to make determinations about technical aspects of Ministry projects, including safety. However, because in this case the allegations of decreased safety may affect market value we must give some consideration to these claims. The Chivers' main allegation was that the combination of limited visibility and a wider Highway made it unsafe for them to take cattle and hay to the south side of the property. (The issue of riding the horses across the Highway will be considered separately below.) It also appeared that they were concerned about turning left into their driveway to the north side when they were heading north from Kamloops.

[56]  Before the taking the Highway was a two lane road with a posted speed of 90 km/h. The two lanes were each 3.6 metres wide for a total travelled portion of 7.2 metres. The 1997 Planning and Evaluation Report commented on a number of concerns to do with the Highway where it cut through the subject lands and recommended the following:

Mr. Dacho acknowledged that certain features of the Highway before the taking did not meet present standards for 90 km/h design speeds. All of these aspects were to do with the safety of the Highway for the general public who used it.

[57]  We were provided with measurements of sight distances made by both Mr. Bowins and Mr. Dacho. We preferred Mr. Dacho's sight measurements since they were made according to a more realistic digital terrain model based on a driver eye height of 1.05 metres and a vehicle object height of 1.3 metres, while Mr. Bowins' model was based on a driver's eye seeing an object that was only six inches above the pavement. In addition, Mr. Dacho determined sight distances that could be seen along the Highway to both the north and south of each drive or roadway both before and after the project. Mr. Bowins only measured the sight distance along the Highway to the south from the one driveway after the project.

[58]  Before the project when the Chivers left the driveway from their residence on the north side of the property to enter the Highway they could see 434 metres to the left or north east and 258 metres to the right or south west. Given these sight distances, turning left to head north east towards Barriere was more compromised than turning right to head south west towards Kamloops. Once the Chivers had turned left, they were in the only northbound lane if approaching north bound traffic that had been beyond the 258 metres was advancing rapidly. If the Chivers wished to cross from the north side of their property to the south side, they had to turn right from their driveway into the Highway's only southbound lane. From the driveway they could see any approaching south bound traffic within the sight distance of 434 metres. They had to proceed about 100 metres along the single southbound lane to the intersection with the Badger Lake Road where they would turn left and enter the south side of their property (presumably someone would have unlocked and opened the gate ahead of time). The existing northbound passing lane ended near the intersection with Badger Creek Road and therefore northbound traffic was merging at this point. The 1997 Planning and Evaluation Report says that this "merge at the top of the hill is difficult; drivers feel crowded and unsafe". If there was oncoming traffic heading north, the Chivers would have to wait in the single southbound lane waiting to turn left. Because the taper of the northbound passing lane extends past the intersection, the distance of travelled roadway the left turning vehicle must cross is somewhat greater at 5.6 metres than the lane width of 3.6 metres.

[59]  Before the project if the Chivers had a vehicle on the south side and wished to leave they had to unlock and open the gate at the Badger Creek intersection. From this intersection they could see 514 metres to the right or north east and 207 metres to the left or south west. If they wished to return to the north side of the property they had to turn right into the single lane heading north east at the point where the northbound passing lane was merging into a single lane. They would proceed about 100 metres along the highway in this single north bound lane and then turn left into the driveway on the north side. At this point they could see approaching southbound traffic for some 434 metres and if there was oncoming traffic they would have to sit in the single northbound lane waiting to turn. This would also be the case if the Chivers were driving northbound on the Highway from Kamloops and wished to turn left into their driveway to the north side of the property.

[60]  After the project the Highway was a four lane road in the vicinity of the subject property. Each lane was 3.6 metres wide for a total travelled portion of 14.4 metres. The design speed for this new Highway construction was 90 km/h and the posted speed continued to be 90 km/h.

[61]  After the project, as a result of straightening the curve to some degree and moving the access to the south side, sight distances from the two driveways were generally increased with one minor exception. From the driveway on the north side of the property the Chivers could now see more than 1,000 metres to the left or north east (compared to 434 metres before) and 249 metres to the right or south west (compared to 258 metres before). This decrease of nine metres in sight distance to the south was the one reduction after the project. If the Chivers turned left to head north east towards Barriere, there were two northbound lanes that permitted faster moving north bound traffic to pass them. If they turned right to head south west towards Kamloops, there were two southbound lanes that permitted faster moving south bound traffic to pass them. If the Chivers wished to cross from the north side of their property to the south side, they now had to cross the Highway to the driveway directly opposite. This would mean crossing four lanes of travelled highway or 14.4 metres. Someone would have to unlock and open the gate. There was a widened shoulder area near this gate which allowed one or more vehicles to sit beside the Highway without being in the line of traffic.

[62]  After the project, if the Chivers had a vehicle on the south side and wished to return to the north side again they would have to unlock and open the gate. From the intersection they could now see 553 metres to the right or north east (compared to 514 metres before the project) and 309 metres to the left or south west (compared to 207 metres before the project). Mr. Bowins pointed out that a vehicle in the passing northbound lane may be obscured by a truck in the outside lane. They would have to cross four lanes of traffic or 14.4 metres to reach the driveway to the north side directly across the Highway. If they wished to turn right or left they would have the reported sight distance to see approaching traffic and once they turned, they would be in one of two lanes so that faster moving traffic could pass them. Finally if they were driving north from Kamloops and wished to turn left into their driveway on the north side of their property they would have to stop in the left lane that was for faster moving vehicles to wait for a gap in the oncoming traffic. Other northbound traffic could pass them in the right hand lane if there was room.

[63]  Mr. Dacho provided a stopping sight distance required for motorists travelling along the highway. At the design speed of 90 km/h the minimum stopping sight distance for a driver seeing a taillight at 0.380 metres above the pavement was 170 metres. This includes perception and reaction time to step on the brakes. This was taken from a 1996 Ministry manual of standards. At a design speed of 100 km/h the stopping sight distance was 200 metres. At a design speed of 110 km/h the stopping sight distance was 220 metres. This means that traffic approaching from the north or south with sight distances from the two driveways of between 249 and more than 1000 metres after the taking had more than the minimum distance to stop if an approaching driver saw a vehicle in front of one of the driveways.

[64]  There was some evidence about the time needed for a vehicle to cross the widened Highway. Before the taking vehicles did not directly cross the Highway because Badger Creek Road intersected about 100 metres along the road from the Chivers' driveway. After the taking Mr. Bowins measured the time it took a truck and trailer to cross the four lane Highway and testified that it took an average of 12.5 seconds. He did not measure the distance but said that this time was from a standstill until the back of the trailer had cleared the last travelled lane. Mr. Dacho provided the time periods for various length vehicles to cross a four lane Highway of 14.4 metres as set out in a Ministry manual on acceleration speeds. From a standing start a passenger vehicle (5.5 metres long) would take 6.3 seconds to cross, a delivery truck would take 9 seconds to cross and a tractor trailer or B train would take 10.9 seconds. The claimants submit that Mr. Bowins' measurement of 12.5 seconds was longer than the average of 9 seconds that it took an approaching vehicle travelling at 90 km/h to travel the 223 metres sight distance to the south west from the Chivers' driveway to the north side found by Mr. Bowins. We have said we prefer Mr. Dacho's more realistic sight distances which were 249 metres to the south from the Chivers' driveway and 309 metres to the south from the new driveway on the south side after the project. A northbound driver travelling at 90 km/h would take 10 and 12.4 seconds respectively to travel these distances. However, these figures presuppose that a northbound driver seeing a vehicle crossing the highway in front of him or her would continue driving at 90 km/h, rather than slowing down. As indicated above, for a design speed of 90 km/h, a driver in the north bound lane could come to a complete stop in 170 metres (200 metres if the design speed is 100 km/h).

[65]  Mr. Dacho measured the same thing a different way in determining the sight distance that was required for a driver sitting in the driveway in order to have sufficient time to cross the highway. After the project this sight distance was 188 metres based on Ministry manuals. It is not clear what size vehicle this sight distance contemplates.

[66]  We conclude that the sight distances from the two driveways after the project and the stopping sight distances for travelling vehicles are more than the minimum required to permit the claimants to cross the Highway in a vehicle, including a trailered vehicle, in the time that a vehicle needs to accelerate and cross the 14.4 metres of the travelled portion of the Highway. While we agree with the claimants that the sight distances for northbound vehicles remain somewhat limited, the crucial question for us to determine is not how safe or unsafe it is for the Chivers to use the Highway, nor how much safer it would have been if an underpass had been provided, but whether the Highway is now more unsafe than it was before the project.

[67]  The main allegation made by the Chivers is that it is now more unsafe to cross the Highway in a vehicle, including a trailered vehicle, than it was before the project. However, three of the four sight distances from the two driveways are greater after the project. This includes the sight distance that was the lowest (and therefore the most unsafe) before the project. From the Chivers' driveway to the north there is now more than a 1000 metre sight distance compared to 434 metres before; from the driveway on the south side there is now a 553 metre sight distance to the north compared to 514 metres before and from the driveway on the south side there is now a 309 metre sight distance to the south compared to the lowest sight distance before the project of only 207 metres. It is only from the Chivers' driveway to the south that there is a nine metre drop in the sight distance from 258 metres before to 249 metres after. In addition, before the project a vehicle had to turn right from the Chivers' driveway into a single southbound lane and drive 100 metres down the Highway to turn left at an intersection that was located in a difficult merge area for the oncoming traffic. If there was approaching traffic the vehicle had to sit in the only southbound traffic lane waiting to turn left. A similar procedure had to be followed for the vehicle returning to the north side, except that the vehicle had to pull out into the Highway in the vicinity of the difficult merge with limited sight distance for oncoming northbound traffic. After the project, the vehicle now can drive straight across the 14.4 metres of travelled roadway to the driveway into the south side that is on the opposite side of the Highway. Three of the sight distances are better (with the fourth being only 9 metres less) and the access to the south side has been moved so that intersection is no longer located where the traffic has a difficult merge. After reviewing all of these aspects we are satisfied that the claimants have not demonstrated that it is less safe for vehicles to cross the Highway to access the south side of the property (or return to the north side) after the project compared with before.

[68]  The second situation raised by the claimants was with respect to turning left from the Highway into the driveway on the north side. Mr. Dacho indicated that the volumes of traffic in this case were significantly less than what was required under the left turn warrant to trigger a left turn slot. However, as we have stated above, our task is not to decide how safe or unsafe it is for the Chivers to turn left from the Highway after the project, but whether it is now more unsafe than it was before the project. The speed limit remains the same before and after the project. The stopping sight distance is the same before and after the project. Before the project the left turning vehicle would be sitting in the single and only lane for vehicles heading in the same direction waiting for a break in the oncoming traffic. After the project the left turning lane vehicle would be sitting in the left or passing lane waiting for oncoming traffic. It is true that some northbound vehicles travelling in this new passing lane may be going faster than vehicles travelling in the single lane before the project. However, there is now a right hand lane that is available for other northbound vehicles to use to pass any stationary vehicle waiting to turn left, so long as there is room. Any vehicle waiting to turn left has greater sight distance of oncoming traffic after the project than before. The sight distance for northbound traffic approaching any stationary vehicle waiting to turn left midway between the two driveways is unclear but it appears that it would be the same or greater after the project. On balance, we are unable to conclude that turning left from the Highway into the driveway on the north side is less safe after the project than before the project.

[69]  The Chivers say that they no longer ride their horses across the Highway as a result of the project. There was a lot of evidence about thoroughbred horses and highways and we accept that the Chivers do not want to cross the Highway on horseback. Rather than trailer the horses across the Highway it appears that they have stopped taking the horses to the south side. While this change in use seems to be related to safety concerns we make two points. First, it is not clear to us how often the property was used for race horse training before the project. In a memo from Mr. Grant's file that came out in cross-examination he states that "the race horse operations have been quite variable and the frequency of hill training utilized in the report are not easily substantiated, nor could Donna [Chivers]  answer that the regular program described in the report would be representative at the time of taking". The actual race horses were racing (and training) away from the subject property for as much as nine months of every year, leaving primarily winter months when hill training would often have been precluded by the weather. Most of the other horses on the subject property were former race horses which did not need this training. Second, we suspect that crossing the Highway on horseback before the project was also somewhat unsafe. The main problem, according to Ms. Chivers, was the horses' tendency to shy back onto the Highway unexpectedly but the shoulder area near the gate on the south side was larger and provided more room after the project than before.

[70]  In summary, we are unable to conclude that safety issues for the Chivers in their use of the subject property are worse after the project than before.

6.  MARKET VALUE

6.1  Expert evidence

[71]  Appraisal evidence for the claimants' property was provided by Danny Grant, of Interwest Property Services (1991) Ltd. His report was dated October 29, 2001. The respondent relied on Lawrence Davies of Appraisals British Columbia. Mr. Davies had prepared an appraisal report dated June 1, 1999 that had been provided to the claimants with the advance payment pursuant to section 20 of the Act. He had updated this report and expanded it for the hearing; this final report was dated November 1, 2001.

[72]  The claimants had retained Slade Dyer of Slade Dyer & Associates, a consultant on land use to make enquiries about subdivision potential of the southern portion of the property. Documents between Mr. Dyer and the Ministry and the Commission were put into evidence together with Mr. Dyer's reporting letters to Mr. Grant. However, Mr. Dyer was not called as a witness. With respect to the gravel located on the property, the claimants called Roy Hostetter, a former owner of a gravel crushing business who had done gravel tests on the property in 1993 and David Ethier, a civil engineer and Chief Engineer with Urban Systems, an engineering consultancy firm.

[73]  The parties have settled compensation for the market value of the land that was taken and the improvements located on this land. There remains the issue of the reduction in market value as a result of the project.

6.2  Highest and Best Use

[74]  We accept the appraisers' shared definition of highest and best use, as "the reasonably probable and legal use of vacant or an improved property which is physically possible, appropriately supported, financially feasible and that results in the highest value".

[75]  Both appraisers are in agreement that the highest and best use of the subject property before and after the taking at the time of expropriation was continuation of the existing use as a small ranch and residence. However, Mr. Grant stated that although there were a number of hurdles before any possible subdivision might be approved, the south side of the property had some speculative potential for eventual small acreage development and that this potential enhanced the value of the current use. He was unable to put any time frame on this potential. Mr. Davies, on the other hand, commented on the presence of overhead power lines near the Highway, the steep slopes and the poor dry soil as detractions from any subdivision appeal. He concluded that the regulatory restrictions and the lack of demand for subdivided lots on this type of property made a change in the current use in the foreseeable future unlikely.

[76]  The Small Holding zoning provides for a minimum parcel size of 2 hectares (4.94 acres). Approximately half of the south part of the subject property of 44 hectares is in the Agricultural Land Reserve. The land within the ALR is closest to the Highway and consists of both open pasture and treed pasture, some of which is on a sloped gradient. The open pasture section is crossed by the two BC Hydro rights of way with overhead power lines. The land outside the ALR is more steeply sloped land in the most southerly part of the property at some distance from the Highway. Most of the land both in and out of the ALR in this section south of the Highway is poor and classified as Class 6 land. The portion of land that is not Class 6 is only marginally better at Class 5. Mr. Grant states that there is no water license but there is piping available to extend the Thompson River supply under the Highway.

[77]  The first issue with respect to the likelihood of subdivision approval is the probability of excluding land from the ALR. We note that about half of the land in the south section is already outside the ALR. In Mr. Davies' earlier report dated June 1999 (one that was provided to the claimants with the advance payment) he states that he has:

discussed the possibility of subdividing the portion south of the highway with the office of the Agricultural Land Commission. It appears that there is virtually no chance that the Commission would approve an application to subdivide.

However in his October 2001 report Mr. Davies modifies this statement somewhat. He states that he has:

discussed the possibility of subdividing the portion south of the highway with Tony Pellett of the Agricultural Land Commission, who said that it is unlikely the ALC would approve any form of subdivision.

However, the Commission has occasionally approved subdivision of land within the ALR. Usually the process involves trading off approval to subdivide marginally productive land for improvements to the agricultural productivity of other land within the ALR.

During cross examination of Mr. Davies an internal Ministry memo from his file dated December 2000 was read to him. This memo referred to a later conversation between Mr. Pellett at the Commission and a Ministry employee in which Mr. Pellett was now reported to have said that given the poor agricultural capacity of the southern portion, the Commission would likely support an application for exclusion from the ALR. Mr. Davies had no explanation why his final report relied on at the hearing referred to the earlier conversation with the employee at the Commission but did not explicitly refer to the subsequent information. It appeared Mr. Davies had received the memo with the subsequent information prior to writing his final report. Mr. Dyer on behalf of the claimants had tried to confirm the earlier information with the Commission but was unsuccessful. Mr. Grant's report repeated Mr. Davies' comments about the uncertainty of exclusion.

[78]  There was also evidence that in 2000 the claimants were in the process of preparing an application for subdivision to be considered by the Commission after the project but although the hearing was some two years later we did not hear any further evidence as to this application or its fate. The respondent submitted that the notes from Mr. Grant's file indicate that he was particularly concerned that the prospect of subdivision might be better after the project. The implication was that the subdivision application was not pursued or if it was, we did not hear about it, because of these concerns.

[79]  We remain unclear as to what the Commission will do about approving any future application to subdivide some of the south portion of the subject property. However, in the circumstances of Mr. Davies' nondisclosure of the most recent conversation involving a Commission employee, we reject the account in his report and find that there is some prospect that the Commission may approve a subdivision of some of the land on the southern side at some point in the future. Given the Commission's failure to respond in any detail to Mr. Dyer's requests, it is not clear to us that a reasonably prudent purchaser on making appropriate enquiries would have been told this without making a formal application for subdivision.

[80]  The second issue is the engineering aspects of the access from the Highway and a road through the subdivision. Mr. Dyer again made enquiries of the Ministry and provided information to Mr. Grant. The Ministry would not provide access for any lots directly to the Highway. Any internal road must be eight metres wide with a 20 metre right of way. The grade of this road should not exceed 8% with limited exceptions. Depending on the size of any proposed development the intersection of the internal road and the Highway may need to be relocated or greatly upgraded. Mr. Dacho, the regional manager for Highway Engineering for the respondent, provided information in response to Mr. Dyer's request as to the requirements of the intersection with the Highway before and after the project assuming a 10 to 12 lot rural lot subdivision on the south section of the subject property in both scenarios. Mr. Dacho said that since the intersection of Badger Creek Road and the Highway before the project was at the end of a taper for the northbound passing lane, the Ministry would not have approved a 10 to 12 lot subdivision entering the Highway at that location where northbound traffic faced a "difficult" merge. In cross-examination Mr. Dacho admitted that at the time he provided that information he was not aware that Badger Creek Road was a public road, but that this was irrelevant to his advice since the Ministry's concern was the impact on the Highway. In his report, Mr. Grant, presumably relying on Mr. Dyer, concedes that this intersection may not have been considered safe enough for traffic generated from a development. After the project, the new location of the access to the south side would need to be modified to give wider radius for the driveway at the intersection for the increased traffic volume. Other upgradings might be required. A note in Mr. Grant's file to Mr. Burke commented on possible engineering costs that might be required by the Ministry that would make the feasibility of a small subdivision questionable.

[81]  Despite this evidence about the inadequacies of Badger Creek Road and the intersection with the Highway provided by the claimants' appraiser, counsel for the claimants submits that Edwards v. British Columbia (Provincial Approving Officer), January 12, 1999, (B.C.S.C. Vancouver Registry No. A981927) is authority for the principle that the approving officer has no authority to require a developer to upgrade existing roads. In that case Hood J. stated that the primary issue was who was responsible for the upgrading of an existing public road that ran through the Edwards property and on which the proposed subdivided lots would front. He interpreted sections 75(1) and 86(1) of the Land Title Act, R.S.B.C. 1996, c. 250 as applying to new highways and therefore not applicable to the existing public road maintained by the Ministry of Transportation and Highways. As a result of his interpretation Hood J. held that the approving officer lacked statutory authority under these sections of the Land Title Act to refuse approval and directed the approving officer to approve the subdivision plan.

[82]  The respondent submits that the case of Edwards could be distinguished. The road in that case was used by the public and was maintained by the Ministry of Transportation and Highways. In this case, Badger Creek Road with a gate at the two entrances to the property (at least one of which was kept locked) had not been used by the public. Nor had it ever been maintained by the Ministry. In any event, in Edwards the issue was who was to pay for the upgrading of a road, the issue was not one about safety at an intersection of a controlled access highway with increased traffic from a subdivision.

[83]  We agree with the respondent that the case of Edwards can be distinguished, at least with respect to some issues. In the present case the primary issue of concern to the Ministry of Transportation and Highways according to the testimony of Mr. Dacho is not the upgrading of Badger Creek Road but the impact of any subdivision traffic exiting onto the controlled access Highway. In these circumstances there are sections of the Land Title Act other than those sections considered in Edwards that apply, including section 80, which provides for a situation where a subdivision affects land adjacent to a controlled access highway. With the south side of the property as part of a farm property before the taking, the evidence was that only the most minimal traffic of perhaps one farm vehicle a day (and only in certain months of the year) would use the intersection along with the occasional BC Hydro vehicle or the occasional gravel truck (six times in 14 years). Any subdivision would necessarily increase the traffic at the intersection. Whether or not the Ministry can require the owners of the subject property to pay to upgrade Badger Creek Road, the approving officer must consider the effect of the increased traffic at the intersection with the controlled access highway.

[84]  Mr. Dyer identified other requirements for a potential subdivision including a water service that provided 500 gallons of potable water per day per lot and a septic field system for each lot.

[85]  Mr. Davies questioned the market for any subdivided lots on the subject property. He emphasized the proximity of the Highway, the presence of the hydro power lines and the steep, stony nature of the land as detractors. However, there was evidence about the sale of some five to ten acre lots in the general area including five of Mr. Grant's comparables and a number of sales of 10 acre parcels in a recent subdivision described by Mr. Davies (although it appeared that some 14 or more than half of the subdivided lots remained unsold at some particular time). There were also some subdivided lots on Clough Road that had once been part of the subject property. We received little evidence that would allow us to determine how comparable any of these subdivided lots are to prospective lots on the subject property. The claimants point out that the subdivided lots would be high up with a view of the river valley below. After reviewing all of the evidence, we prefer Mr. Grant's assumption that there is some market for subdivided lots over Mr. Davies' opinion, especially in a situation where a relatively small number of lots were proposed.

[86]  Much was made about Mr. Davies' use of "typical" purchaser and what a "typical" purchaser may want in a country property. It was strenuously argued that his use of this word showed that he did not understand the definition of "market value". The definition of market value in section 32 of the Act provides for what would have been paid for a property "if it had sold at the date of expropriation in the open market by a willing seller to a willing buyer". Other definitions of market value sometimes include reference to buyers and sellers who are informed, knowledgeable and act prudently. See The Appraisal of Real Estate, Canadian ed., Appraisal Institute of Canada, 1995, pp 16-19. With respect to highest and best use and market value of a property these are to be defined in terms of the hypothetical buyer and seller as opposed to the current owner. See Meyer v. British Columbia (Minister of Transportation and Highways) (1995), 55 L.C.R. 94 (B.C.E.C.B.) at 103-106; and Whitechapel Estates Ltd. v British Columbia (Minister of Transportation and Highways) (2002), 78 L.C.R. 32 (B.C.E.C.B.) at para 63-67. While a "hypothetical" buyer may have been a somewhat better choice of phrase, we do agree with Mr. Davies' efforts to differentiate a prospective notional buyer from the current owners. We note that Mr. Grant also uses the term "typical" buyer or purchaser in his discussion of market value.

[87]  In conclusion, we agree with both appraisers that the highest and best use both before and after the project is the existing use as a small ranch and residence. In this case, unlike many where the likelihood of subdivision is questioned, the existing zoning permits subdivision of the land that is not in the ALR. On the evidence that we have received we find that there is some prospect that the Commission may approve a subdivision of some of the land on the southern side at some point in the future. There remains considerable risk as to whether any subdivision would be economically feasible given the characteristics of this land and the engineering and service requirements, a fact that Mr. Grant conceded (although it is possible that Edwards may limit some of those costs). Mr. Grant failed to provide any time frame for a subdivision and we find that the prospect of subdivision may very well be in the long term given the various costs and uncertainties. After considering all of the evidence, we conclude that there is a speculative possibility of subdivision and that a hypothetical purchaser on the valuation date might have taken that speculative potential into account.

[88]  There was also a small gravel pit on the south side that provided an additional temporary use for gravel extraction both before and after the project. Mr. Ethier, the engineer, indicated that the area that appears to contain gravel was relatively large and might contain between 1,350,000 to 2,700,000 cubic metres. No field testing of the limits and depths of the gravel deposits were done. Only one sample was tested and it appeared that it had too much fine material to meet the Ministry standards for sub base and well-graded base unless it was treated. It was likely suitable for other uses including municipal road base. Royalties are based on the distance gravel must be transported and Mr. Ethier's evidence was that there was only a limited market for this gravel at present. Ms. Chivers stated that they had sold an unspecified amount of gravel some six times since 1988. We heard no further evidence as to the application made to the Commission with respect to a permit to extract gravel.

[89]  The gravel deposits provide an additional speculative potential value for the subject property although we note that not all the possible uses and potential uses are compatible. If extensive extraction of gravel occurred, for example, presumably some or all of the farm use of the south part of the property would be brought to an end. Mr. Grant suggested that the gravel deposits might be used in any potential subdivision of the property, and in that case the amount of gravel extracted would presumably be limited and the possibility of any future extraction would be foreclosed.

6.3  Market Value Before the Project

6.3.1  Claimants' Position

[90]  Mr. Grant used 24 comparable sales to estimate a per acre value for different sections of the property. These sales were between 5.73 to 320 acres and the sale prices ranged between $1,172 and $15,689 per acre. He used ten of the comparables that ranged from 90 to 248 acres to value the 149 acres in the ALR, assuming no severance by the Highway. The range of these comparables was between approximately $1,500 and $2,000 per acre and he concluded a value of $1,700 per acre. Mr. Grant attributed a higher valuation to the 60 acres that were outside the ALR because of its greater potential for subdivision. He referred to three of the comparables with prices ranging from $3,744 to $5,831 per acre and he concluded a valuation for the 60 acres outside the ALR at $2,200 per acre. As a result of the Highway crossing the ALR part of the property before the taking, the inconvenience as well as safety considerations resulted in Mr. Grant applying a 5% reduction to the whole property. Mr. Grant submitted that it was the value of the south portion that suffered from the severance and he applied the 5% reduction for the whole property to the south section. As a result of the reduction being applied only to this part of the property, Mr. Grant used a 10% reduction to the land on the south part of the property. He calculated the 60 acres on the south side that were non ALR at $1,980 per acre and the 50 acres on the south side that were within the ALR at $1,530 per acre. Thus the total valuation for the subject property before the taking was $363,600 (50 acres @ $1,530 + 99 acres @ $1,700 + 60 Acres @ $1,980).

6.3.2  Respondent's Position

[91]  Mr. Davies used seven comparable sales, only one of which overlapped with Mr. Grant's. These seven properties were between 117 and 315 acres and the sale prices ranged from $825 to $2,034 an acre. Mr. Davies adjusted the seven comparables for size, area of cultivation and river frontage which gave a narrower price range between $1,067 and $1,726 per acre. He then compared the comparable sale properties to the subject property on the basis of access and location and concluded a valuation for the entire subject property of $1,553 per acre or $323,500.

6.3.3  Analysis -- Market Valuation Before the Project

[92]  The two appraisers' values for the entire property were relatively close at $363,600 and $323,500 respectively. Mr. Grant concluded a general acreage value for the ALR land of $1,700, while Mr. Davies' acreage value for the whole property was $1,553. However, Mr. Grant categorized the subject property into three different sections which he valued separately. Mr. Davies treated the subject property as a whole.

[93]  Altogether there were 16 comparable sales for the general acreage value ranging from $983 to $2,000 per acre before adjustment. Mr. Davies did not include any comparables that had residential improvements. Six of Mr. Grant's 10 comparables included residential improvements including a cabin, houses and barns. He deducted the value of the improvements from four of the sales; it is not clear whether this was on the basis of the assessed value (although another comparable discussed below, had the value of the improvement as measured by the assessed value deducted). At least one of these 10 comparables had irrigation equipment included in the sale price and one was a listing price rather than a sale price.

[94]  Neither appraiser adjusted for time although the sale prices ranged from August 1994 (Mr. Grant) or February 1996 (Mr. Davies) to December 1999 (Mr. Grant). Three of Mr. Grant's comparable properties sold twice:

The second sale of this last comparable at $123,000 was in Mr. Grant's file but had not been mentioned in his report. One of Mr. Davies' properties sold twice. It sold in January 2000 for $196,000 which was $6,000 greater than the sale price in November 1998. Mr. Grant stated that there was insufficient data to adjust for time. Mr. Davies said that within the three year period for his sales (the three years preceding June 1999) the value of most properties remained stable. We will place more weight on those sales that occurred closer to the date of taking in June 1999.

[95]  Mr. Davies adjusted his comparable sales for the overall size of the parcel (which he estimated at $500 an acre); the size of amount of cultivated area, (which he estimated at $500 an acre) and riverfront location (which he estimated at 26% for its presence). He also compared the access for all seven comparable sales: whether access was from a paved road, from a gravelled road, or from an easement over private land. Finally he ranked the properties on location which included the distance to Kamloops, the elevation, and the length of gravel road. While we were not necessarily convinced as to the market evidence supporting particular adjustments, we found the systematic approach of Mr. Davies in considering each of these characteristics of assistance.

[96]  Mr. Grant did not make any adjustments; he stated that there was insufficient data. He said that he considered balance of hay and grazing land, the commuting distance, river frontage, view from the residence, and the presence of an irrigation system to conclude $1,700 per acre.

[97]  We find three comparables of assistance. The first is the one comparable used by both appraisers. It is relatively similar to the subject in a number of respects including size, size of cultivated area, river frontage, severance by a highway and a railway, access directly to a highway, distance to Kamloops, some sloped areas of the property and even the presence of a small gravel pit. This comparable property was 65 hectares (161 acres) compared to 84 hectares (208 acres) for the subject. The size of the cultivated area on the comparable property was 22 hectares (55 acres) of Class 2 land compared to the subject's 25 hectares (62 acres) of hayfields according to Mr. Grant) or 17 hectares (43 acres) of Class 1 land according to Mr. Davies. Both properties are severed by a highway (the comparable by the Trans Canada Highway and the subject by the Yellowhead Highway) and a railway (the comparable by the Canadian Pacific Railway and the subject by the Canadian National Railway). The river frontage of the comparable property was on the South Thompson River, while the subject's was on the North Thompson River. Mr. Davies suggests that the South Thompson River is more desirable than the North Thompson River because the South Thompson is navigable and can be used for a wider variety of aquatic activities. However the comparable property had only a narrow strip between the highway and the river while the subject had about half the property between the highway and the river. Most of the comparable property is relatively flat, but the land does rise 150 metres to 500 metres in the south east corner. The subject property is more sloped, rising 30 metres from the land near the river to the Highway and then rising 150 metres from the Highway to the highest areas in the south east corner. The comparable property is 38 kilometres from Kamloops compared to the subject at 50 kilometres and both properties have access from a Highway. Finally, Mr. Davies tells us there was a small commercial gravel pit on this comparable, which is also similar to the subject property (although at six sales in 12 years, the subject property's sales are very small). The sale of this property was in August 1997. Mr. Grant reports the unit sale price of this comparable at $2,033 per acre while Mr. Davies' adjusted price was $1,657 per acre, (and he ranked this property superior to the subject on non-adjusted factors).

[98]  We are also assisted to a degree by Mr. Grant's sale 18. It was somewhat smaller than the subject property at about 140 acres, and nearly all flat and cleared. The sale price included an old house and barns and some farm equipment. This property, like the subject was also severed by the Yellowhead Highway and fronted on the North Thompson River. There was also a creek through the half that did not front on the river. This comparable was about twice as far from Kamloops as the subject. This property's smaller size compared to the subject will tend to increase the price per acre but its greater remoteness will likely decrease the price. Although it is flat and cleared, the agricultural capability of this comparable is unclear. The sale of this property was in November 1997 and the unit price was $1,838 per acre. Because the price included an old house and barns and some farm equipment, the unit price was apparently reduced from $2,138 per acre to be an appropriate comparison with the subject. No details were provided as to how this was accomplished however. In addition, Mr. Davies claimed that no sale was in fact registered. As a result of the lack of information on the agricultural capability and the deduction for the improvements we give limited weight to this comparable.

[99]  Finally we relied on Mr. Grant's sale 23. This property was bigger than the subject at 248 acres. There was considerably more cultivated land at 130 acres and about 100 acres of timber. With a 160 acre Crown Lease the property will support 100 head of cattle compared to only 20 cattle on the subject. This comparable's larger size will tend to decrease the price per acre while its greater area of cultivation will tend to increase the price per acre. The property is severed by Mamit Lake Road and is near Merrit. The sale occurred close to the valuation date in August 1999 and after deducting Mr. Grant's estimated value of the improvements, the residual unit sale price was $1,613 per acre. As indicated above, the lack of information on the deduction for the improvements means that we give limited weight to Mr. Grant's sale 23.

[100]  Mr. Grant valued the 60 acres on the south side that are non ALR and have some speculative potential for subdivision separately. The first difficulty with valuing these 60 acres independently is the problem of valuing different parts of a given legal parcel separately. If a portion of the property is valued as if it was a separate title that can be compared to other properties with similar characteristics including the smaller size, the valuation based on that smaller size will be misleading. It is true that the board accepted an appraisal approach that treated the subject property as having three different sectors with respect to highest and best use in Gorman Bros Lumber Ltd. v. British Columbia (Minister of Transportation and Highways) unreported (September 17, 2002) ECB #33/99/227; leave to appeal dismissed 2003 BCCA 74 (February 6, 2003). However, the decision makes clear at para 70 that this was because the appraiser stated that he was valuing the separate sectors as if each was attached to the whole and his comparables appeared to support this. In the present case Mr. Grant appears at times to be treating the 60 acres of non ALR land as if it were already subdivided. He suggests, for example, that the smallest comparable for the non ALR land was similar in size at 51 acres to the 60 acres of non ALR land. Although he talks about the contribution of these 60 acres to the interim ranch use it is not clear that he is valuing the 60 acres of non ALR land as if it was attached to the whole.

[101]  The second problem with valuing the 60 acres of non ALR land separately is that there is no market evidence to support any valuation based on subdivision potential. Mr. Grant used three different comparables to value this sector that gave unit sale prices of $5,831, $3,744 and $4,739 per acre respectively. After considering the risks in obtaining subdivision, and these three comparables, Mr. Grant concluded a unit price for the 60 acres on the subject property of $2,200 per acre. However, none of these three comparables had any potential for subdivision. The higher unit prices compared to the agricultural properties discussed above were because of some combination of the following factors: they were significantly smaller than the subject property (at 51 acres, 102 acres and 122 acres respectively); one of them had significantly more land in cultivation; all of them were closer to Kamloops; and on one property the sale price included equipment reportedly worth $150,000 while on another it included a mobile home and equipment. One of the properties had a "fancy rustic home" with an indoor pool, hot tub, and sauna assessed at $211,600 and while this assessed value was deducted from the sale price, the residual price may not fairly represent the value of the underlying ground. Mr. Grant acknowledged in cross examination that none of these comparables resembled the subject property or these 60 acres of non ALR land on the subject property. We do not find these comparables of any assistance in valuing any part of the subject property.

[102]  The 60 acres of non ALR land is the poorest quality land on the subject property, with steep slopes, dry stony land with some trees and without river frontage. The 1.77 hectares (4.374 acres) of flat stony land near the Highway that was actually expropriated was stated by Mr. Davies to provide a market contribution of $500 an acre, although he generally concluded a value for the subject property at $1,553 per acre. This non ALR land is not directly affected by the taking and any value it might have to a potential purchaser on account of its speculative prospect for subdivision is much the same both before and after the project. The subdivision potential is speculative and appears to be in the long term. Given the difficulty with valuing a segment of one legal title separately and the lack of any market evidence to support a higher valuation, we conclude that the value of this portion of the property should be on the same basis as the rest of the property, keeping in mind that there is this quite limited and speculative potential for subdivision.

[103]  On reviewing the three comparables discussed above at $2,033 per acre unadjusted (or $1,657 per acre adjusted), $1,838 per acre and $1,613 per acre, and keeping in mind the limited and speculative subdivision potential for the poorest quality land, as well as the speculative potential for gravel extraction, (which is not totally compatible with the subdivision potential), we conclude a unit value for all the land in the subject property at $1,700 per acre. This is the same unit price as that estimated by Mr. Grant for the 143 acres of the subject property within the ALR.

[104]  Mr. Grant goes on to make a 5% deduction in the entire property price for severance. However, he proceeds to apply this deduction to the south side only which results in about a 10% deduction to the valuation of the land on the south side. Mr. Grant acknowledged in cross examination that this 5% deduction for severance is not based on any market evidence that he was able to collect. However, he did refer us to an article dating from the 1960's relating to partial takings for the Ohio Turnpike and how the segments of farms that had been separated by the taking were actually used by the owner (or sold) a few years after compensation had been awarded. Mr. Grant stated that this study showed between 65% and 95% recovery for the farms that had been severed by taking for the Turnpike.

[105]  When we reviewed this study we found that there were several categories of parcels that had been created by the takings. Some of the parcels were categorized as "isolated". In these, the taking cut through the property creating a main parcel and a smaller isolated parcel. Access between the main parcel and the isolated parcel was still possible although the route was sometimes more circuitous than before the taking and the construction of the highway. Other parcels were described as "landlocked". These were ones where the taking again cut through the property creating two parcels: a main parcel and a smaller landlocked parcel. Access between the main parcel and the landlocked parcel was removed since the landlocked parcel was now surrounded by land owned by third parties. The authors report that a few years after the taking 24% of the isolated parcels had been sold with an average recovery of 94%. Fifty percent of landlocked parcels had been sold with an average recovery of 75%. Almost all of both the isolated and the landlocked parcels that had not been sold were being used by the owner, despite assumptions made when compensation was awarded.

[106]  Mr. Grant appeared to be using the isolated parcels selling at 95% recovery to support his deduction of 5% for severance for the subject property before the project. First we note that most of the isolated parcels (over 75%) continued to be used by their owners as farm land a few years after the takings. While those isolated parcels that had been sold resulted in 95% recovery we have no information about any of these sales of isolated parcels of farmland in the early 1960's in Ohio to support a deduction to be applied to the whole of the subject property in this case. We note that the conclusion from this study appeared to be that parcels of land that had become isolated from the main parcel as a result of an expropriation for a highway were not in the long run as badly affected as had been assumed when compensation had initially been calculated.

[107]  We also note that two of the three comparables on which we relied to find a unit price of $1,700 per acre were severed by a highway and the third was severed by a road. As a result severance has already been factored into the sale price. We conclude that no additional deduction should be applied for severance of the subject property by the Highway before the project.

6.3.4  Conclusion -- Market Valuation Before the Project

[108]  Thus we find the valuation of the subject property at 208 acres before the project to be $1,700 an acre or $353,600.

6.4  Market Value After the Project

6.4.1  Claimants' Position

[109]  Mr. Grant categorized the 4.374 acres that were taken as being land on the south side of the subject property that was within the ALR. He valued this land before the taking at $1,530 an acre or $6,692 for all the land that was taken. He added a separate sum for timber on the land that was taken of $3,000.

[110]  Mr. Grant estimated the reduction in market value of the remainder under two different scenarios. First he assumed that the new driveway and gate provided an alternative access although no access permit had been granted. Under this assumption he estimated the reduction in market value by two different methods.

[111]  One of Mr. Grant's approaches was to estimate the greater impact of the severance as a result of increased separation and nuisance from the widened four lane Highway. While before the project he estimated a 5% reduction in the whole property as a result of the severance by a two lane Highway, after the project he estimated a 20% reduction in the whole property as a result of the four lane Highway. Again if it was the value of the south portion that suffered from the severance, it would be a 30% to 40% reduction in the market value of this section. Mr. Grant referred once more to the 1960's Ohio study and the increased isolation of the southern portion after the taking. Mr. Grant's calculation of the reduction in market value of the remainder using this approach was $71,400 (20% of $363,600 less $6,692).

[112]  Mr. Grant also estimated the reduction in market value to the remainder by capitalizing the estimated income losses incurred in operating the south side of the subject property after the project. In estimating the income losses, Mr. Grant estimated the extra time to trailer horses at 45 minutes per round trip x 72 round trips over 6 months for an additional 54 hours per year. At $40 an hour this results in an estimated annual cost increase of $2,160 for additional labour and machinery time. He commented on the difficulty of measuring increased time with respect to the cattle operation but estimated an extra minute a crossing for the driver delivering hay to wait for a break in the traffic for a four lane Highway compared to a two lane Highway. When this was transformed into a yearly expense at four trips per week for 24 weeks he estimated three hours at $20 an hour or an annual cost of $60. After some discussion of appropriate capitalization rates Mr. Grant capitalized the total estimated loss of income of $2,220 at 3% for a loss in market value of $74,000. He stated that this was a measure of the reduction in market value.

[113]  Given these two estimates of reduction in market value of the remainder of $71,400 (as measured by 20% reduction in the market value of the entire property) and $74,000 (as measured by capitalizing the loss of income of $2,220 at 3%) Mr. Grant concluded a reduction in market value between the two estimates at $73,000.

[114]  The second assumption made by Mr. Grant was that as a result of Badger Creek Road having been stopped near its former intersection with the Highway and no access permit having been issued for the driveway, the south side of the property no longer had legal access. (On this assumption Mr. Grant stated that the south part of the property could still be accessed by a circuitous route via the Oliver Creek Forest Service Road leading to Badger Creek Road and the gate into the highest part of the property.) In these circumstances Mr. Grant was of the view that the loss to the southern portion would be 50% (30% loss to the entire property). Mr. Grant's calculation of the reduction in market value of the remainder using this approach was $107,000 (30% of $363,600 less $6,692).

[115]  Under this second alternative Mr. Grant assumes legal access for the south side from Oliver Creek Forest Service Road. The claimants say that under sections 115 and 121 of the Forest Act, R.S.B.C. 1996, c. 157 a forest service road cannot be legal access. Assuming that there is no legal access to the south side at all the claimants say that there would be greater reduction in the market value than the 50% of the south side or 30% of the entire property. Mr. Grant's valuation of the south side of the property before the taking is $195,300 and the claimants submit that if there is no legal access the reduction in market value would be $150,000. They also claim a further reduction in market value for the loss of the gravel resource at $100,000.

[116]  In addition, the claimants say that Badger Creek Road as a public road was a benefit with respect to the subdivision potential to the south side. According to the claimants, on the basis of Edwards, before the project they had an advantage with Badger Creek Road intersecting the Highway as an approving officer could not require them to upgrade a public road.

6.4.2  Respondent's Position

[117]  Mr. Davies valued the 4.374 acres that were taken in two steps. This land was rough pasture and open range and he estimated the value contribution of this land to the whole, on the basis of his size adjustment at $500 an acre, or $2,200 rounded. However, under subsection 40(3) of the Act, the minimum compensation is the ratio of the area of land taken to the total land area before the taking times the market value of the land before the taking. Mr. Davies' calculation under section 40(3) was $6,794 (4.374 acres /208.23 acres = .0210 x $323,500). His final valuation of the land that was taken was $6,794.

[118]  Mr. Davies stated that the market value of the remainder after the taking was similar to the market value before the taking. The attributes that made the property desirable such as the riverfront, the hayfields, the residence and the outbuildings were unaffected by the project. The particular difficulties with the cattle or horse operations did not affect the market value since these specific uses were not necessarily those of a typical purchaser. He found no reduction in market value to the remainder.

6.4.3  Analysis and Conclusion -- Market Value After the Project

6.4.3.1  Land taken

[119]  The two appraisers were very close on their respective valuations of the land that was taken, at $6,692 and $6,794 respectively. This issue has settled in any event at $11,201 for land and improvements including timber. Accordingly we make no award for the land taken or improvements.

6.4.3.2  Reduction in Market Value to the Remainder

[120]  We have concluded above that the claimants had an equitable right to access to the southern portion of the subject property. Thus Mr. Grant's estimate of a 30% reduction to the market value for loss of legal access has no basis. The claim for $150,000 for reduction in market value assuming no access is also rejected. Similarly the claim for $100,000 for the loss of the gravel resource is also dismissed. In these circumstances we do not find the case of Burke v. Nova Scotia of assistance since damages for severance were awarded on the basis of a newly created controlled access highway through the middle of a farm that left one portion with no access.

[121]  Although we have made no finding on the overall safety aspects for the Chivers in their use of the Highway, we have concluded above that it is not less safe for vehicles to cross the Highway after the project compared with before.

[122]  Mr. Grant described the south side of the subject property after the project as being more isolated than before. The Highway was wider at 14.4 metres than the 7.2 metres before the project. However, Mr. Grant did not visit the property before the project commenced and he made a number of mistaken assumptions. He wrongly thought that the posted speed had increased after the project. In addition, he wrongly thought the cattle were herded across the Highway on foot before the project and that vehicles to transport the cattle across the Highway were only used after the project. We find that Mr. Grant's incorrect assumptions have led him to misjudge the impact of the project on the reduction in value to the remainder.

[123]  Mr. Grant used the 1960's Ohio Turnpike study of partial takings to support a greater deduction of 20% in the market value of the remainder after the project. As we have indicated above, the Ohio study did report an average recovery of 75% for the 50% of landlocked parcels that had been sold some years after the taking (with most of the parcels that were not sold continuing to be used by their owners). It was apparently this smaller recovery (compared to 95% for isolated parcels) that led Mr. Grant to his deduction of 20% to be applied to the whole property after the project. However, we have questioned the lack of evidence to support these sales of parcels in Ohio in the 1960's being applicable to the subject. Further, this 20% deduction by Mr. Grant was on the assumption that the south side continued to have legal access and therefore it was clearly not landlocked. We do not find this study of any assistance in supporting a deduction in market value for the subject property.

[124]  Mr. Grant also estimated the reduction in market value of the remainder by capitalizing the estimated extra income lost in operating the south side of the property after the project. He tried to estimate the extra time required after the project at $40 per hour for labour and other increased fuel and maintenance for the Chivers or their employees to trailer their horses across the Highway or deliver hay, based on a given number of trips per week for a given number of months per year, with the total loss then being capitalized. He emphasized that this was not a calculation of business loss but rather a representation of income loss, primarily on the horse operation on the subject property.

[125]  The respondent had numerous criticisms of this approach. The primary objection in our view is that a reduction in market value under sections 32 and 40 of the Act needs to be based on what a willing buyer and seller would agree as a sale price after the project. Since Mr. Grant's numbers are based on what he assumed Ms. Chivers generally did with her horses (although he stated that they should not be misconstrued as representative of any given period) we cannot see that they have any application to a notional purchaser who could not have this same precise use of the property even if he or she happened to be interested in raising horses. We also note that Mr. Grant's assumptions about the number of trips etc. are at odds with Ms. Chivers' evidence both before and after the project. Secondly, an income approach is generally an unsatisfactory measure of a reduction in market value where the type of property concerned is not valued on an income approach. The evidence is that ranch properties are not valued on an income approach. Thirdly, the respondent objects to the capitalization rate chosen of 3% and the fact that the loss was capitalized in perpetuity by Mr. Grant despite his assertion of a realizable potential for subdivision development. We agree with these objections and do not find this approach of any assistance in measuring a reduction in market value to the remainder.

[126]  There remains the issue of subdivision potential after the project compared to before. The claimants submit that the case of Edwards means that the loss of the intersection of Badger Creek Road as a public road and the Highway has led to a reduction in the subdivision potential after the project. We have already stated that the case of Edwards can be distinguished with respect to the issue of the location of the intersection of the access to the south side and the Highway. Whether or not Edwards assists the claimants with respect to the costs to upgrade Badger Creek Road, as indicated above the location of the intersection after the project is a separate question. There are fewer objections to the location of the intersection and the impact on the Highway after the project than the location before. As a result the subdivision potential, although it remains very speculative, is not in our opinion any worse after the project.

[127]  We note that in memos to counsel that came out of his file during cross examination Mr. Grant acknowledged the difficulties of this appraisal because the project only caused "incremental" increases to severance problems that already existed before the project. We have found that Mr. Grant was mistaken in several respects as to conditions before the project and that various aspects of severance and safety are not objectively worse after the project. We agree with Mr. Davies that the desirable attributes of this property such as the riverfront, the hayfields, the residences and the outbuildings are all unaffected by the project. Although we have reviewed the literature provided about horse training on hills we have no evidence that persuades us that a willing purchaser would pay less for the remainder of the subject property following the project. We conclude that there is no reduction in market value as a result of the project.

7.  DISTURBANCE DAMAGES or BUSINESS LOSSES

7.1  Claims

[128]  The claimants' claim for disturbance damages was amended a number of times through the successive Statements of Claim. During final submissions it appeared that the following claims for disturbance damages under sections 34 and 40 remained:

7.2  Expert Evidence

[129]  Lorne J. Pellegrin of KPMG, Chartered Accountants in Kamloops provided expert evidence for the claimants. KPMG's report compared the operating expenses before and after the project. These expenses were primarily derived from Donna and Gary Chivers' income tax returns and were "normalized" to exclude or adjust for one time and unusual expenses, identified after discussions with the Chivers. The revenue and expenses statements for the ranching operation were also in evidence although Mr. Pellegrin said that the income tax returns could not always be reconciled with the figures in these statements. There were separate revenue and expense statements for the horses that went to the race track at Hastings Park in Vancouver in 2000 and 2001. First, Mr. Pellegrin was able to isolate some one time expenses that he attributed to the project. Next, he compared the normalized expenses for the cattle operation for 1996-1998 with those for 1999-2000. He found an increase in the average expenses for 1999-2000 after normalization and calculated the present value of the difference for 10 years at an annual discount rate of 10%. With respect to the horse operation Mr. Pellegrin provided an estimate of the income and expenses assuming that three race horses were sent to Vancouver for the racing season compared to the income and expenses assuming that the race horses were raced without sending them to Vancouver. Between July 1, 1999 and December 31, 2001 he estimated a net loss of $7,000 for the horses sent to Vancouver to race compared to the net result if the horses had been raced without sending them to Vancouver. However, this claim for $7,000 in Mr. Pellegrin's report was never advanced in any of the amended Statements of Claim and we were told at the hearing that it was not a section of the report on which the claimants were relying. Instead the claimants claimed $11,491.25 for the costs for keeping the horses at Hastings Park in Vancouver in 2001 as shown on the Hastings Park revenue and expense statement. They also made a claim for $25,000 as a general loss for the inability to train race horses any longer and the consequential retirement from horse racing.

[130]  Under sections 34 and 40 of the Act an expropriated owner is entitled to reasonable personal or business losses that are directly attributable to the taking or the disturbance or that result from the construction or use of the project. Each of the claimed losses is dealt with separately below.

[131]  As we have already noted, a general problem with many of the claims that were advanced is that they were based on a misunderstanding of the situation before the project. Mr. Pellegrin did not know that when the cattle were on the south side prior to the expropriation that delivery of hay was required on a daily basis but for the first few weeks. When the report was written he seems not to have been aware that before the project cattle were transported across the highway in a livestock trailer. He was told that there was an increased transport of cattle and hay as a result of the project and this is his explanation for some of the increased costs that he identifies. His estimation of the loss on the horse operation assumes that the only reason the horse went to Hastings Park in 1999, 2000 and 2001 was as a result of the project. He did not seem to know when he wrote the report that the race horses regularly went to Hastings Park for the racing season before the project.

7.3   Additional Cost for Hay in the Summer of 2000 -- $4,000

[132]  The claimants claim for the additional cost of hay in 2000 when the cattle were pastured in the hay fields on the north side of the subject property instead of on the south side. As a result Ms. Chivers states she ordered 800 bales of hay at a cost of $4,000 that was an additional expense in 2000 compared to 1999. The respondent did not raise any specific objections to this cost.

[133]  The claimants say that Ms. Chivers' testimony about this expense is supported by the statements of farm income contained in the annual income tax returns and summarized in Mr. Pellegrin's schedules. In 2000 the amount recorded for hay, feed and straw was $9,292 compared with $5,296 in 1999. Thus the schedule records a $4,000 increase for feed and hay in 2000 compared to 1999.

[134]  We note that this claim was not one that was isolated by Mr. Pellegrin as a special one time expense. It was not specifically pled in the Statement of Claim until a Further Amended Statement of Claim was provided on November 4, 2003 midway through the hearing. This suggests to us that it was not a claim identified by the claimants as an extra expense at the time when it is alleged that it was incurred.

[135]  The revenue and expense statements record the various payments made for various items including hay and feed, together with the date and the company to whom the payment was made. When we look at the feed and hay costs that are recorded by Mr. Pellegrin (from the statement of farming activities in the tax returns) compared to the total payments made for feed and hay in the revenue and expense statements for the relevant years we find the following:

The amounts listed by Mr. Pellegrin for feed and hay from the income tax returns for 1998 and 1999 are identical to the amounts recorded for feed and hay in the revenue and expense statements for each respective year. The amount listed by Mr. Pellegrin for 2000 is identical with the total of three feed costs and one hay expense that show up on the 2000 revenue and expense statements, including the separate Hastings Park statement for the horses that went to Hastings Park in Vancouver. Because these feed costs for $4,831 and $72 occurred at Hastings Park they are not properly part of the ranching expenses and it appears that Mr. Pellegrin included these costs in the $6,771 normalization deduction for training and boarding costs for horses in 2000.

[136]  The feed payments for $4,831 and $72 recorded on the 2000 Hastings Park statement are dated August and September 2000, and are stated to cover the period July 13 through September 29, 2000. Ms. Chivers' sister who had done the training of the race horses at Hastings Park in previous years had suffered a serious stroke in July 2000 and has been unable to return to any horse training activity. All the payments recorded on the 2000 Hastings Park revenue and expense statement are dated after July 2000, although the horses had been at Hastings Park since the end of January 2000. None of the people or companies to whom payments are made on the Hastings Park revenue and expense statements for 2000 and 2001 is recorded on any of the revenue and expense statements for the ranch in earlier years. Specifically, the supplier of feed at Hastings Park is not one that is recorded on any of the revenue and expense statements for the ranch. Ms. Chivers testified that both she and her sister owned horses and were in the business together. She normally had the horses on the ranch in the winter including her sister's horses while her sister had Ms. Chivers' race horses at Hastings Park during the extended racing season. Ms. Chivers stated "I would say my sister was more in debt to me than I was to her, because I took care of the horses all the winter." It seems that the normal operational costs to keep the horses at Hastings Park were not paid by Ms. Chivers, or at least were not recorded by Ms. Chivers on any of the statements that we were given, until her sister had a stroke in July 2000. After that date Ms. Chivers appears to have taken on the operational expenses for her horses at Hastings Park that she recorded on the Hastings Park revenue and expense statements. We conclude that the extra cost of about $4,000 for feed and hay in the 2000 income tax return compared to the 1999 return was for feed for the horses kept at Hastings Park incurred in late 2000 in Vancouver after Ms. Chivers' sister had a stroke.

[137]  However, if less hay was produced in 2000 because the cattle were pastured on the hay fields, one would expect most of the additional hay to be purchased in the spring of 2001, before the cattle are put out to pasture. In 1998 and 1999, for example, all the hay purchases of $2,509 and $1,200 were in the spring in March, April and May. However, the revenue and expense statement for the ranch for 2001 shows hay expense of only $653 (and feed expenses of $1,571). (We have the revenue and expense statements for 2001, although we do not have the tax return.) There is also a revenue and expense statement for the horses at Hastings Park for 2001 and it shows $5,826 for hay (and $3,467 for feed). All of the hay on the 2001 revenue and expense statement for the horses at Hastings Park (but for an amount costing $320) and all the feed is from the same supplier of the feed in the 2000 Hastings Park statement. Similarly to what we found in 2000 we are satisfied that the costs for feed and hay on the 2001 Hastings Park revenue and expense statement were incurred in Vancouver and were being paid for by Ms. Chivers following her sister's stroke. In the face of the documented payments in the revenue and expense statements we conclude that we cannot accept Ms. Chivers' testimony that she purchased extra hay on the ranch in 2000 because of the project. Mr. Pellegrin's schedule showing greater payment for hay and feed in 2000 compared to 1999 has a different explanation and does not support Ms. Chivers' evidence. This claim is denied.

7. 4  Used Truck $3,000

[138]  The claimants acquired a used Ford truck in August 2000. Ms. Chivers stated that the new truck was used to pull the livestock trailer. Initially the claimants claimed for both the livestock trailer bought in July 1998 for $8,000 and the acquisition of the truck in August 2000 for $3,000. However, Ms. Chivers acknowledged that they would have bought the livestock trailer in any event. She also explained that moving the cattle in the horse trailer that they owned before 1998 was unsatisfactory in several respects. In any event, the $8,000 claim was withdrawn during the hearing, leaving the $3,000 claim for the used truck. The claimants say that the truck would not have been required if the cattle had been able to continue to graze on the southern pasture.

[139]  The respondent said that this claim should be rejected. The cost of feeding the cattle on rented range land was significantly less expensive than feeding the cattle on the southern part of the property (see below). As a result the Chivers should have used rented range in any event and the purchase of the truck was unrelated to the project.

[140]  The issue is whether the cost of the used truck in 2000 is directly attributable to the taking or results from the project. As we understand it the reason for the purchase of the truck was that a more powerful truck was necessary to haul the larger livestock trailer. We note that in July 1998 when the livestock trailer was purchased Ms. Chivers had only recently received her first advice about the proposed project and she had told the Ministry that she would like an underpass. At this time purchasing a new livestock trailer could not be directly attributable to the taking or result from the project since she had not yet been denied the underpass and no additional transporting of cattle could have been anticipated. The claimants have acknowledged that the livestock trailer would have been bought in any event. In these circumstances, the claim for the truck cannot be directly attributable to the taking or the project. There was a need to transport cattle using the larger livestock trailer both before and after the project. We also note that in August 2000 when the truck was purchased the cattle were on the north side of the property and did not need transport anywhere. The claim for $3,000 for the truck is denied.

7.5  Higher Annual Costs for Cattle Operation -- $31,700

[141]  The Chivers also claimed higher annual costs for the cattle ranching operation. Mr. Pellegrin estimated these on a schedule that compared operating expenses for the cattle ranching part of the operation for 1996 through 1998 with those that were affected by the taking in 1999 and 2000. The expenses, derived from Donna Chivers' income tax return, were "normalized" to exclude one time expenses, some expenses directly related to the project considered separately, and some expenses related to the horse racing operation in 2000. Mr. Pellegrin found increased expenses for the ranching operation of about $2,139 in 1999 and $4,552 in 2000. He assumed an ongoing annual loss in the range of $3,000 to $4,000 discounted at 10% a year for ten years to obtain a total future loss in the range of $18,000 to $25,000. When he added the estimated losses for 1999 and 2000 to these projected future losses for ten years he arrived at a total loss in the range of $24,700 to $31,700 rounded.

[142]  Mr. Pellegrin attributed these increased expenses after the project to increased machinery and vehicle expenses to take the cattle to pasture and to transport hay and feed. He also refers to increased hay and feed expenses as well as increased labour expense for transporting cattle. In his final submission, Mr. Burke, counsel for the Chivers, referred us to the extra costs in 2001 when the cattle were taken to the rented range. These included the higher cost for transporting the herd to and from the pasture. There was also the extra cost to trailer two horses to take them to the rented range every two to three weeks in 2001 to check on the cattle. Since two people were necessary for this task Mr. Burke submitted that the extra costs for Mr. Finnigan to accompany Ms. Chivers when Gary Chivers was away should be considered. Ms. Chivers testified that Mr. Finnigan had been paid with a cow that Ms. Chivers continued to keep. Mr. Finnigan received the revenue from selling the calves. A cow was valued at over $1,000 and Ms. Chivers continued to incur the costs to maintain the cow such as feeding during the winter at $70 per month. This labour expense did not show up in the financial records.

[143]  The Ministry disputed this claim for losses for the ranching operation on several grounds. First the cattle operation did not appear to be a money making operation. Mr. Pellegrin stated in his report that he assumed that any losses on the sale of the cattle would be offset by savings of feed and veterinary costs for the cattle. The income tax returns reported losses ranging between $13,000 and $30,000 every year for the entire farm operation. Both the claimants had other jobs that brought in income. Second the expenses were based on tax returns and there were discrepancies between these and other financial records that Mr. Pellegrin was unable to reconcile. Third the normalized operating expenses were compared for three years before and two years after the project. There was a range in the expenses and it was not clear that the reported difference was statistically valid. Fourth one expense in 1996 was normalized to zero when in fact the other four years showed some expense for this item at $57, $700, $950 and $1,943, for an average of $915. If this expense was "normalized" to $915 rather than zero, then the operating expense for 1996 becomes $24,397 and the average for 1996-1998 is $19,614. Fifth one expense in 2000 that was included was the one time expense of $4,000 for the extra hay in that year when the cattle were pastured on the hayfields. This expense, which has been claimed separately, should be "normalized" to zero since it was a one time cost. This would provide normalized expenses for 2000 of $18,552 and an average for 1999 and 2000 as of $19,345. Assuming these two changes in 1996 and 2000 ($19,614 before and $19,345 after), the claimed increase in expenses after the project occurred disappears.

[144]  We agree with Mr. Burke that the fact that a business shows only a negative income on its income tax return is not a reason to deny additional net expenses that are proved to be directly attributable to the project.

[145]  Nevertheless we have a number of difficulties with this claim. Mr. Pellegrin's estimations of increased expenses as a result of the project were modest, only $2,139 in 1999 and $4,552 in 2000 out of a total of about $20,000 for the annual ranching expenses after normalization. When we reviewed Mr. Pellegrin's normalized operating expenses on his schedule for the five years in question, there were wide variations in certain categories of expenses that did not make sense to us. For example, the heading gas, oil, and grease showed substantial sums for most years ranging between $2,907 and $5,002, but for 1998 this heading showed nil. When we checked the income tax returns we found that Mr. Pellegrin's number for this heading for 1996, 1997 and 1999 included the monies listed in the respective income tax return under the heading motor vehicle expenses (not including CCA) together with the heading gas, diesel fuel and oil. However, in 1998, the sum of $4,563 listed under the heading motor vehicle expenses (not including CCA) in the income tax return was omitted in Mr. Pellegrin's expenses for that year and the gas oil and grease heading was recorded as nil. This appears to be a mistake and when this number is added to the 1998 normalized expenses, the alleged losses for 1999 and 2000 shrink significantly. Further, $4,563 is a significant increase in the monies recorded under the heading for gas, oil and grease compared to those for 1996 and 1997, even though 1998 is still before the project.
[146]  We also agree with Mr. Hincks, that the $4,383 for clearing and levelling in 1996 should not have been normalized to zero when the income tax returns continue to report expenses under that heading of $700, $1,943, $950 and $57 for the succeeding four years. If the figure of $4,383 in 1996 is normalized to $915 instead of zero, then the alleged losses disappear or virtually disappear.

[147]  In any event, there were other large fluctuations in some of the expenses listed in Mr. Pellegrin's schedule for items such as insurance, veterinary, and machinery and truck. An unusual veterinary bill or vehicle repair in the amount of $2,000, for example, would have a significant effect on the normalized operating expenses, and yet not necessarily reflect anything about changes in the cattle ranching operation.

[148]  This brings us to the more fundamental problem with this claim as to there being a causal link between any increased expenses on Mr. Pellegrin's schedule and changes in the cattle operation due to the project. The claimant is only entitled to those business losses that are directly attributable to the taking or result from the project. The main general explanation for greater costs after the project was increased transportation costs. However, as we have indicated above, the proper comparison is with the situation before the project. Before the project there were transportation expenses as the cattle were loaded into a livestock trailer and taken across the highway to the south side of the property every spring. In addition, bales of hay were transported across the highway every day in a pick up truck. In the fall the cattle were brought back to the north side in a livestock trailer.

[149]  In the summer of 1999 the evidence was that the cattle were already on the south side when construction commenced. Ms. Chivers said that she stopped delivering hay because of the construction on the highway. Therefore, the cattle were transported on the same basis as before the project but there was less transport of hay. In the summer of 2000 Ms. Chivers said that the cattle were kept on the north side of the property. However, other evidence suggests that the cattle were likely taken to the south side but for a shorter period. This would mean that either there was no transport of either cattle or hay or there was the same transport of cattle but less transport of hay. Thus, in 2000, the only full year after the taking considered by Mr. Pellegrin in his five year comparison, there was less transport expense associated with the cattle than before the taking. It is true that there is some increase in Mr. Pellegrin's machinery and truck heading in 2000 compared to earlier years but there is no explanation in what was done with the cattle to explain increased transportation costs. A review of the revenue and expense statements shows considerable work on the used Ford truck around the time that it was purchased in August 2000. We have found that this truck purchase was not related to the project. It follows that repairs made to the truck at the time of its purchase cannot be related to the project. When these are omitted the increase in this heading disappears. We conclude that there is no credible evidence to link any increased ranching operation costs in 1999 and 2000 to the project.

[150]  Mr. Pellegrin projected his estimations of losses from the ranching operation over a 10 year period. In 2001, the Chivers took the cattle to the rented range land a few kilometres away. However, again the important consideration is how did this change in location compare to the situation before the project? The time consuming part of the transportation of the cattle is loading them into the livestock trailer. A cattle chute is used and Ms. Chivers testified that it took two or three persons to load the cattle into a trailer. She suggested that transporting their 20 head of cattle (with calves) from the north side of the property to summer pasture could take much of the day. But whether each trailer load of cattle is driven 10 minutes to the neighbour's range instead of only 5 minutes to the south side is insignificant, especially when the trip is only twice a year. Before July 1998 the livestock trailer could transport only 5 head of cattle at a time but the new livestock trailer (the purchase of which has been acknowledged to be unrelated to the project) permitted 10 cattle to be carried at once.

[151]  Once the cattle were on the rented range, the Chivers checked on the cattle every two to three weeks by loading two horses into a trailer and driving over to the range where they checked on the cattle on horseback. These checks with trailered horses were not something that had to be done when the cattle were on the south side of the property before the project. On the other hand in 2001 no hay had to be delivered. In our view, the labour and vehicle expense for five or six trips of about four kilometres to the range with the trailered horses cannot have cost more than the labour and vehicle expense of at least 100 trips across the Highway with hay delivery before the project. This would include any possible cost of providing a cow to Mr. Finnigan who sometimes accompanied Ms. Chivers to check on the cattle in 2001, a cost that we do not accept is solely related to this work in any event. (The additional cost of the rented range in 2001 is considered below.)

[152]  In 2002, the Chivers took two thirds of their cattle across the Highway to the south side. This option presented marginally smaller labour and vehicle expenses compared to before the project as fewer cattle were transported.

[153]  We are uncertain as to what will be done with the cattle during 2003, but since we have concluded that none of the choices to date has resulted in increased labour and vehicle expenses compared to before the project, then we have no basis for awarding future expenses. It appears that there was no basis for increased expenses as a result of the project and KPMG and Mr. Pellegrin were not properly instructed of the situation before the project.

7.6  Fencing -- $6,000

[154]  The claimants claim $6,000 for the additional cost of fencing in 1999 and 2000. Mr. Pellegrin had identified this additional cost from a heading in the income tax return for building and fence repairs. While the payments in this category in excess of the $1,000 a year that appeared to be an average totalled about $11,000, Ms. Chivers stated that $5,000 should be deducted from this sum because some of the fencing costs in these two years were for a fence on the southern boundary of the property that had nothing to do with the project. Ms. Chivers told us that more fencing had to be replaced in 1999 as a result of the Ministry taking down the fence for the two license areas. She said that it was so old that once you replaced one section it was necessary to replace the rest. In 2000 some of the fencing replaced by the Ministry had to be replaced because it fell down with cows pushing through the fencing to reach rye grass planted by the Ministry on the road allowance. The respondent said that it accepted this claim in principle, although details had not been provided until the hearing.

[155]  There was little evidence provided at the hearing but for Ms. Chivers' testimony which is recounted above. The Ministry replaced fencing in the areas where the contractors had worked on the project. It was unclear to us the extent of the fencing that was replaced that Ms. Chivers attributed to the project. Mr. Pellegrin provided no information about this claim. It appears that the claim to replace old fencing in 1999 because the Ministry touched certain sections of it may be only advancing maintenance work that needed to be done in any event. Nonetheless in the circumstances we award $6,000.

7.7  Additional Expenses for Range Rental -- $1,439 and $9,000

[156]  The claimants claim $1,439 for renting range land from a neighbour in the summer of 2001. This rent was calculated per cow and the numbers fluctuated in different months. This rent covered the period June 1, through to the end of October. Mr. Pellegrin calculated 10 years rent at $1,439 per year at a 10% discount rate to be $9,000. The claimants claimed this cost as well.

[157]  The respondent objected to this claim on the grounds that the cost of leasing the range land was much cheaper than keeping the cattle on the south side of the property where bales of hay had to be ferried across on a daily basis to supplement the limited grazing. As a result the Chivers did not suffer a loss in renting range land in 2001 nor will they suffer a loss if they rent range land over the next 10 years.

[158]  Ms. Chivers estimated that she delivered 10 to 15 bales of hay on a daily basis to the south side before the taking, after the first two to four weeks. At a cost of $5.00 per bale the "cost" of delivering hay was between $1,500 and $2,250 per month. (The Chivers grow hay on the hayfields but do not grow enough and have to buy additional hay each year.) This makes the "cost" of hay for the period of June through October in the range of $6,000 - $9,000.

[159]  On the rented range there was no need to supply any hay. The total cost to rent the range was only a quarter the cost of supplying hay to the south side of the property, even if all of the hay was grown in the Chivers' hayfields. It is not enough to claim an extra expense if that expense is correlated with a substantially greater cost savings. The Chivers have not proved that they suffered an overall financial loss in 2001 with respect to this expense and no money is awarded.

[160]  In 2002 the Chivers kept the cattle on their own property. There is no evidence to support any further expenses for range rental. In any event the claimants acknowledged that if the board determined that there was access to the south side then the claim for future range rental would disappear. This claim for 10 years or range rental is dismissed.

7.8  Extra costs for Horse Operation -- $11,491 and $25,000

[161]  The claimants claim two extra costs related to the horse operation. One of these is $11,491 for the extra costs of training and boarding three horses at Hastings Park in Vancouver in 2001 and the other is $25,000 for the financial impact on their horse training and racing business due to the inability to use the southern part of the subject property. In the earlier amended Statement of Claim filed February 5, 2002 that had been in effect at the commencement of this hearing there had been a claim for expenses related to the horses being sent to Hastings Park in 1999 ($20,000) and in 2000 ($17,753). These claims had been carried forward from an earlier amended Statement of Claim filed March 26, 2001. We have already noted that Mr. Pellegrin's report dated December 6, 2001 estimated a net loss for training and boarding horses at Hastings Park from July 1, 1999, to December 31, 2001 of $7,000. However, this claim was never advanced. In the new Further Amended Statement of Claim provided to the board and the respondent on November 4, 2002 (midway through the hearing) the earlier claims were withdrawn and were replaced by the two claims for $11,491 and $25,000.

[162]  The $11,491 is the excess of expenses over income in the Hastings Park revenue and expense statement for 2001. The claimants say that in 2001 the horses would not have been sent to Vancouver if the south portion of the property had been available for training. Ms. Chivers recognized that there would be increased expenses for training the horses since her sister's stroke in July 2000. In addition the horses had not been able to carry out the hill training in the previous winter because of the project.

[163]  The respondent says that this claim should not be allowed for two reasons:

[164]  We have already found that the Hastings Park revenue and expense statements record payments for expenses after July 2000 that were not recorded as being paid by Ms. Chivers in earlier statements. Further, there were significant monies paid to a trainer and to people to gallop the horses after Ms. Chivers' sister was unable to do this work because of her stroke. The total of these two expenses in the Hastings Park revenue and expense statement in 2001 was $13,478. We are satisfied that this increased expense is unrelated to the project and the alleged loss disappears if these two expenses are omitted.

[165]  The claimants say that they would not have sent the horses to Hastings Park in 2001 if the project had not occurred and they still had access to the south side of the property. There was not a satisfactory explanation for this statement. The sister had had her stroke in July 2000 and the Chivers had begun incurring increased expenses through the last half of 2000. In January 2001 they knew that these expenses would continue but nonetheless they decided to send the horses to Hastings Park to race. As Ms. Chivers had testified earlier there is no point in keeping working race horses at home during the racing season and the availability of the south side as it was before the project is irrelevant to this decision. It seems to us that Ms. Chivers' comments about wishing that she had not sent the horses to Hastings Park in 2001 were made with hindsight and were related to the injuries that had plagued the horses and the poor financial results for the horse operation compared to 2000. This net return for the horse operation was affected by both decreased revenue and increased expenses, and these, in turn, were affected by the injuries to the horses and the sister's stroke. At the end of 2001 the Chivers decided not to send race horses to Hastings Park any more and they brought the race horses back to the ranch. We see no connection between the project and the inability to use the south side and the horses being at Hastings Park during 2001. We reject the claim for $11,491.

[166]  The claimants also claimed $25,000 as compensation for the financial loss on their horse operation due to the inability to use the southern part of the subject property. The respondent objected to this amended claim for $25,000 being allowed on the grounds that the amendment (for which no basis was disclosed), was made after the evidence of Ms. Chivers had concluded and as a result the respondent had been prejudiced.

[167]  We agree with the respondent that amending a claim at this stage of the hearing prejudices the other side, where the amendment is not a simple amendment to bring the claim in line with the evidence that has been adduced. As a result we refuse to permit this amendment to claim $25,000. In any event, there is no evidence that supports the claimants having suffered a financial loss or expense for the horse training and race operation that is directly attributable to the taking or results from the project. We do not accept that the decision to stop racing horses was as a result of the project. Further, as we have indicated above, there is evidence that undermines the amount of hill training of prospective race horses that was claimed to have occurred before the project.

8.  SUMMARY

[168]  The claimants have been awarded the following:

9.  INTEREST

[169]  We have awarded the claimants a total of $6,000. This is in addition to the advance payment of $11,201 that was paid on June 28, 1999, which the claimants accepted in settlement of the claim for land and improvements taken. The fence repairs appear to have been incurred in 1999 and 2000. Under section 46(1)(b) of the Act, we consider that it is reasonable that interest is payable on $6,000 from the approximate midpoint, January 1, 2000, until paid. Interest is to be calculated annually at the rates specified in section 46(2) and (3).

[170]  Section 46(4) provides:

Under section 46(4) additional interest is payable if the advance payment under section 20(1) or (12) is less than 90% of the compensation awarded, excluding interest and business loss. In this case the compensation awarded is $6,000. There are two issues as to the applicability of section 46(4) in this case. First, the compensation awarded of $6,000 is for a business loss and section 46(4) purports to exclude business losses. However, in Sequoia Springs West Development Corp. v. British Columbia (Minister of Transportation and Highways) (2000), 71 L.C.R. 153 this board found that business losses excluded under section 45(4) should be construed restrictively to mean business losses following relocation of a business under section 34(3). In our opinion, the business losses that are excluded under section 46(4) should be the same ones as excluded under section 45(4). See Pay Less Gas Co. (1972) Ltd. v. British Columbia (Minister of Transportation and Highways) (2002), 77 LCR 171 (B.C.E.C.B.). The award of $6,000 in this case is not for a business loss that should be excluded under section 34(3).

[171]  Second, it is not clear under the formula set out in the section that additional interest is to be paid. Ninety percent of the compensation awarded of $6,000 is $5,400. The advance payment did not form part of the compensation awarded as it was accepted by the claimants in settlement of the claim for market value of land that were taken. The advance payment of $11,210 is not less than $5,400. Construed strictly no additional interest is payable under section 46(4).

[172]  However, the Act puts a premium on settlement. The claimants should not be penalized in meeting the required percentage under section 46(4) as a result of settling part of the claim. In some cases the board has been asked to make an award which includes the amount for which a partial settlement was reached. In other cases we have not been told the amount of the partial settlement. We seek to rationalize this situation in a way which does justice to the parties and accords with the underlying purpose of these provisions. Therefore in this instance if the amount for which the parties have partially settled a claim is not expressly made part of the amount awarded, then the amount of the advance payment related to the settlement should also be excluded. See the discussion on cost entitlement in Payless. This means that the advance payment for other issues that had not settled was nil and the calculation in section 46(4) results in additional interest being awarded from June 28, 1999 until the date of this decision. This board in Richland Farms Ltd. v. British Columbia (Ministry of Transportation and Highways) (1991), 46 L.C.R. 66 established the basis upon which an award for additional interest is to be made. First, while interest under section 46(1) compounds annually, additional interest under section 46(4) provides for simple interest only. Second, the calculation of additional interest runs on the outstanding difference from the date of each advance payment.

10.  COSTS

[173]  The claimants seek costs under section 45 of the Act and the Tariff of Costs Regulation, B.C. Reg. 189/99 (the Tariff). Subsections 45(4) and (5) provide:

In this case the compensation awarded is $6,000 and the advance payment is $11,210. 115% of the advance payment is $12,891.50. In a similar manner to additional interest under section 46(4) the formula under section 45(5) applies and there is discretion as to costs. However, once more, the settlement has affected the percentage required under section 45(4). Again the amount of the advance payment related to the settlement should be excluded. This construction means that section 45(4) applies and the claimants are entitled to their costs. Under section 45(3) and (7) the claimants are entitled to their actual reasonable legal, appraisal, and other costs until June 28, 1999 and to their reasonable costs as prescribed in the Tariff of Costs Regulation, B.C. Reg. 189/99 after that date. This case was of ordinary difficulty and those costs under the Tariff are awarded at Scale 2.

[174]  Notwithstanding our finding that the claimants are entitled to their costs, we wish to make the following comments with respect to reasonableness. These comments are for consideration by the chair if determination of costs under section 45(9) of the Act becomes necessary. As indicated above, this claim was driven by the claimants' disappointment at not obtaining an underpass and their perception that the Ministry may have deliberately thwarted their chances. While we understand the claimants' disappointment, it does not justify making substantial claims on the facts that existed in this case. The appraiser's notes to counsel saying the project only caused "incremental" increases to severance problems support our view.

[175]  We wish to comment on the costs for Mr. Pellegrin in particular. Under Van Daele v. Van Daele (1984), 56 B.C.L.R. 178 (C.A.) the test for a disbursement such as hiring an expert business valuator is whether it was "a proper disbursement in the sense of not being extravagant, negligent, mistaken or a result of excessive caution or excessive zeal, judged at the time when the disbursement or expense was incurred". As the panel who heard all the evidence with respect to business losses it does not seem to us that at the time that Mr. Pellegrin was retained there was a proper or reasonable basis for the claimants or their advisors to think that there had been any increased costs or business loss from the ranch or horse operation that were directly attributable to the taking or resulted from the construction or use of the works. The explanation provided by Mr. Pellegrin for the increased expenses for the ranching business was that there was an increase in transportation costs related to the cattle and the ranching business. However, in 2001 the claimants knew that there was no objective basis for claiming that they had incurred any net transportation costs due to the project. The claimants also knew that they had not incurred any extra costs for hay that were due to the project. Nor had they incurred any expenses related to the horses at Hastings Park in Vancouver that were due to the project. Mr. Grant, Mr. Bowins and Mr. Pellegrin all had mistaken understandings about the circumstances of what was done with the cattle and horses before the project. We note that as early as November 7, 2000 Mr. Grant (even with his mistaken understanding of the facts) wrote Mr. Burke that "there is very little likelihood that the Chivers can prove the annual losses estimated by financial records as ECB demanded in Corners Pride and other cases." The one claim for fences did not need a business valuator. Again on the facts that existed in this case, retaining a business valuator with respect to the alleged losses from the ranching or horse operation suggests to us that the test in Van Daele may not have been met. On the other hand, in October 2001, when Mr. Pellegrin finalized his draft report, we agree that there were some grounds to think that there was a business loss from the gravel. Mr. Pellegrin's draft report contained a section on gravel royalties although the final report did not because Mr. Pellegrin advised the claimants to seek advice from the engineering consultancy firm, Urban Systems. These comments with respect to Mr. Pellegrin and other costs can be considered by the chair if there is a determination of costs under section 45(9) of the Act.

THEREFORE IT IS ORDERED THAT the respondent, the Minister of Transportation, shall pay the claimants, Donna Marie Chivers and Gary Carnegie Chivers: