August 19, 2004, ECB Control No.: 14/02/248

REASONS FOR DECISION

 
1.  INTRODUCTION

[1]  Richard and Florence Fritz are the registered owners of property located in the rural area of the District of Sicamous, at 1513 Solsqua Road. The property is 28.10 acres which they use for agricultural and residential purposes (the "Fritz property").

[2]  In February 1995, the District of Sicamous ("Sicamous") acquired a 29 acre parcel of land across Solsqua Road from the Fritz property to construct a wastewater treatment facility (the "facility") and public works yard. Construction began in June 1996 and the facility commenced operation in September 1996.

[3]  the construction of the facility in 1996, Sicamous entered on the Fritz property and installed a 200 mm waterline and fire hydrant for purposes related to the facility. Sicamous did not acquire a statutory right of way or compensate the Fritzes for this trespass at that time.

[4]  December 11, 2001, Sicamous expropriated a 22 foot, 0.34 acre, strip of land along the western boundary of the Fritz property (the "partial taking" or "strip taken") to acquire additional land for extending a waterline to service an industrial development and to allow for future widening of Solsqua Road. The expropriation had the additional effect of legalizing the existing waterline trespass and legalizing existing trespasses by BC Hydro and BC Telephone utility poles and overhead transmission lines.

[5]  After the expropriation, the "remainder" of the Fritz property consisted of 27.76 acres.

 
2.  THE CLAIM

[6]  The Fritzes claim compensation of $15,000 for the strip taken as of December 11, 2001. They also claim compensation of $80,000 for a reduction in value to the remainder of their property due to the impact of the facility commencing in 1996.

[7]  Originally, the claimants had framed their pleadings under section 41 of the Expropriation Act, R.S.B.C. 1996, c.125 ("the Act") and section 312 of the Local Government Act, R.S.B.C. 1996, c. 323. Section 41 provides for compensation for injurious affection to property where no land has been expropriated.

[8]  the course of preparing for the hearing, the claimants discovered that the partial taking had the effect of legalizing the municipality's pre-existing trespass for the waterline that was installed for the purposes of the facility. Shortly before the commencement of the hearing, the claimants applied to amend the Form A to include the alternative claim under s. 40, which provides for compensation when part of an owner's land is taken.

[9]  board heard the application during the hearing. The respondent did not take issue with the claimants framing their claim under section 40 instead of section 41, other than the procedural concern that the respondent might be prejudiced by the lateness of the amendment. The board afforded the respondent opportunity to apply for an adjournment but the respondent determined that was not required. The board granted the amendment.

[10]  Accordingly, the claim for compensation resulting from the impact of the facility was framed under s. 41 and, in the alternative, under s. 40 for reduction in the market value to the remainder.

[11]  The respondent made an advance payment to the claimants pursuant to section 20 of the Act on December 11, 2001, of $3,216.00, and another payment of $2,034.00 which the respondent submitted was confirmed received by claimants' counsel on February 4, 2003.

 
3.  ISSUES

1. Is the claim for damages for the impact of the facility properly brought under section 41, injurious affection, or under section 40, partial taking?
2. What is the market value attributable to the strip taken? Is the strip taken to be valued as a stand alone lot, or part of the whole?
3. Has the wastewater treatment facility had a negative impact on the market value of the remainder of the Fritz property, and if so, what is the loss in value?

 
4.  BACKGROUND

[12]  The Fritzes moved to Sicamous in 1969 and purchased this acreage property. Over the years, their farm included cattle, pigs, chickens, grain, and hay. For medical reasons, Mr. Fritz had to reduce his farming operations in 1981/82.

[13]  December 1982, the Fritzes sold a 0.58 acre northern strip of the property to a neighbour for $25,000. The neighbour wanted legal access from Solsqua Road and the alternatives were for the owners to buy this .58 acre strip or put a bridge across the Eagle River.

[14]  The Fritz property is zoned LH — Large Holdings which requires a minimum lot size of 39.53 acres. The 28.10 acre property is legally non-conforming. Approximately 20 acres of the property is agricultural, 1 acre contains the residence and farm buildings, and 7 acres is forest. It has 674 feet of frontage on Solsqua Road and also fronts to the east on the Eagle River which runs into Shuswap Lake.

[15]  The buildings on the Fritz property include the residence, barn and other outbuildings. The residence was built in 1952, has two levels plus a full basement, 4 bedrooms, one bathroom, living and dining room areas plus kitchen. In 1969 the Fritzes enclosed the back porch and in 1999 enclosed the front porch. Other renovations included a new roof, new siding, and storm windows. The outbuildings include a 30' barn which is approximately 50 years old to which lean-to additions have been added, 2 granaries, a meat house, a machine shed with 3 bays and a temporary machine shed. In the summer of 2003, the Fritzes tore down an older building and built a garage.

[16]  The general neighbourhood is primarily farmland with a scattering of some six houses on large lots, and some industrial use. The area is separated from the core of Sicamous by the Eagle River to the south. Other uses in the neighbourhood include a British Columbia Hydro substation and a yard at which telephone poles were made. The Canadian Pacific Railway mainline runs through the area and, approximately, 25 trains a day pass along this line.

[17]  In September 1994, Sicamous formally announced its plans to construct the wastewater treatment facility. In February 1995, Sicamous bought the property and in September 1995, began building the facility, starting with the sewage lagoons. The facility was completed around the end of June 1996, and put into operation in September 1996. During the first year all the sewage was brought in by tanker trucks because pipelines to the facility had not yet been constructed. After the pipelines were in place, tanker trucks continued to bring sewage from houseboats and other customers on a daily basis, more frequently in the summer.

[18]  In addition to constructing the facility, Sicamous constructed a public works yard on the same property during the late fall of 1996.

[19]  Mr. Fritz testified that for 17 years the main farm in the area leased farm land from him but stopped leasing the year after the Sicamous facility was built, saying that Mr. Fritz was charging too much rent. After that, the Fritzes purchased the necessary equipment and started farming the land.

[20]  BC Hydro has a small substation adjacent to the Fritz property. Mr. Fritz testified that he farmed part of the Hydro property with his own property and grazed his cattle right to the fence line. He also testified that he farmed along the strip taken, up to the Hydro poles.

[21]  When Sicamous announced the intention to build the wastewater treatment facility, most of the residents in the area were opposed.

[22]  Mr. Fritz testified that during construction of the facility there was dust and noise but basically it did not interfere with his farm. Sicamous installed a new water line and fire hydrant. The waterline was installed on the Fritz property and the hydrant is approximately 125 feet from their residence.

[23]  Mr. Fritz testified that he was not aware that he had any right to ask Sicamous for compensation. It was not until 2000, when Sicamous wanted to extend the waterline, that negotiations occurred about expropriating a portion of the Fritz property. Mr. Fritz testified that the Sicamous representative told him it was needed to extend the waterline and for future road widening. He told the representative he did not want to sell any of his property.

[24]  Mr. Fritz testified that he was never advised that there was an existing trespass for the waterline or for BC Hydro or Telephone utility poles. There was evidence that the companies contributed $7,500 to the sale of the strip from an adjacent property to legalize their occupation of those lands. The Fritzes contended that the trespass on the Fritz property should also be valued at $7,500. They did not assert this as an additional claim but relied upon it to support Mr. Grant's estimate of $15,000 for the partial taking.

[25]  The Fritzes testified that they continue to be disturbed by noise from the public works yard and early morning vehicle headlight glare, both of which disturb their sleep. Mr. Fritz acknowledged that logging trucks use Solsqua Road as early as 4:00 a.m., and that there are approximately 25 trains per day on the CPR line.

[26]  The Fritzes' main complaint has been the odour from the facility which Mr. Fritz testified has reduced their enjoyment of their property. Mr. Fritz described the odours as human waste or outhouse smell, and sometimes a chemical smell. He explained that one of their greatest joys had been to sit outside at night to enjoy the view and the fresh air. Since the facility was constructed they often cannot do that. He also testified that they sometimes smell sewage when they are working in the yard during the day. He said that sometimes he smells odours from the main farm operation in the area — from spraying and manure.

[27]  Mrs. Fritz testified that the odours from the facility have significantly decreased her enjoyment of the property. She said that it has affected the visits of her grandchildren, such as by restricting the number of picnics they used to have. She no longer uses a clothes line because there was a sewage odour on the laundry drying outside. She described the smell as a typical bathroom smell.

[28]  . Fritz kept notes in the summer of 2003 and testified that there were 13 days in July when they could smell the odours from the facility. For the rest of the month they were away. In August there were about 4 days with odours from the facility. He testified that the odours depend entirely on the wind direction. The conditions in the summer of 2002 were worse than in 2003.

[29]  A property owner who lives adjacent to the facility testified for the claimants. He testified that his enjoyment of his property has been devastated by the facility and he will be selling. He purchased the property and moved to Sicamous in 1992. He testified that although the wind from the facility usually blows away from his property, there are times, particularly in the summer when there is a distinct musty smell. He estimated that he notices the odour about 30 times a year and on 2 or 3 days per year the odour is unbearable.

[30]  Two other neighbours of the wastewater treatment facility testified at the hearing. They testified that they had experienced odours emitted from the facility. One described the odours as "musty" and another, a former driver of a septic tank pumping truck, stated that the odours were that of sewage or human waste.

[31]  the road from the Fritz property, immediately adjacent to the facility, is a 0.59 acre residential property that was owned by the Retis. The Retis filed a claim with the board for compensation for injurious affection from the construction and operation of the facility. The board's decision, Reti v. Sicamous (District) (1999), 68 L.C.R. 296, is referred to later in this decision. The Retis sold their property in October 1998.

[32]  The 1998 purchaser of the Reti property has an Agreement to Purchase with "Purchaser #2", who testified for the respondent in this hearing of the Fritz claim. Purchaser #2 testified that when he moved to the property in February 2000, he occasionally smelled 'musty' odours from the facility, which he said were not offensive. He said the odours occurred once or twice a month when trucks came to the facility as part of the maintenance program. Recently, he has not noticed any odours. He testified that the operation of the facility had not interfered with his use of his property.

[33]  The Chief Operator of the wastewater treatment facility gave evidence about the overall operation of the facility. He testified that there were swampy stagnant water smells from the operation of the facility and human waste odours were evident when there were problems such as spillage from the trucks which discharge into the lagoon. He testified that obnoxious smells were only emitted when there was a problem with the operation of the facility. There have apparently been a number of such problems over the past seven years of the facility's operation although spillage is reported less frequently now than it was initially.

[34]  Mr. Fritz testified that he thought his property might be appropriate for a residential development along the river frontage. He also testified that he was aware he might qualify for a homesite severance under the Land Reserve Commission (LRC) regulations but knew that approval is not automatic. He first made inquiries about this in 2002 and, as of the hearing, had not taken any steps to subdivide the property. He testified that he has a blueprint for the house he would like to build. He assumed he would have to put the second house to the north of the existing property because any other placement would interfere with farming and the LRC probably would not permit that.

 
5.  PRELIMINARY ISSUE

Is the claim properly framed under Section 40 or 41

[35]  The evidence is clear and undisputed that Sicamous entered on the Fritz property in 1996 to install a waterline to service the wastewater treatment facility which was then under construction. The board finds that the appropriate section for the claimants to advance their claim for reduction in value due to the impact of the facility is s. 40. Therefore, the board will not address issues relating to s. 41. Similarly, the board will not address issues relating to s. 312 of the Local Government Act as this section applies to actions of a municipality that do not constitute an expropriation within the meaning of the Expropriation Act.

[36]  The respondent submitted that the claimants were statute barred from advancing a claim under s. 41, by operation of the limitation period set out in s. 42 of Act, and statute barred under s. 285 and 285 of the Local Government Act. As the board has determined that these sections are not relevant to the Fritzes' claim the board does not need to address the limitation issues.

 
6.  OVERVIEW OF THE APPRAISAL EVIDENCE

6.1  Highest and Best Use

[37]  Danny Grant, appraiser for the claimant, defined "highest and best use" within his report as:

"the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value."

[38]  Mr. Grant concluded that the highest and best use of the Fritz property was "…the continuation of agricultural and residential uses, including an additional residence, on the subject while awaiting an ultimate use change to a non-ground based agricultural or industrial use." He asserted that the Fritz property had "special adaptability" for a homesite severance under the Land Reserve Commission guidelines. This benefit would not be available to a purchaser of the Fritz property but was a value component for the present owners only. He concluded the highest and best use was the same before and after the taking.

[39]  C. Cavazzi, for the respondent, in his report stated:

"Highest and Best Use can be defined as the most probable use of a property at a particular moment in time that will produce the highest net return, taking into consideration its potential utility."

[40]  He concluded that the highest and best use of the Fritz property was a continuation of a combined residential/agricultural use. He described the property as a "residential small holding" and both appraisers agreed that the property was too small to be a viable farm capable of sustaining a family without external income sources.

[41]  Mr. Cavazzi also found that there was no change in the highest and best use of the property before or after the taking. He did not address any homesite severance potential within his report and stated in testimony that this potential was not part of market value but was a value to owner issue.

[42]  The appraisers are essentially agreed on highest and best use although Mr. Grant has included the "special adaptability" of the homesite severance potential as a component of his appraisal.

6.2   Taking and Reduction in Value to the Remainder

[43]  Mr. Grant estimated that the value of the land taken was $15,000. He concluded that the remaining lands were negatively affected by the presence of the wastewater treatment facility and estimated the injurious affection to be $80,000. The compensation claim for $95,000 was based upon these amounts.

[44]  Mr. Cavazzi estimated the market value of the land taken at $4,250. He concluded that there was no negative impact, or injurious affection, to the remaining property.

[45]  In his report, Mr. Grant used an effective date of November 30, 2001 while Mr. Cavazzi used December 11, 2001. The parties agreed that this difference was of no consequence. The date of expropriation, and thus the relevant date for compensation purposes, is December 11, 2001.

 
7.  THE CLAIMANTS' CASE

7.1  Market Valuation of the Fritz Property

7.1.1  Land value

[46]  Mr. Grant completed the Cost Approach for his valuation, utilizing six comparables to determine the value of the land. Three of these comparables, Sales Nos. 1, 2, and 6, were small parcels (0.57 acres to 2.4 acres) and are referred to later in this decision in the section on Partial Taking. His other three, Sales Nos. 3, 4 and 5, ranged in size from 19.10 acres to 31.13 acres. The sales spanned a period from 1982 to 2001. Mr. Grant noted that the 1982 transaction required a time adjustment however he did not apply adjustments to any of his comparables.

[47]  Mr. Grant's Sale No. 3 is a 19.10 acre parcel immediately east of the Fritz property, improved with a large house, which sold in July 2001 for $319,800. This sale included a separate 0.58 acre parcel that provides access from Solsqua Road. That small parcel was severed from the Fritz property in December 1982 and that transaction is Mr. Grant's Sale No. 1, at $25,000. To obtain the value of the underlying land for the 19.10 acre portion of the property, Mr. Grant relied upon BC Assessment Authority's (BCAA) estimate of $161,000 or, $8,429 per acre. The respective values assigned to the July 2001 sale in the Land Title documents were $319,800 for the larger parcel and $200 for the smaller parcel. In his analysis of the combined 2001 transaction, Mr. Grant excluded the smaller parcel.

[48]  No. 4 is a 31.13 acre property to the north of the Fritz property. This vacant parcel sold in December 2001 for $362,500 or $11,644 per acre. The property is designated for industrial development and a portion of it is apparently subdividable.

[49]  The site of the wastewater treatment facility is Mr. Grant's Sale No.5. This 29.03 acre property sold in 1994 for $290,300 or $10,000 per acre.

[50]  These three sales indicated a range of $8,429 to $11,644 per acre and Mr. Grant concluded that the base value for the Fritz land was $10,000 per acre, or $281,000.

7.1.2  Homesite severance potential — Highest and Best Use

[51]  To determine the value of the homesite severance potential, Mr. Grant reviewed listings of subdivided lots and small acreage properties in the Sicamous area as there were apparently no sales. Mr. Grant estimated that a one acre site on the south side of the Fritz property "with the potential for a view of the Eagle River on a raised building area" was worth $50,000. He provided no details on the referenced listings.

[52]  As the underlying land value was $10,000 per acre and Mr. Grant estimated that the cost of the hypothetical severance would be about $5,000, he deducted these amounts from his $50,000 estimate to conclude that there was a $35,000 net increase in value to the Fritz property due to the potential for the homesite severance.

7.1.3  Improvements

[53]  Mr. Grant estimated the depreciated value of the improvements to complete his cost approach. The house was over 50 years old at the effective date of the appraisal and in substantially original condition. Mr. Grant estimated that the effective age of the house was 25 years and utilized a depreciation rate of 33%. However, to address the deficiency of an out of date kitchen, he deducted a $10,000 allowance for a kitchen upgrade. This resulted in a depreciated value of $65,800 for the house. He estimated the value of the barn and four sheds, most of which he depreciated at a rate of 50%, at a total of $15,052. Thus, his estimated depreciated value of the improvements totaled $80,852.

7.1.4  Conclusion

[54]  Mr. Grant concluded the total value of the Fritz property prior to the taking and excluding the impact of the wastewater treatment facility to be $397,000 based upon land at $281,000, improvements at $81,000 and $35,000 for the special adaptability for the homesite severance.

7.2  Reduction in Value to the Remainder

[55]  Mr. Grant gave his opinion that the wastewater treatment facility had a negative impact on the value of the remainder. Within his report, he provided an excerpt from a study titled "Richmond Wastewater Treatment Plant, Impact on Land Values". This study was completed by Mr. Grant for use in other unresolved expropriation disputes regarding the expansion of the large Greater Vancouver Regional District wastewater facility in Richmond, BC. The result of this study was his conclusion that the value of the Richmond property under consideration suffered a 40% reduction in value due to the proximity of the treatment facility.

[56]  Mr. Grant stated in his report that, based on the findings in his Richmond study, applying the same conclusion in the local Sicamous market would result in reducing values by greater than 50%. Applying the study to the Fritz property, he gave his opinion that the residential aspect was more seriously affected than the farm aspect and that, overall, the Fritz property suffered a 20% reduction in value due to the proximity of the wastewater treatment facility. This resulted in his conclusion of a reduction in value of $80,000, rounded ($397,000 @ 20%).

7.3  Partial Taking

7.3.1  Land Value

[57]  To determine the value of the partial taking, Mr. Grant provided a Direct Comparison Approach analysis to value the strip taken ($15,000) and he provided an analysis of the damages to the remainder ($14,185 loss in revenue to the owner). He concluded that the value of the partial taking was $15,000.

[58]  For the Direct Comparison approach, Mr. Grant relied upon his three smallest comparables, Sale Nos. 1, 2 and 6. The two smallest comparables were strip severances, one from the north side of the Fritz property (Sale No. 1) and one from the frontage of the property to the south (Sale No. 2).

[59]  Sale No. 1, the severance from the north side of the Fritz property, occurred in 1982 to the owner of a landlocked parcel to the east who required it for access to Solsqua Road. The sale price was $25,000 or "roughly $1.00 per square foot". Mr. Grant noted that this transaction occurred some 19 years prior to the effective date of his appraisal. He stated that a time adjustment would be required, but he did not quantify it.

[60]  Sale No. 2, a 0.573 acre portion from the adjacent property to the south, was sold to the District of Sicamous in 1999 for $18,000 "also at about $1.00 per square foot." This strip included a portion that had been a Section 4 Road (under the Highway Act, R.S.B.C. 1996, c. 188, it had been deemed a public road to which the owner had no legal entitlement). The main portion however was a strip that the municipality, BC Hydro and BC Telephone had used for installation of the watermain and utility poles. The strip also provided access to the bridge over the river. The municipality and the utility companies had been trespassing on this strip for a number of years prior to the sale and the evidence showed that they contributed $7,500 to the purchase price. Mr. Grant reasoned that as part of the strip was a Section 4 road, the actual area sold was approximately 17,489 sq. ft. (0.40 acres) and he estimated the value at "about $1.00 per square foot".

[61]  Sale No. 6 was a 2.4 acre parcel on the Eagle River, improved with a 5 year old house, which sold in March 1999 for $204,000. To obtain the land value, Mr. Grant deducted the BCAA assessed value of the improvements from the sale price. This sale then indicated a per acre rate of $34,000 or a square foot rate of "about $0.75 per square foot."

[62]  Mr. Grant relied upon assessments in his report for Sale Nos. 3 and 6. He confirmed that for Sale No. 3, the assessed value was from the 2002 roll, which reflects the assessed value as of July 1, 2001. For Sale No. 6, the assessed value was from the 2003 roll, which reflects the assessed value as of July 2, 2002. The effective date of his appraisal was November 30, 2001 and the sales in question occurred in 2001 and 1999 respectively.

[63]  In addition to the three sales, Mr. Grant noted in his report that "large residential lots in the area of less than one acre range in value between $30,000 to $50,000 and with a range of sizes from 10,000 to 40,000 square feet, or from about $1.00 to $3.00 per square foot." Mr. Grant estimated the value of the 14,745 square feet taken from the Fritz property at $15,000, or $1.00 per square foot rounded. He rationalized valuing the part taken as a separate parcel as there is a historic record of this type of subdivision being permitted, i.e. Sale Nos. 1 & 2.

7.3.2  Reduction in Value to the remainder

[64]  In the alternative, Mr. Grant considered the impact of the partial taking as damages to the remaining lands based on the reduction of the farm operation. He calculated the area removed to be less than 2% of the farmed area. He applied a corresponding reduction to the value of the farm land and a similar reduction to the utility of the improvements, machinery and family farm labour.

[65]  On the basis of the value of the residential and farm improvements at $115,000 and the machinery at $50,000, he estimated the full loss of this utility to be about $3,300. He estimated the reduction in labour income at $100 to $200 per year. He capitalized this amount at 2.5% for a present indication of loss at between $4,000 and $8,000.

[66]  Additionally, Mr. Grant reported that, as the partial taking facilitated the establishment of a major industry for the area, an increase in truck traffic could be expected in the foreseeable future, which would impact the value of the residential component of the remainder. He concluded that the increased truck traffic "should not have a greater impact than 5% of the two homesites as ultimately improved, the total value contribution of which is not likely to exceed $250,000. In terms of present value, loss based on this anticipation is not then likely to exceed $7,500."

7.3.3  Conclusion

[67]  Concluding his analysis of the damages to the remainder, Mr. Grant totaled the 'loss of utility' estimate ($3,300), loss to the residential portion ($7,500), and the value of the land taken (0.3385 acres @ $10,000 per acre = $3,385). He concluded that a prudent vendor would not be warranted in selling the strip taken for less than about $18,000.

[68]  His final conclusion on the value of the part taken is $15,000 on the following rationale (Exhibit No. 8, page 67):

"Therefore, for the value as a sale of a separate piece to others for access and utility extension of $15,000, any losses to the remaining lands are internalized in the market process related to selling a small portion of the farm and residential units."

 
8.  THE RESPONDENT'S CASE

8.1  Market Valuation of the Fritz Property

[69]  In his report, Mr. Cavazzi stated that the purpose of the appraisal was:

• to estimate the market value of the fee simple rights of the property as of December 11, 2001, and:
• Consider the impact to it from the expropriation of 0.34 acre for road purposes on December 11, 2001;
• Consider the impact to it from the presence of a municipal wastewater treatment facility and public works facility located nearby that was developed in June 1996.

[70]  Mr. Cavazzi used the Direct Comparison Approach to determine the land value. He specifically excluded the improvements from his valuation because he believed they were unaffected by the public works and "we do not consider they would add appreciably [to] the underlying market value of the land."

[71]  Mr. Cavazzi utilized nine sales within his report. His comparables ranged in size from 9.24 acres to 42.25 acres. Two of his sales, Index Nos. 5 and 6, were the same as Mr. Grant's Sale Nos. 3 and 4.

[72]  Mr. Cavazzi's comparable sales occurred between June 1998 and May 2002. He applied a time adjustment factor of 2.23% per month, compounded, to his sales. The sales prior to the effective date of his report were adjusted up while the later sales were adjusted down. Mr. Cavazzi also adjusted for differences in location and physical characteristics. For parcels with improvements, he deducted the estimated contributory value of the improvements. He indicated that he spoke to at least one of the parties involved in each transaction and in some cases received advice from realtors and other appraisers as to the value of any improvements.

[73]  After adjustment, Mr. Cavazzi's comparable sales indicated a per acre price range of $6,822 to $12,525 per acre. He placed the most reliance on two comparables, Index Nos. 5 & 6.

[74]  Mr. Cavazzi's Index No. 5, a property that sold in June 2001, is Mr. Grant's Sale No. 3 — the property east of the Fritz property with the 19.1 acre main parcel and the 0.58 acre access parcel (the Fritzes sold the 0.58 acre access parcel in 1982 for $25,000). He included both the related sale of the access parcel, at $200, and the sale of the main parcel at $319,800, in his analysis. He estimated the value of the land, as if vacant, to be $195,000 or $9,900 per acre. After a time adjustment, this sale indicated a per acre rate of $11,290. He also made an adjustment for physical features which resulted an adjusted per acre value of $12,408 for this comparable.

[75]  Mr. Cavazzi's Index No. 6, a property that sold in December 2001, is Mr. Grant's Sale No. 4. Mr. Cavazzi did not apply any adjustments to this sale. The sale price per acre for this property was $11,643.

[76]  Relying primarily upon these two sales, with his other comparables providing additional support, Mr. Cavazzi concluded the market value of the Fritz property at $12,500 per acre or, for the entire 28.10 parcel, a value of $351,000.

8.2  Reduction in Value to the Remainder

[77]  Mr. Cavazzi stated that there is no negative impact to the Fritz property from the wastewater treatment facility. The basis for his assertion is twofold. Firstly, he could not determine that there were objectionable odours in the area and secondly, if odours were present, he felt that they would be consistent with a predominantly agricultural property within a rural community. Mr. Cavazzi did not consider whether there was a negative impact from stigma of being in close proximity to a wastewater treatment facility. In his testimony, he stated that the claimants had not alleged stigma in the Form A and, therefore, he did not consider it.

8.3  Partial Taking

[78]  Mr. Cavazzi applied the same per acre value to the property before and after the date of the partial taking. Using a rounded 0.34 acres for the taking, at $12,500 per acre, he concluded the value of the part taken at $4,250.

 
9.  THE BOARD'S ANALYSIS

9.1  Credibility of Expert Witnesses

[79]  The claimants alleged that Mr. Cavazzi was an advocate of the respondent's cause. They objected to Mr. Cavazzi's conclusion that their testimony at Examination for Discovery was inconsistent with his investigation regarding odours from the wastewater treatment facility. They alleged that he euphemistically called them liars. They asserted that his failure to conclude a loss in value to the remainder due to the presence of the wastewater treatment facility was further evidence of his lack of impartiality and they took issue with his failure to value the homesite severance potential and the value of the B.C. Hydro and B.C. Telephone trespass.

[80]  The respondent was also critical of the claimants' appraiser. Criticism included Mr. Grant's consideration of value to owner issues, reliance on property assessments and his failure to apply adjustments to his comparable sales data. The Respondent submitted that Mr. Grant's methodology was novel and unclear, that he combined two valuation approaches, that his report contained significant errors, and that he relied excessively on his judgment without sufficient supporting documents or references. The respondent asked the board to discount Mr. Grant's evidence due to these shortcomings.

[81]  The board finds some weakness in Mr. Cavazzi's expert opinion, particularly relating to his failure to consider whether stigma attaches to properties in close proximity to a wastewater treatment facility. In the board's view, Mr. Cavazzi improperly limited himself by reliance on his interpretation of the Form A, instead of addressing the issues relating to the overall valuation of this property. Additionally, the board finds weakness in Mr. Cavazzi's evidence that there was no appreciable value in the improvements of the Fritz property, despite having estimated contributory value for the comparable properties.

[82]  The claimants' main concern with Mr. Cavazzi was an apparent lack of neutrality. The board has carefully considered the claimants' concerns. Generally, the board finds that Mr. Cavazzi's appraisal evidence provided an objective view. His overall land value exceeded Mr. Grant's value. The fact that he did not consider the homesite severance is not indicative of bias. His expert opinion differed from Mr. Grant's but that also is not indicative of bias.

[83]  The board finds there are instances of Mr. Grant having relied on his expertise without providing the board with substantiating facts with which to test the expert opinion. For example, Mr. Grant's Richmond study is based on his analysis without sufficient details to allow the board to analyze or test his results; his opinion of value of the improvements and the labour component are presented without supporting evidence; and his reference to real estate listings does not provide any details from which the board could conclude a value for the homesite severance potential.

[84]  The board notes the caution by the Federal Court, Trial Division, in Willows Golf Ltd. v. Canada, [1977] F. C. J. No. 307, court file No. T-182-74, at page 6:

The Court is not justified in jumping with an expert witness to a conclusion that is sustained only by evidence of his expertise; it simply must have evidence as to facts so that it can both understand and evaluate the process leading to the conclusion and the validity of the conclusion itself.

[85]  The board is reluctant to rely on the opinion of experts when it is presented without supporting evidence. Accordingly, the board has attached little weight to those parts of Mr. Grant's evidence that do not afford the opportunity to test his opinion against evidence.

[86]  We decline to find either expert to be a biased witness or to have exceeded the role of expert witness. Accordingly, we decline the invitations to disregard the entire opinion of either expert witness. We have considered the evidence of each and accorded their respective opinions such weight as we consider warranted, as discussed in the analysis that follows.

9.2  Market Valuation of the Fritz Property

9.2.1  Land Value

[87]  Excluding consideration of the impact of the wastewater treatment facility, Mr. Grant concluded that the land value of the Fritz property was $10,000 per acre. Mr. Cavazzi concluded $12,500 per acre.

[88]  Mr. Cavazzi utilized nine sales for comparison with the Fritz property and applied adjustments for time and physical differences. He concluded a per acre value at the top end of his adjusted range.

[89]  Mr. Grant utilized three sales for comparison with the Fritz property. He did not apply adjustments. We find that it would have been beneficial to have an analysis of the changes in market conditions, particularly for Sale No. 5 which occurred in 1994.

[90]  Mr. Grant utilized the assessed value of the land for Sale No. 3 as he could not estimate the residual land value because he did not know the value of the improvements. Although he maintained that he only reported the assessed values and did not rely on them, we find that he did rely on them in that he used them in his analysis to determine residual land values. We find that it was inappropriate for Mr. Grant to rely on assessments for his analysis. The board does not have evidence of how the assessed values were determined or of the basis for the apportionment between land and improvements.

[91]  The board places most reliance on one of the comparables used by both experts — Mr. Grant's Sale No. 4 and Mr. Cavazzi's Index No. 6 – a 31.13 acre property which sold in December 2001, for $11,643 per acre. This property does not have river frontage and had previously been used in part as a former sawmill and part for the railway. Approximately 13 acres had been in the ALR. This sale has the advantage of being the approximate size of the Fritz property and having occurred at the effective date of the evaluation. Neither expert found it necessary to apply adjustments to the sale price in comparing it to the Fritz property.

[92]  The board finds that Mr. Cavazzi's analyses and adjustments are reasonably supported and accepts his conclusion of land value at $12,500 per acre, or $351,000 overall.

9.2.2  Homesite severance potential — Highest and Best Use

[93]  The Fritzes claimed that they were eligible to obtain a subdivision under the homesite severance provision of the Land Reserve Commission. The basis for that claim would be under s. 31 of the Act - that the eligibility provided additional value to the property either as a different highest and best use or as a special economic advantage arising out of their occupation.

[94]  Mr. Grant included a copy of the Homesite Severance policy from the LRC in the appendix of his report. In our view, key statements within this policy are:

"The purpose of this policy is to provide a consistent approach to situations where property under application has been the principal residence of the applicant as owner-occupant since December 21, 1972 and the applicant wishes to dispose of the parcel but retain a homesite on the land.

Persons making use of this policy should understand clearly that:

a.	no one has an automatic right to a "homesite severance";
b.	the Commission shall be the final arbiter as to whether a particular "homesite severance" meets good land use criteria; (see #4 below)
c.	a prime concern of the Commission will always be to ensure that the "remainder" will constitute a suitable agricultural parcel. (see #5 below)."

[95]  It was not disputed that the Fritzes fulfill the owner and occupancy requirements to qualify for homesite severance. However, approval is not automatic; it is subject to a number of provisions. The evidence shows that the Fritzes made no attempt to obtain approval for a homesite severance either before or since the partial taking although Mr. Fritz testified that he talked to the LRC in the winter of 2002/2003. Mr. Fritz acknowledged that approval would not be automatic and that location of a new parcel would be an issue because of the LRC's farming requirements.

[96]  The claimants argued that the approval of a homesite severance on the property to the south (the "Woods" property) was evidence that a severance would be granted on the Fritz property. The "Woods" property was approved for a severance in 2001. The Ministry of Water, Land and Air Protection gave their approval to the severance subject to covenants relating to minimizing potential flood damage. Their approval letter specified minimum building elevations but noted that filling would be acceptable to achieve the required elevation.

[97]  The evidence does not establish whether similar requirements would be necessary for the Fritz property but, given the proximity to the Woods property and the Eagle River, the board accepts that it is a possibility.

[98]  Mr. Fritz testified that he believed one of his neighbours had been refused a requested severance.

[99]  There was conflicting evidence on the appropriate location of the hypothetical homesite severance. Mr. Fritz stated in testimony that the logical location of a new homesite would be to the north of the existing house while Mr. Grant assumed that a location south of the house would be appropriate. Mr. Fritz testified that a homesite to the south would impact the farming operation on the property.

[100]  The size of the homesite severance is another unknown factor. Although Mr. Grant has valued this hypothetical parcel as if a one acre site, the board notes from his report that the Community Development technician recommended a 1 hectare (2.47 acre) parcel for the Woods homesite severance.

[101]  The respondent submitted that the board cannot take the value of the homesite severance into account unless the evidence establishes that there is a greater than 50% probability that the severance would be granted and referred the board to Farlinger Developments Ltd. v. Borough of East York (1975), 8 L.C.R. 112; [1975] O. J. No. 609 (Ont. C.A,).

[102]  The claimants argued, based on McPhail's Equipment Co. v. Surrey (City) (1995), 57 L.C.R. 57 (ECB No. 18/89/92), that the proper test to be applied to the homesite severance is "the value of the land taken with all its potentialities…" They argued that a prudent vendor would effect a severance of the property prior to sale. They pointed to the Woods' property severance and Mr. Grant's reference to the listings of 20 properties to support a contention that there was compelling evidence of both the potential for subdivision and a market value for the lot.

[103]  In our view, the claimants have confused the issues of highest and best use based on 'probabilities' and the calculation of compensation which can involve 'potentialities.' The first task is to determine highest and best use based on the probable use to which the property could be put. It is in that context that the board must consider whether there is evidence to demonstrate the probability that approval for severance would be granted by the appropriate authority. If the board determines that it was a probable use, then the board would consider the impact on value.

[104]  It is in the context of determining compensation that the courts have referred to the potentialities. In Farlinger at para. 51, the Court stated:

Before an owner of expropriated land is entitled to compensation on the basis of a higher and better use, the probability of such use must be clearly established.

... Having determined the highest and best use of the property the next task is to fix the compensation to be awarded to the owner based on such use. The market value of the land to be determined under s. 14(1) of The Expropriations Act should reflect the present value of the potentialities of such land.

[105]  The board agrees with the Respondent that the appropriate test for highest and best use is that set out by the Court in the Farlinger case:

From these authorities it would seem to be established that the highest and best use must be based on something more than a possibility of rezoning. There must be a probability or reasonable expectation that such rezoning will take place. It is not enough that the lands have the capability of rezoning. In my opinion probability connotes something higher than a 50% possibility.

[106]  In Gonev v. Richmond (City) (2000), 71 L.C.R. 251 (E.C.B. No. 04/98/192), the board stated, at para 74, after referring to the Farlinger case:

If the highest and best use of an expropriated property is based on re-zoning potential, or in this case its bonusing density potential, there must be a probability or a reasonable expectation that such a change in the land use will be approved. Purchasers are unlikely to pay any increment for relatively uncertain possibilities.

[107]  We find that the claim for a value enhancement on the basis of a hypothetical severance of the property, that has neither been applied for nor approved, is too remote and speculative. The Homesite Severance policy is not transferable – it applies only to the Fritzes. While there is a possibility that this severance might be approved, the probability of this occurrence has not been demonstrated. Further, the size, location and other requirements that might be imposed are unknown.

[108]  The board finds the highest and best use for this property is a continuation of the combined residential and agricultural uses.

[109]  The parties did not argue the applicability of section 31(2) in the absence of a finding under section 31(1). However, there was general reference to the value of a "special economic advantage to the owner arising out of his or her occupation or use of the land" which necessarily invokes section 31(2).

[110]  Even if a homesite severance was probable, the claimants have not provided evidence of value. The board is not satisfied that the market value of this hypothetical parcel has been proven by the listings referenced by Mr. Grant. Mr. Grant provided no details of these listings. In the absence of any evidence from which the board could draw conclusions, the board attributes no weight to these listings.

[111]  We find that the claimants have not substantiated a claim for compensation based on eligibility for the homesite severance, either under s. 31(1) as increased market value resulting from a different highest and best use, or under s. 31(2)(a) as a special economic advantage arising out of their occupation.

9.2.3  Improvements

[112]  Mr. Cavazzi stated that he did not value the Fritz improvements because they did not contribute any appreciable value over and above the value of the land. The only evidence therefore is Mr. Grant's opinion on this point. The respondent was critical of Mr. Grant's cost estimates and we share some of the respondent's concerns. Specifically, we find it difficult to accept that Mr. Grant's estimate of depreciated cost reflects the market value of these improvements. Mr. Grant made no attempt to support his conclusion with market data. However, lacking any better data, we accept Mr. Grant's opinion of the depreciated value of the improvements as they existed at the time of taking ($80,852). As Mr. Cavazzi declined to value the improvements the only other indication we have is the assessed value, which at $66,900 is slightly below Mr. Grant's estimate.

9.2.4  Conclusion

[113]  Utilizing the land value at Mr. Cavazzi's estimate of $351,000 less the $4,250 value of the part taken for the works, and adding Mr. Grant's estimate of the depreciated value of the improvements yields a value of $427,602 for the remainder of the property as improved at the time of taking, December 11, 2001.

9.3  Reduction in Value to the Remainder

9.3.1  Evidence of Odours and Stigma

[114]  The Fritzes claim under s. 40(1) for losses attributable to the effect of the taking on the remainder of the land, and for losses attributable to the noise, odour and stigma from the proximity to the wastewater treatment facility.

[115]  Although the respondent and Mr. Cavazzi placed considerable emphasis on the claimants' failure to allege 'stigma' in the Form A, the board finds that is not determinative. The claim is for damages resulting from the effect of the treatment facility.

[116]  Section 40(1) provides:

[117]  Based on the evidence of the facility's Chief Operator, the Fritzes and the other lay witnesses, the board finds that while the wastewater treatment facility may not emit objectionable odours when operating under optimum conditions, clearly there have been times when this was not the case. We find the evidence demonstrates that the severity of the odours has decreased since the facility first started operation. In part this is due to the fact that initially sewage was trucked to the facility and there were some spills and odours emitted during the dumping process. Since then, many residences have been hooked up to sewage pipes and now trucking is mainly used for the houseboats.

[118]  The District has no doubt promptly attended to and tried to mitigate operational problems as they arose, however only a neighbourhood with a treatment facility in it would ever experience these problems. Even if the facility rarely produces odours, the fact that it has, and may again, is clearly a negative factor for a residential property. Additionally, the Chief Operator testified that the facility is currently only operating at one third of the design capacity.

[119]  The neighbourhood has an agricultural aspect and a certain tolerance to some objectionable odours could be expected. However, we accept the claimants' submission that human waste odours are more repulsive than the occasional agricultural odours noticeable in the community. We find, based on the evidence of the Fritzes and the other neighbourhood witnesses, that odours do occur. Although the incidence of odours has decreased, there are still odours which negatively affect the Fritz property particularly during the summer months. We accept the expert opinion evidence that if odours are present, they will affect market value, and we find that odours emanating from the wastewater treatment facility have a negative impact on the value of the Fritz property.

[120]  As noted earlier, Mr. Grant referred to a study from the Richmond area to support his opinion that there is a stigma and to give evidence of the loss in value that results. Mr. Cavazzi did not consider the possibility of stigma in his report and he testified that he did not think there was any stigma attaching to the Fritz property from the treatment facility.

[121]  The Reti property, referred to above, is across the road from the Fritz property, and the wastewater treatment facility is directly behind the Reti property. The Reti property, 0.24 hectares (0.59 acres), was essentially a single family residential property with no agricultural component. Mr. Grant and Mr. Cavazzi provided appraisal evidence for the compensation claim decided by this board.

[122]  We are cognizant of the strictures against using findings from a previous case as evidence. However, given that the Reti and Fritz properties are across the street from each other, are affected by the same wastewater treatment facility, were appraised by the same appraisers considering similar issues, the findings in that case are of some interest in considering the stigma issue in the Fritz case.

[123]  In his report in the Reti case, Mr. Cavazzi gave his opinion that stigma attaches to properties in close proximity to a wastewater treatment facility. At pages 35 and 36 of his Reti report, he stated:

"However, we anticipate that the marketability of a residential property may be affected by the development of a wastewater plant in close proximity to it. We also anticipate the impact may be higher prior to the completion of the plant due to the anticipation of a negative impact and either be sustained if objectionable odors and/or noise occur and diminish if they do not. We also expect that mitigation of any impact could be achieved by screening and landscaping." (p. 35, Ex. 16)

And, at page 36,

"In summary, the neighborhood is not residential in nature but a mixture of other uses, at least some of which may not be desirable in the marketing of single family residential properties relative to those located in areas not so affected. However, the establishment of a sewage lagoon and treatment plant imposes an unusual type of development that probably creates some stigma in respect of a residential property although its impact may be less for a property in a rural neighborhood where other stimuli, either objectionable or potentially objectionable, may exist.

We have no evidence to support a specific estimate of loss and anticipate the market would be arbitrary in its measurement. Given the character of the neighborhood and the age, style and quality of the home, we anticipate the presence of a wastewater treatment plant adjacent to it would reduce its probable market value by 10% to 25%."

[124]  The board accepts that stigma attaches to properties in close proximity to wastewater treatment facilities, particularly residential properties. We note that the board accepted that proposition in the Reti case, at which time it was propounded by both Mr. Cavazzi and Mr. Grant.

[125]  We find that the wastewater treatment facility does not have a visual impact on the Fritz property. We also find that the evidence does not support the claimants' contention that noise from the works yard and the treatment facility negatively affects the neighbourhood which is subject to noise from logging truck traffic and some 25 trains passing through every day.

[126]  However, we find that both odours and the stigma associated with being in close proximity to the treatment facility have a negative effect on the market value of the Fritz property.

9.3.2  Valuation of Odours and Stigma

[127]  The Fritz property is primarily agricultural with a residential component. We find that the agricultural component would not suffer the same degree of negative impact as the residential component, because there is some tolerance for odours on an agricultural property. However, since the agricultural component cannot be treated as separate from the residential, we find that the impact of the wastewater treatment facility attaches to the property as a whole.

[128]  We have considered Mr. Grant's evidence of the Richmond treatment facility and find that we cannot place any reliance on the study or his opinions of its usefulness in determining the impact on the Fritz property. Firstly, the "study" as included within Mr. Grant's report is an excerpt which lacks critical information that would allow us to evaluate the reliability of the conclusions. Secondly, we are not convinced that this large facility is in any way comparable to the Sicamous facility. Thirdly, Mr. Grant himself appears to have placed little reliance on his study. He concluded a 40% reduction in value for the Richmond property in his study. He stated in his report that applying the results of the Richmond study to the subject area would indicate a reduction in property values of over 50%. He then concluded a 20% reduction was applicable. We do not find this analysis compelling.

[129]  While we do not accept Mr. Grant's conclusion of a 20% diminution in value, we also do not accept Mr. Cavazzi's evidence that there is no negative impact on value.

[130]  In the Reti case, Mr. Grant provided a before and after analysis to value the reduction in value associated with being in close proximity to the facility. Mr. Cavazzi's opinion was that the reduction in value was between 10% and 25%. The board concluded that the reduction in value was 30%.

[131]  Fritz property is further removed from the facility than the Reti property and the evidence before us was that odours have diminished. The Fritz property is agricultural with a residential component whereas the Reti property is purely residential. Having considered and weighed the various factors, we find that 5% is sufficient to account for the negative impact of the wastewater treatment facility on the Fritz property. Using the total of $427,602 as the estimated market value of the remainder, a 5% diminution in value is $21,380.

9.4  Partial Taking

9.4.1  Land Value

[132]  Mr. Grant presented two scenarios to determine the value or impact of the partial taking. In the first scenario he valued the part taken as if a separate parcel available for sale. He thought this was appropriate as there were two prior sales of strip severances in the neighbourhood and thus concluded that could have been done for the strip taken from the Fritz property.

[133]  The board finds that the strip taken from the Fritz property was not a subdivided parcel and the creation of this strip parcel did not constitute the highest and best use of the land at the time of the taking. The Appraisal of Real Estate, Second Canadian Edition (Vancouver, 2002) defines highest and best use as:

"The reasonably probable and legal use of vacant land or an improved property that is physically possible, appropriately supported, and financially feasible and that results in the highest value."

[134]  The board finds that the strip subdivision of the partial taking area was not a reasonably probable use of the land at the time of the taking, except as acquired under the statutory authority of the District of Sicamous. There was no evidence to suggest otherwise.

[135]  Further, the board finds that the claimants have not established the market value of this strip severance. Neither of Mr. Grant's Sale Nos. 1 and 2 meets the test of market value for the reasons that follow.

[136]  Sale No.1, the strip severed from the north boundary of the Fritz property, was acquired for $25,000 by the landowner to the east who had no road access to his property. This strip provided legal road access to the parcel. The obvious motivation factor must play a significant role in the price agreed for this parcel. It is telling that when analyzing the 2001 resale of this parcel in conjunction with the 19.10 acre main parcel, Mr. Grant declined to even consider the small parcel (the value ascribed to this sale in 2001 was $200), stating in testimony that it is just a driveway which adds no utility to the main parcel.

[137]  The second transaction, Sale No. 2, a strip acquired from the property south of the Fritz property, was a settlement which resolved outstanding trespass issues. The board finds that this was not a freely negotiated market transaction where the purchaser had a choice of properties to acquire.

[138]  A situation in which there is only one logical purchaser of the land is not an indicator of market value. We do not consider the acquisition of a parcel by a purchaser influenced by undue stimulus to represent an open market transaction.

[139]  In Baines v. British Columbia (Minister of Transportation and Highways) (1997), 61 L.C.R. 45 (E.C.B. No. 21/94/137), the board considered and rejected the use of settlements as indicators of market value. The board considered a number of cases and noted that the weight to be attributed to settlements is dependent on the evidence of how reflective the settlements were of market value. The board stated at p. 63:

In Richland Farms, the board discussed the factors to be considered in deciding the weight to be attributed to evidence of settlements of neighbouring property owners with the expropriating authority. At p. 70 this board quoted from Shell Canada Ltd. v. City of Calgary (1985), 33 L.C.R. 235 (Alta.-L.C.B.) at p. 243:

… there must be evidence that both parties to the transaction accepted and agreed to such a division [between land value and items of damage] in reaching a final settlement.

In this case, there is insufficient evidence to establish either the factors affecting the acquisition price or the indications of an open and competitive market.

[140]  The board agrees that a settlement is not necessarily a reliable indicator of market value because there are many considerations, in addition to the market value, which might contribute to the settlement amount. In this case, in addition to other factors such as avoidance of litigation, there may have been consideration for nuisance and stigma from the wastewater treatment facility. There was no evidence before the board of how the settlement value was broken down. The board does not place any weight on the Woods' settlement in determining market value for the Fritz partial taking.

[141]  The Claimants submitted that it is an error of law to compensate an expropriated owner based on the value to the owner for the whole parcel instead of a value to the owner of the piece of the parcel actually taken, and referred the board to GTE Sylvania Canada Limited v. B.C. Transit (1991), Vancouver Registry No. CA010253 (BCCA).

[142]  In the GTE case, the umpire had found that the small parcel taken had no independent value and that the remainder of the whole was just as valuable after the expropriation as the whole had been before and thus awarded a nominal $1.00 value to the small parcel. The Court of Appeal stated that the Transit Act required that the piece taken be valued as a free-standing parcel and rejected the notion of arriving at a value to owner for the whole parcel instead the value to owner for the piece taken.

[143]  The board distinguishes the reasoning in the GTE case because it was decided in the context of the provisions of the Transit Act which has no parallel in the Expropriation Act. Additionally, the board notes that the Court of Appeal went on to say that if the parcel

taken could not have stood alone at the time of the taking as a legal entity, or could not have stood alone at that time as a commercial entity, then it may be that the only proper way to value the land taken would be to value the whole parcel and then to attribute a proportionate part of the value of the whole parcel to the piece taken, on the basis of the proportion that the area of the part taken bears to the area of the whole parcel.

The Court then referred with approval to the decision of the Alberta Court of Appeal in The Queen v. Bonaventure Sales Ltd. (1980), 22 L.C.R. 164. In Bonaventure, which concerned a strip of land expropriation from the boundary of two properties, the Court stated at pp. 164-165:

It is not reasonable to convert those strips into a saleable area of land for purposes of evaluation of that land per se....We are of the opinion that the only method of arriving at the fair market value was to take a fair market value of the whole of each parcel and then attribute the per acre value to the acreage taken....In the result, we are of the opinion that the Board proceeded on a wrong principle in....equating strips taken with saleable acreage and treating it as saleable acreage to be valued by itself.

[144]  Professor Eric C.E. Todd, The Law of Expropriation and Compensation in Canada, 2nd ed. (Carswell: Scarborough, Ont., 1992) at page 355, notes that the Alberta Court of Appeal rejected the valuation of a strip severance as a separate parcel on the basis that there would not have been willing buyers or sellers for the strip severances.

9.4.2  Damages to the remainder

[145]  The Board rejects the Fritzes' claim for a loss in farming income and efficiencies. The taking represented approximately 1.2% of the land area of the Fritz property. While the majority of the land was farmed, the area taken, for the most part, was not. Due to the physical encumbrance of the hydro/telephone poles on the Fritz property, the land taken could not be efficiently farmed and the evidence indicates that it was not. The poles were apparently in trespass on the property however the reality is that the area was not being farmed. We note that this board decision does not deal with the issue of the prior trespass; we are merely stating the facts as they were at the date of the taking.

9.4.3  Conclusion

[146]  The board concludes that the proper compensation for the part taken should be based upon the pro-rata value of the whole parcel. As we have accepted Mr. Cavazzi's land value, we find his pro-rata calculation to be the correct basis of determining compensation for the strip taken. We find that $4,250 is the value of the partial taking from the Fritz property.

 
10.  SUMMARY

[147]  Accordingly, the board awards the claimants $4,250 for the partial taking from the property plus $21,380 for the loss in value to the remainder. The total compensation awarded to the claimants is $25,630 plus interest and costs as applicable.

 
11.  INTEREST

[148]  The claimants submitted that interest on the compensation for loss in value to the remainder should be calculated from 1995. That is the year construction of the facility commenced and when the initial waterline was installed on the Fritz property. Claimants' counsel referred the board to Armstrong v. British Columbia (Minister of Transportation and Highways) (1989), 42 L.C.R. 32 (B.C.-E.C.B.).

[149]  The board rejects the claimants' submission about the date of the interest calculation for two reasons. Firstly, section 46(1)(a) is clear that interest is payable on the market value portion of the compensation from the date the owner gave up possession. In this case, that date is December 11, 2001. All of the compensation the board has awarded is based on market value, so s. 46(1)(b) does not apply. Although a waterline was installed on the Fritz property as early as 1995, there was no taking and the Fritzes did not give up possession of any portion of their land.

[150]  Secondly, the board finds the Armstrong case is distinguishable. That case, heard in 1989, concerned land that had been used by the Parks Branch in 1960 to construct a ditch adjacent to highway development. Part of the land used exceeded the resumable portion permitted under a Crown right-of-way. The claimants and the respondent did not discover this "excess taking" until 1987 when the Ministry wanted to increase the existing right-of-way. The board found that the claimants were entitled to compensation back to 1960, and that interest was payable on any compensation awarded for land taken and damage by severance and injurious affection from 1960 to 1987. From December 24, 1987, the date that the Expropriation Act, S.B.C. 1987, c. 23 was enacted, the interest provisions of the Act applied.

[151]  In the Armstrong case, the board was dealing with an excess taking that occurred prior to the enactment of the Expropriation Act. Accordingly, the common law applied and the board canvassed the common law for both entitlement to compensation and interest payable on the compensation. Subsequent to the enactment of the Act, only the Act applied.

[152]  The only date of taking in this case was December 11, 2001. That taking resulted in Sicamous acquiring additional land and had the effect of legalizing the exiting waterline trespass.

[153]  The board finds the claimants are entitled to interest pursuant to section 46(1) of the Act on the award, less the amounts paid by the respondent, from December 11, 2001.

[154]  The amount of the total advance payment is less than 90% of the compensation awarded and, therefore, the claimants are entitled to additional interest pursuant to section 46(4) of the Act. The board finds the claimants are entitled to interest at 5% from December 1, 2001, on $22,414 and from February 4, 2003, on $20,380, to the date of this decision.

12.  COSTS

[155]  The total award to the claimants is $25,630 and the total of the advance payments is $5,250. Pursuant to section 45(4) of the Act, because the amount awarded is greater than 115% of the advance payments, the respondent must pay the claimants their costs. If the parties do not agree on payment of costs, that can be referred to the board.

[156]  The claimants asked the board specifically to order entitlement to costs for attendance at the final day of hearing on October 16, 2003, in Vancouver. The board has determined that, if the parties do not otherwise agree, the issue should be left to a final costs review and thus declines to make the order.

THEREFORE IT IS ORDERED THAT the District of Sicamous pay to Richard and Florence Fritz:

1.	Compensation under section 40 of the Act in the amount of $25,630;
2.	Interest pursuant to section 46(1) as follows:
	a.	from December 11, 2001 to February 3, 2003, on $22,414;
	b.	from February 4, 2003 until paid, on $20,380.
3.	Additional interest of 5% pursuant to section 46(4) as follows:
	a.	from December 1, 2001 to February 3, 2003, on $22,414;
	b.	from February 4, 2003 to the date of this decision, on $20,380.

Interest is payable at the following rates:

1. Six and one-quarter per cent (6.25%) from July 1, 2001 to December 31, 2001.

2. Four per cent (4.00%) from January 1, 2002 to June 30, 2002.

3. Four and one quarter per cent (4.25%) from July 1, 2002 to December 31, 2002.

4. Four and one half per cent (4.5%) from January 1, 2003 to June 30, 2003.

5. Five per cent (5.0%) from July 1, 2003 to December 31, 2003.

6. Four and one half per cent (4.5%) from January 1, 2004 to June 30, 2004.

Fritz v. Sicamous, Appendix A