October 23, 2001, E.C.B. No. 17/98/214

REASONS FOR DECISION

1.  INTRODUCTION

[1] The claimant, Alice Joan Morris, is the registered owner in fee simple of a large parcel of property near Buckley Bay on Vancouver Island, British Columbia. The property is improved with a residence occupied by the claimant and much of it is forested with a significant stand of second growth merchantable timber.

[2] In 1997, the respondent, Her Majesty the Queen in right of the Province of British Columbia as represented by the Minister of Transportation and Highways, required more than half of the claimant's property for highway construction purposes as part of a development known as the Vancouver Island Highway Project. Specifically, the property was needed to construct a new four lane divided highway, a two lane intersecting road, and a full grade separated interchange between them.

[3] On June 13, 1997, the parties entered into an agreement to transfer or dedicate land under section 3(1) of the Expropriation Act, R.S.B.C. 1996, c. 125 (the "Act"). As a result of the respondent's acquisition, the claimant's property was severed into two physically separated parcels lying respectively to the east and west of the newly constructed highway although remaining under a single legal title. The section 3 agreement provided for an advance payment to be made to the claimant by the respondent in the amount of not less than $231,162, and also stipulated that compensation would be determined by the board. As a matter of stylistic convenience, the board in this decision has sometimes referred to the respondent's acquisition using the terms "expropriation" or "taking".

[4] On June 8, 1998, the claimant filed with the board an application for determination of compensation (the "Form A"). Initially, the compensation sought for the market value of the land acquired, the reduction in value to the remaining land (otherwise described as "injurious affection") and disturbance damages totalled approximately $175,397 above the advance payment. The Form A was subsequently amended on three occasions to alter the quantum of compensation sought under various heads of alleged loss and to delete other portions of the claim. By the time the matter proceeded to a compensation hearing, the board was advised that the claims for disturbance damages had been settled. What primarily remains for the board's determination is compensation for the market value of the land acquired by the respondent and for injurious affection. The parties have agreed that the valuation date for determining compensation is June 23, 1997.

[5] The compensation hearing proceeded over four consecutive days in Vancouver. The claimant and her daughter, Anne Morris, both testified briefly. The other witnesses for the claimant were two qualified experts, Edward M. Hughes, a registered professional forester with Huock Resource Consultants Ltd., who testified concerning a timber evaluation report he had prepared dated April 14, 2000, and Gordon D. Frampton of Frampton Appraisals Ltd., a real estate appraiser who testified with respect to his report dated March 10, 2000. The witnesses for the respondent were two qualified experts, James T. Trebett, a registered professional engineer and director of engineering for Sterling Wood Group Inc., who testified concerning a timber cruise and valuation report dated June 13, 1997, and Richard W. Gordon of D.R. Coell & Associates Inc., a real estate appraiser whose report was dated May 17, 2000 and was revised on June 20, 2000. Ralph W. English, the project manager responsible for construction of that portion of the Vancouver Island Highway Project in the vicinity of the claimant's property, also testified briefly for the respondent.

2.  BACKGROUND

[6] The property in question is a rural acreage between Buckley Bay and Union Bay on the east coast of Vancouver Island, 22 km. south of the city of Courtenay. The property bears the civic address of 322 Emerton Road and is legally described as:

P.I.D. 006-116-078
Lot 2, District Lot 27,
Nelson District,
Plan 3968

(the "subject property").

[7] Before the respondent's acquisition, the subject property comprised 31.03 hectares (76.67 acres) of land. It was crossed by three utility rights of way for hydro and natural gas affecting approximately 17% of the original site area. The homesite and the utility corridors on the easterly portion of the subject property were zoned Rural One (RU-1) while the area to the west of the utility corridor was zoned Upland Resource (UR), contained within the Agricultural Land Reserve ("ALR").

[8] The claimant and her husband, who is since deceased, acquired the subject property in 1962 and used the single family residence located near its northeast boundary off Emerton Road as their family home. They were able to access other parts of the subject property through internal roads and trails crossing the utility corridor. The claimant had not harvested any of the timber on the subject property but testified that they had been saving it for later good growth with the intention that it be logged. She said she had received inquiries about dealing with the timber.

[9] The respondent's acquisition was from the southern and central portion of the subject property. It comprised 17.1 hectares (42.25 acres) of land in total, of which 13.73 hectares (33.92 acres) was forested land and 3.37 hectares (8.33 acres) was from the area cleared for and encumbered by the utility corridor. The two separated parcels with which the claimant was left consisted of an eastern remainder, including the residence, of 10.18 hectares (25.16 acres) which for reference purposes has been labelled as "Part A", and a western remainder, a wooded site of 3.75 hectares (9.27 acres) which has been labelled as "Part D". Access to Part A remains unchanged while Part D is now left isolated by the new highway configuration.

3.  THE COMPENSATION CLAIM

[10] As summarized in the most recently amended Form A, filed at the start of the compensation hearing, the claimant's claims consist of the following:

•	Market value (s. 31)	$249,000.00
•	Injurious affection (s. 40)	55,000.00
•	Disturbance damages (ss. 34, 40)	1,815.00
•	Pre-taking entry damages (s. 9)	6,152.98
	Total Claim:	311,967.98
	Less advance payments	255,662.00
	Net Claim:	$ 56,305.98
•	plus costs and interest pursuant to ss. 45 and 46 of the Act.

[11] The respondent has made two advance payments in this matter. The first payment was made on June 23, 1997 in the amount of $231,162, all of which was allocated to land value including timber. The second payment was made on June 6, 2000 in the amount of $30,000. The respondent allocated this further payment in the following manner: land value (including timber) $14,135; disturbance (pre-taking entry damages) $5,800; interest $2,750; appraisal costs $4,500; legal costs $1,000; and travel costs $1,815.

[12] At the commencement of the compensation hearing, the parties advised the board that payment of the claim for disturbance damages under sections 34 and 40(1)(b) of the Act had been agreed at $1,815. As the board understands it, this amount was incorporated into the second advance payment under the allocation to "travel costs" but appears to have satisfied both the claim for travel costs of $1,345 asserted under para. 13.5 of the statement of claim in the most recently amended Form A and the claim for a property tax adjustment of $470 under para. 13.2. Payment of the claim for pre-taking entry damages under section 9 of the Act had also been agreed at $6,152.98, in respect of which the respondent had already advanced the sum of $5,800 as part of its second payment.

[13] It seems clear that the amounts allocated to appraisal and legal costs in the second advance payment totalling $5,500 were advance payments of costs pursuant to section 48 of the Act rather than payments on account of compensation under section 20. The claimant therefore properly deducted this amount when calculating the total of section 20 advance payments. The claimant also says that the $2,750 allocated to interest in the second advance payment should not be taken into account for the purpose of the statutory calculations in sections 45 and 46(4) of the Act concerning costs and additional interest.

[14] The amounts allocated by the respondent to land value, including timber, in the two advance payments totalled $245,297. On its face this appears to bring the parties close together on the question of market value, with the claimant asserting a claim for $249,000. However, the real sticking point is the claimant's additional claim for injurious affection of $55,000. The respondent says that its payments on account of land value take into account both the market value of the land acquired and any injurious affection to the remaining land. This forms the basis for the respondent's assertion that no further compensation should be awarded beyond the amount of the advance payments and the already agreed upon additional amount for pre-taking entry damages.

4.  THE ISSUES

[15] While the board, with reference to the claimant's remaining claims, must determine the highest and best use of the subject property before the respondent's acquisition and whether that highest and best use was affected by the acquisition, there is really little dispute between the parties on this question. Similarly, while the board must determine the market value of the subject property before the acquisition, the parties are very close in their estimates of this value. The essential question for determination concerns the valuation of that portion of the subject property acquired by the respondent as well as any reduction in market value to the remainder. Even so, the parties appear to differ by an amount of less than $10,000 on the market value of the 42.25 acres of land acquired.

[16] The heart of the dispute in this matter centres around the treatment of that remaining isolated portion of the subject property, comprising 9.27 acres of woodland at its western extremity, which has been labelled as Part D. The claimant's claim for injurious affection of $55,000 entirely relates to Part D.

[17] Since the respondent's acquisition, Part D has been left without legal access. It is now bordered on the north by woodland owned by Chinook Forest Products Ltd., and on the west by land owned by Weyerhaeuser Company Limited (formerly MacMillan Bloedel Ltd.) immediately across an unopened road allowance referred to as Lost Road. On the east Part D is bordered by an exit ramp of the new highway and on the south by a private logging road known as the Buckley Bay Main. There is a locked gate, a large ungulate cattle guard, and a wildlife fence at the southeast corner. These physical barriers, as well as the steeply sloping embankments at this point, make Part D inaccessible by vehicle. The claimant says the combined lack of both physical and legal access renders Part D of no value.

[18] Although the respondent acknowledges that there has been some injurious affection to Part D, which it says has been accounted for in the advance payments allocated to land value including timber, the respondent denies that Part D has been made valueless. In attributing value to Part D, the respondent has assumed no direct legal road access but has also assumed that a temporary easement might be obtained across one of the two neighbouring properties to the north and west, owned by forest companies, in order to allow commercial harvesting of the timber on Part D. Other alternative arrangements, it suggests, such as the sale of Part D to one or other of these companies, might be possible.

[19] The issue concerning Part D has been described in some detail at this juncture because, at the outset of the compensation hearing, the claimant sought an adjournment of the proceedings generally on the basis of information it had recently received through the discovery process suggesting that access of some sort to Part D might be obtainable through the co-operation of the respondent. If this was the case, the claimant said, it would have a very significant bearing on the one remaining major area of dispute over compensation. The claimant sought the adjournment, in effect, to afford the parties additional time to explore upon what terms access might be negotiated.

[20] The respondent opposed the request for adjournment partly on the basis that it had been brought only at the last minute, with almost no notice, and would result in additional costs and inconvenience. Furthermore, the respondent argued that an adjournment would resolve nothing and that the board should hear the appraisal evidence concerning access to Part D and its market value as an isolated parcel which, the respondent said, rested largely on the value of the timber. There was nothing to preclude the claimant, even after having been compensated for loss of access, from seeking the co-operation of the respondent to remedy the problem.

[21] The board denied the claimant's request for an adjournment. The primary reason which the board gave was that the respondent in its submissions had conceded that no access to Part D was available and, as the board understood those submissions, had marshalled its own appraisal evidence on that basis. The respondent had said that it was prepared to compensate the claimant for injurious affection on the same basis of loss in value irrespective of whether at some later date the claimant, independently or through co-operation with the respondent, was able to negotiate access to Part D.

[22] In the board's view, a further issue necessarily arising from the foregoing submissions which led to the ruling on adjournment is whether, in determining any reduction in market value to the remaining land, weight should be given to the respondent's subsequent assertions concerning the possibility of obtaining temporary access or pursuing other options with respect to Part D.

5.  HIGHEST AND BEST USE

[23] In assessing the highest and best use of the subject property both before and after the respondent's acquisition, the parties' appraisers recognized that some distinction needed to be drawn between the easterly and westerly portions.

[24] As previously noted, the subject property carries a split zoning. The existing homesite and utility corridor on the easterly portion of the subject property which, before the acquisition, comprised about 38.6 acres, is zoned Rural One (RU-1) under which permitted uses include, among other things, residential and agricultural uses. The minimum lot size for subdivision is 19.77 acres. The westerly portion, west of the utility corridor which, before the acquisition, comprised just over 38 acres, is zoned Upland Resource (UR) under which permitted uses include one single family dwelling, forestry and agricultural uses. The westerly portion is included within the ALR. The minimum lot size for subdivision under this zoning, except for lands within the ALR, is 98.8 acres. Under the Official Settlement Plan adopted by the Regional District of Comox-Strathcona, the whole subject property has a Rural Resource designation. One notable feature of properties so designated is that they may be "locations with significant present or future resource characteristics for agriculture and forestry".

[25] After the respondent's acquisition, that easterly portion of the remainder identified as Part A, containing some 25.16 acres, continued to fall within the RU-1 zoning while the isolated westerly portion identified as Part D, containing 9.27 acres, continued to fall within the UR zoning.

[26] Both appraisers appeared to consider that there was some long-term subdivision potential at least for the easterly portion of the subject property, both before and after the acquisition, although the existing rural homesite utilization maximized its current use. Mr. Gordon, who completed a report for the respondent, concluded in this context that the highest and best use was a long term (15 to 25 year) holding situation. The appraisers also indicated that extraction and regeneration of the forestry resource on the westerly portion was, and continued to be, its highest and best use.

[27] Although the appraisers stated their conclusions as to highest and best use somewhat differently, the board finds that they were essentially in agreement on the issue. The board accepts these conclusions and determines that the highest and best use of the subject property, before and after the acquisition, was rural residential on the easterly portion and forestry extraction and regeneration on the westerly portion.

6.  MARKET VALUATION

6.1 The Statutory Scheme

[28] It is useful at this point to set out the principal statutory provision which governs compensation for partial takings of land. Although the respondent acquired part of the subject property pursuant to a section 3 agreement, section 3(1)(b) of the Act provides that the board must determine compensation to be paid to the owner "as if the land had been expropriated under this Act". The relevant subsections of section 40 of the Act provide:

Partial takings

40 (1)	Subject to section 44, if part of the land of an owner is expropriated, he or she is entitled to compensation for
	(a)	the market value of the owner's estate or interest in the expropriated land, and
	(b)	the following if and to the extent they are directly attributable to the taking or result from the construction or use of the works for which the land is acquired:
		(i) the reduction in the market value of the remaining land;
		(ii) reasonable personal and business losses.
(3)	If part of the land is expropriated, the amount of compensation payable in respect of the matters referred to in subsection (1)(a) and (b)(i) may be established by determining the market value of the area of all of the land before the date of expropriation and subtracting from it the market value of the land remaining after the expropriation occurs, but in no case, subject to section 44, must compensation be less than the amount determined by multiplying the ratio of the area of the land taken to the area of all of the land before it was taken, times the value of the land before it was taken with the appropriate reduction if the interest expropriated is an easement, right of way or similar interest less than the fee simple interest.
(4)	For the purposes of the second calculation referred to in subsection (3), the value of the land before it was taken is the value of the land only, having no regard to improvements on the land.
(5)	If, in the case of a partial taking, the character and use, or potential use, of the land before it was taken varies such that the land that was taken was, before the taking, more valuable or less valuable than the average value of the land that was not taken, the board may, after making a determination under subsection (3), make an adjustment to reflect that value accordingly.

6.2  Appraisal Methodology

[29] As described by E.C.E. Todd, The Law of Expropriation and Compensation in Canada, 2nd ed. (Scarborough, Ont.: Carswell, 1992) at pp. 344-347, there are two recognized methods of determining compensation in partial takings: the summation or aggregate method and the "before and after" method. The summation method involves, first, valuing the portion of the owner's land which was taken and, second, adding to that amount as a separate calculation the decrease in value, if any, to the owner's remaining land by reason of severance damage or injurious affection. The "before and after" method ascertains the value of the whole of the owner's property before the taking and its value after the portion has been taken and deducts the one amount from the other. This method therefore incorporates in one calculation all of the loss applicable to the property from both the land taken and the reduction in value to the remaining land.

[30] The "before and after" method is expressly recognized within the Act under the first part of section 40(3), although use of the method is clearly discretionary. Furthermore, if the method is used, section 40(3) goes on to provide that, subject to sections 40(5) as recited above and section 44, which takes into account general and special benefits, in no case can the compensation be less than that determined by use of the pro rata statutory calculation under the second part of section 40(3). This statutory calculation results in the owner receiving as compensation at least the pro-rated value of his or her land before the taking.

[31] The parties disagreed as to the proper appraisal method to be used in the present instance. Mr. Frampton, in the appraisal report prepared for the claimant, considered the "before and after" method inappropriate in the circumstances. This method, he stated at p. 10 of his report, "will not reflect a market derived differential". Instead, he derived a per acre market value of the whole of the subject property before the taking using the direct comparison approach. He then applied this before value directly to the pro rata calculation under the second part of section 40(3). In the first instance, for the purpose of the calculation, he used the ratio represented by the portion of the land taken to the whole of the subject property before the taking. In the second instance, he treated the severed, isolated Part D as though it had also been taken and included it in a further statutory calculation under the second part of section 40(3). Although Mr. Frampton himself did not describe it as such, claimant's counsel characterized the appraiser's approach as the summation method.

[32] The claimant cited Corner's Pride Farms Ltd. v. British Columbia (Minister of Transportation and Highways) (1994), 52 L.C.R. 15 (B.C.E.C.B.) in support of the contention that the "before and after" method is not appropriate given the diverse nature of the subject property. At p. 24 of its decision the board concluded in part that:

...the "before-and-after" method will be relied on only where it produces an equitable result....In this case, the subject property is far from homogeneous. It has a number of different zonings. Some land is within the Agricultural Land Reserve, some land is not within the reserve. The terrain also varies greatly: there is bottom land close to the Fraser River; cleared pasture land south of the CNR tracks; and treed grazing areas and steep mountain slopes south of the Trans-Canada Highway. There are also creeks bisecting the property. The board concludes that an averaging of the land values in these very disparate areas would not constitute credible evidence of the market value of the land taken by the respondent....The board concludes that for an equitable result to be achieved in the present case, the market value of the 29.257 acres taken by the respondent should be ascertained pursuant to [s. 31] of the Act.

The claimant suggested that the board in Corner's Pride, in referring to what is now section 31 of the Act, was in effect prescribing the use of the summation method.

[33] Mr. Gordon, on the other hand, in his report prepared for the respondent, fully utilized the "before and after" method. He completed his analysis on that basis in order to test whether it produced a higher number than would result from the pro rata calculation under section 40(3).

[34] The respondent cited the decisions of the board in Vision Homes Ltd. v. Nanaimo (City) (1994), 54 L.C.R. 103, aff'd (1996), 59 L.C.R. 106 (B.C.C.A.), and Husband v. Langley (Township) (1996), 59 L.C.R. 221, as instances where the board has accepted the "before and after" method to determine compensation in partial takings. It says that, despite the somewhat disparate nature of various parts of the subject property, that method is nevertheless appropriate in the present instance. The respondent therefore called into question the claimant's additional claim for compensation for injurious affection based upon the methodology employed by Mr. Frampton. Respondent's counsel specifically referred to a passage in Husband where the board, at p. 234, stated:

By measuring the value of property before and after a partial taking, the appraiser is by definition valuing both the property taken and any loss in value to the remainder. There is no room for an additional allowance for injurious affection.

[35] In using the "before and after" method, Mr. Gordon found his after value to be higher on a per acre basis than in the before scenario and he, too, ultimately rested his conclusion on the pro rata calculation under section 40(3). He took a different approach to the calculation, however, than that applied by Mr. Frampton. As contemplated by section 40(5) of the Act, Mr. Gordon distinguished between the per acre value of that part of the subject property which lay within the utility corridor from the per acre value of the rest, estimating that, as encumbered, the lands within the utility corridor had only a 50 per cent residual value.

[36] The respondent referred to decided cases of the board where the presence of an easement or right of way on the owner's property was held to have reduced its value by 50 per cent (see Cokato Dairy & Stock Farms Ltd. v. Fernie (City) (1994), 54 L.C.R. 199, and Jones v. Fernie (City) (1994), 54 L.C.R. 221), as well one case where the imposition of a right of way was said to be tantamount to a fee simple acquisition and therefore to have reduced the value by 100 per cent (see Mayfair Resources Corp. v. Greater Vancouver Water District (1997), 61 L.C.R. 183). The respondent has relied on the earlier cases for its proposition that a 50 per cent residual value for the lands within the utility rights of way is appropriate in this instance.

[37] As the subject property had a significant value in the standing timber, both of the appraisers, in utilizing the direct comparison approach, estimated market value through comparison with timbered properties as well as bare land. In reaching their value conclusions, they both took into account the value of the "stumpage", which in this context is defined as the market value of the standing timber. Estimates of stumpage value were provided to the respective appraisers by the timber experts retained by each of the parties. The approaches which these experts employed will be discussed later in the decision.

6.3  The Claimant's Case

[38] The claimant relied on Mr. Frampton's analysis in making her claim with respect to the market value of the land expropriated and injurious affection to the remainder. Mr. Frampton completed a brief narrative report using two sets of sales: three transactions of timbered properties and two of bare land to which timber value was added.

[39] The timbered properties sold in the range of $5,600 to $8,200 per acre for parcels of 24.29 acres to 53.50 acres. After adjustment, the price per acre ranged between $5,300 and $7,000. Based on these three comparables, Mr. Frampton concluded a market value for the whole of the 76.67 acre subject property before the taking, including the timber, of $5,900 per acre, or $452,500 rounded.

[40] Mr. Frampton then turned to the two comparable sales of bare land, which he said had negligible timber, at $4,100 and $4,700 per acre for 34.27 acres and 75.15 acres. He considered them both equally superior to the subject lands in subdivision potential, and adjusted for that factor, but did not comment on the comparative similarity of sales price per acre despite the considerable difference in size. In any case, after adjustment, the price per acre of these two comparables was put at $3,500 and $4,200 respectively. This indicated to him a value rate for the subject property, as though bare land, of $3,800 per acre.

[41] Mr. Frampton initially appeared to indicate in his report that his use of bare land comparable sales to which the value of timber would be added was an alternative route to arriving at the market value of the subject property. However, he in fact used these comparables to estimate the value of that 42.25 acre portion of the subject property which the respondent acquired. Furthermore, he viewed the utility corridor portion of the lands acquired, which he stated to be 8.80 acres, as being "totally sterilized" for development purposes and having no value except in respect of the access it provided, before the taking, to Part D. In the result, Mr. Frampton applied the $3,800 per acre rate to the remaining 33.45 acres, deriving, after several corrections, a bare land value of the portion taken at $127,110. To this he added the stumpage value estimated by the timber evaluation expert, Mr. Hughes, of $140,117 in order to arrive at a total value of the lands taken of $267,200 rounded.

[42] It should be noted that Mr. Frampton did not rely on the foregoing analysis of bare land comparables together with timber value in order to reach his final conclusion. Rather, he looked to the pro rata calculation provided under section 40(3): that is, he divided the portion of the lands taken (42.25 acres) by the whole of the subject property (76.67 acres) and multiplied this quotient by the market value of the subject property derived from his first three comparables ($452,500). From this exercise he estimated the compensation for the lands taken at $249,000 rounded. The claimant asserts the amount of $249,000 as the compensation to which she is entitled under this head.

[43] Under the heading of "reduction in market value to the remaining land", Mr. Frampton went on to consider the impact of the respondent's acquisition on the now severed and isolated Part D. It was his conclusion at p. 16 of his report that, after the acquisition, Part D without access was "impaired to the point of negligible utility and hence of no value." He therefore included that area, comprising 9.27 acres, in a further pro rata calculation under section 40(3). He divided the portion of the lands taken which now included Part D (51.52 acres) by the whole of the subject property (76.67 acres) and multiplied this quotient by the market value of the subject property ($452,500) in order to arrive at an estimate of total compensation owing in respect of market value and injurious affection of $304,000 rounded. The difference between this figure and the $249,000 which resulted from the earlier statutory calculation is the amount of $55,000. This is precisely the amount claimed by the claimant as compensation for injurious affection related to the loss of access in respect of Part D.

6.4  The Respondent's Case

[44] The respondent relied on Mr. Gordon's analysis in setting out its position with respect to the compensation owed to the claimant for market value and injurious affection as a result of its partial acquisition of the subject property. Mr. Gordon used the direct comparison approach to estimate the market value of the entire 76.67 acre subject property before the taking and the 34.43 acre remainder after the taking, in each instance valuing the property as bare land and adding in the timber value. In estimating his after value, he first treated separately that 25.16 acre portion of the remainder labelled as Part A, and he next treated Part A in combination with the 9.27 acre portion labelled Part D. The difference between these two value estimates he considered to be the residual value of Part D.

[45] Mr. Gordon's appraisal report contained a full "before and after" analysis based on a total of seventeen comparables, two of which were common to both appraisers. In his before value analysis, Mr. Gordon used five sales and one listing with prices ranging from $3,118 to $14,071 per acre. The comparables in the upper range were of parcels that included merchantable timber. After adjustment, he concluded a before value for the portions of the subject property situated on both sides of the utility rights of way of $3,440 per acre. As earlier explained, he made a 50 per cent downward adjustment to this per acre value for the land within the utility corridor. In the result, Mr. Gordon concluded a before value for the bare land of $241,500 rounded. To this figure he added the stumpage value of $204,000 derived from the report of the respondent's timber evaluation expert, Mr. Trebett. Overall, Mr. Gordon estimated the market value of the whole of the subject property before the taking, including lands and timber but excluding improvements, at $445,500, or $5,810 per acre. As it turns out, this estimated before value is closely comparable to Mr. Frampton's conclusion of $5,900 per acre.

[46] When turning to his after value analysis, Mr. Gordon began by considering Part A, for which purpose he identified as particularly useful from his index of seventeen comparable sales, five sales of land fronting on the Island Highway. They ranged in size from 16.8 acres to 43.5 acres with selling prices in the range of $5,511 to $9,834 per acre. After analyzing the comparables and making a 50 per cent reduction in value to the portion of Part A within the utility corridor, he concluded an after value for Part A excluding improvements at $166,000 or $6,598 per acre before stumpage.

[47] In valuing together the two portions of the remainder, Part A and Part D, Mr. Gordon made the assumption that Part D now had no legal access and that its contributory value to the remainder as a whole was much diminished by the fact that it was physically severed from Part A by the respondent's highway project. He did consider Part D to have some nominal residual value, however, and further assumed that a temporary easement might be obtained to allow removal of the stand of timber situated there. Through the selection from his index of four other comparable sales, Mr. Gordon derived an adjusted value for the combined Parts A and D of $169,500, or $4,923 per acre before stumpage. This adjusted value included a net contributory value for Part D of $3,500.

[48] Taking the indicated total remainder value of $169,500, and adding the stumpage value of the timber on both Part A and Part D, shown in the Trebett report as being $83,500 rounded, Mr. Gordon concluded an after value of the remaining land of $253,000, or $7,348 per acre. His conclusion, using the "before and after" method, was a before value of $445,500 less an after value of $253,000, for a difference of $192,500.

[49] The compensation amount of $192,500 suggested by Mr. Gordon's use of the "before and after" method equates to $4,556 per acre for the 42.25 acres acquired. Since this is less than the $5,810 per acre value which he derived in the before scenario, in the final analysis he too, like Mr. Frampton, adopted the pro rata calculation referred to in section 40(3) of the Act. After making the reduction for the lower value of the lands encumbered by the utility rights of way, Mr. Gordon arrived at the sum of $239,963, as follows:

According to the respondent, $239,963 is the amount of compensation to which the claimant is entitled for the market value of the land taken and for injurious affection to the remainder.

6.5  Timber Valuation

[50] A significant component of each appraiser's estimate of market value was the stumpage value attributed to merchantable timber located on the subject property. However, what was most at issue in the hearing in terms of the claimant's claim for loss was the timber value on that severed and isolated portion of the subject property which, after the respondent's acquisition, became labelled as the Part D remainder, the 9.27 acre woodlot.

[51] Both parties relied on a timber cruise conducted by Sterling Wood Group Inc. ("Sterling") and a summary of volumes completed by Claymore Consulting Group Ltd. Mr. Hughes for the claimant analyzed the data contained in the timber cruise report. His conclusion was a net timber value for Part D of $66,786. Mr. Trebett, who is a principal of Sterling, completed a separate analysis for the respondent. He applied what is known as the "Rothery method" of calculating the stumpage value. He concluded the market value of the timber on Part D at $32,603. This amount was expressly adopted by Mr. Gordon in his after valuation.

[52] As the foregoing numbers suggest, the timber evaluation experts differed in their analysis of the stumpage as it relates to Part D. There was only a minor difference of opinion on the gross selling price of the timber: Mr. Hughes estimated $94,013 while Mr. Trebett estimated $97,549. Mr. Hughes calculated the logging costs at $19.00 per cubic metre while Mr. Trebett's rate was $34.02 per cubic metre. Mr. Trebett also included a $15,000 expense to construct an access road into the site. Mr. Hughes did not address access. Another significant difference between the two experts was Mr. Trebett's inclusion of a 20 per cent discount for profit and risk. Mr. Hughes said he did not apply any such discount because, in his opinion, given the small size of the Part D woodlot, a prudent purchaser would be able to realize a guaranteed sale price for the timber purchased within three months of acquiring it. The manner in which they treated these various factors largely accounts for the result that the claimant's timber expert estimated a stumpage value for Part D which was more than twice that estimated by the respondent's expert.

[53] Mr. Hughes also analyzed a number of other scenarios involving the timber stand from which he identified other losses in timber value as a result of the respondent's taking. These included such theoretical considerations as the net present value of future forest growth on the Part D remainder as well as the advantages to be derived there from use of alternative logging methods. However, since these estimated losses were not advanced by the claimant in making its claim, the board does not need to consider them.

7.  ANALYSIS AND CONCLUSIONS

7.1 The Appraisal Methodology Considered

[54] There was considerable argument at the hearing over the issue of which of the two recognized appraisal approaches to determining compensation in partial takings - the summation method or the "before and after" method - was the more appropriate in the circumstances of this case. In the board's view, the debate is rendered somewhat academic by the fact that both appraisers ultimately relied on the pro rata calculation found in section 40(3) of the Act in order to estimate the compensation payable on account of the market value of the land taken and injurious affection to the remaining land.

[55] Nevertheless, in the board's view, the appropriateness of using this pro rata calculation is predicated on our being satisfied that the appraisal approaches used in the first instance would not have produced a higher value.

[56] In that regard, the board notes that Mr. Gordon for the respondent included a thorough analysis of "before and after" values, utilizing a large number of comparables, before concluding that the statutory calculation took precedence. The significantly lower value he derived by use of the "before and after" method by comparison with the pro rata calculation raises some question as to the suitability of the method in this instance. However, in the board's view, it is also the only appraisal method which was properly followed to its conclusion.

[57] The oddity produced by the "before and after" method in this case is that the claimant's remaining land appears to be worth more per acre after the taking than before, despite the fact that it is now severed by a highway interchange and that part of it has become inaccessible. As the board sees it, this result comes about for three reasons. First, the higher per acre value is a consequence of the smaller size of Part A after the taking where the appraisal evidence has demonstrated a higher per acre value for smaller sized parcels. Second, because Part A where the claimant's residence is situated comprises over 25 acres, there was no negative effect of the highway project on the homesite portion of the remainder. The house is well buffered from the road. A third factor is the percentage of land before and after the taking which was within the lower value utility corridor. Of the 76.67 acre subject property before the taking, some 13 acres or about 17 per cent of the total lay within these rights of way. It appears that the respondent tried, as far as was possible, to concentrate its taking within this already restricted use corridor. Of the 34.43 acres comprising Part A and Part D which remained after the taking, only about 4.8 acres or 14 per cent were so encumbered, resulting in a higher overall value per acre.

[58] Mr. Frampton for the claimant, after relying on a limited selection of comparables to derive an estimate of market value before the taking, chose only to apply the pro rata statutory calculation to the taking which had occurred. In fact, he applied the calculation twice, first to estimate the market value of the land taken, and second to estimate what he construed to be the reduction in market value to the remaining land or injurious affection by treating part of the remainder as though, in fact, it had been taken. The board finds no basis in the Act for doing the calculation in this manner. Moreover, despite what claimant's counsel endeavoured to suggest, the board is not persuaded that the method which Mr. Frampton adopted was the summation method, or that the numbers he derived need only be reworked to constitute the summation method. The summation method requires that the value of the land taken be determined from the market and that an amount be added for injurious affection, derived independently. This Mr. Frampton did not do.

[59] Since the pro rata calculation in section 40(3) of the Act, whether applied in the first instance by Mr. Frampton or ultimately by Mr. Gordon, produces the statutorily required minimum amount of compensation, and is higher than the amount indicated by Mr. Gordon's use of the "before and after" method, the board concurs in the use of the calculation to determine compensation in this instance. However, it must be correctly applied with reference to the other relevant considerations in section 40 of the Act.

7.2 The Valuation Evidence Considered

[60] The first step in applying the pro rata calculation is to derive the market value of the whole of the subject property, comprising 76.67 acres, before the respondent's acquisition of the portion it required for highway purposes. Each of the appraisers arrived at an estimation of the before value by use of the direct comparison approach, taking into account in one way or another the value of the timber on the subject property. Their estimates were remarkably close: Mr. Frampton's at $452,000 and Mr. Gordon's at $445,500.

[61] The board prefers Mr. Gordon's estimate over that of Mr. Frampton. Despite the similarity in opinions reached at this stage, the board feels obliged to point out that the quality of the two appraisal reports submitted on behalf of the parties varied considerably. The report prepared by Mr. Frampton for the claimant was so severely deficient in its presentation, analysis and conclusions that it was of little use to the board in reaching a final conclusion of compensation in this case. His report was not only unusually brief but also contained a plethora of errors. These included errors going to basic elements of the report, such as the plan number of the subject property partially acquired, the name of the property owner, the size of the original parcel, the size of the acquired lands, and the calculation of the area within the utility rights of way. Mr. Frampton also referenced the Act as it stood before the 1996 revision and without taking into account more recent amendments, made several textual errors, and incorrectly referenced one of his comparable sales. The identification and correction of these errors in the course of the hearing led to some confusion and occupied valuable time.

[62] The respondent, in cross-examining Mr. Frampton, pointed out that one of the comparable sales he used had been rejected by the British Columbia Assessment Authority as not being a valid transaction. Mr. Frampton replied that he had not been aware of this and agreed that the rejection might indicate that the transaction was not an arm's length sale. He admitted that he had not conducted title searches on his comparable sales nor had he researched assessment data because he did not have access to the local real estate board. He had viewed each of his comparables, he said, but had taken no further steps of data verification of the sales provided to him by a real estate agent in Nanaimo. The board has difficulty in appreciating how such lapses could have occurred in a qualified appraiser of Mr. Frampton's acknowledged experience.

[63] The next step in applying the pro rata statutory calculation is simply to multiply the before taking value by the ratio of the area of the land taken to the area of all of the land before it was taken, making an adjustment if appropriate pursuant to section 40(5) where the land that was taken is more valuable or less valuable than the average value of the land that was not taken.

[64] The board accepts the pro rata calculation as presented by Mr. Gordon, and determines that the compensation to which the claimant is entitled for the market value of the lands taken and reduction in market value to the remaining land is the sum of $239,963. In so deciding the board also considers appropriate, in light of the Act, the decided cases, and Mr. Gordon's analysis, the 50 per cent adjustment which he made to reflect the lower per acre value of the land within the utility corridor.

[65] The board's acceptance of the pro rata calculation renders moot the issues which arose during the hearing concerning the estimates of the timber evaluation experts, Mr. Hughes for the claimant and Mr. Trebett for the respondent. Mr. Trebett was criticized by the claimant for factoring into his analysis an allowance of more than $16,000 for profit and risk and a further $15,000 as the cost to construct an access road into the isolated Part D in order to be able to harvest the timber.

[66] Mr. Trebett explained at p. 11 of his report that the profit and risk factor accounted for the "risk that the timber will not meet the quality expected, that the price will drop, [and] that there will be unforeseen occurrences or delays in logging." Notwithstanding Mr. Hughes' assertions that a prudent purchaser of the timber would have been able to sell it at a guaranteed price in short order, the board considers that some allowance should be made for profit and risk, albeit Mr. Trebett in his testimony acknowledged that the 20 per cent factor he applied was possibly too high.

[67] Assuming that temporary access could have been obtained to Part D in order to harvest the timber, it also seems reasonable to the board to factor in some cost for a logging road to facilitate the operation.

[68] On the one hand, to eliminate from Mr. Trebett's calculations the allowance for profit and risk and for the cost to construct an access road would result in a higher stumpage value after the taking and, in turn, would reduce still further Mr. Gordon's estimate of loss from his "before and after" analysis. On the other hand, if the claimant were given the benefit of the doubt, and the board were to conclude no timber value for Part D due to lack of access after the taking, the resulting after value based on Mr. Gordon's analysis would be $169,500 for the bare land values of Part A and Part D and $50,938 for the stumpage value on Part A as determined by Mr. Trebett, totalling $220,438. Deducting this amount from the before value of $445,500, the loss in value resulting from the taking would then become $225,062. This figure is still not high enough to supercede the compensation of $239,963 to which the claimant is entitled under the pro rata statutory calculation.

[69] Also made moot is the issue arising out of the claimant's unsuccessful adjournment application as to whether, in determining any reduction in market value to the remaining land, weight should be given to the respondent's assertions later in the hearing about the possibility of obtaining temporary access or pursuing other options with respect to the sale of timber on Part D.

8.  THE COMPENSATION AWARD

[70] The board has determined that the compensation award to which the claimant is entitled for the market value of the lands taken and injurious affection to the remainder pursuant to section 40 of the Act is the sum of $239,963. The parties have also agreed that the claimant is entitled to an award of compensation for disturbance damages pursuant to sections 34 and 40 in the sum of $1,815 and for pre-taking entry damages pursuant to section 9 in the sum of $6,152.98. Accordingly, the board's total award of compensation to the claimant is the sum of $247,930.98.

[71] The respondent made an advance payment to the claimant of $231,162 on account of compensation on June 23, 1997, the date fixed for possession and also the agreed valuation date. The respondent made a further advance payment on account of compensation on June 6, 2000, in the sum of $21,750, excluding the amounts allocated to interest and advance costs. These two payments total $252,912. Therefore, the respondent's total payment on account of compensation is $4,981.02 greater than that which board has awarded before consideration of interest. In final submissions, respondent's counsel advised the board that, at the time of making the second advance payment, the respondent had not discovered a calculation error in Mr. Gordon's report and had, accordingly, overpaid the claimant by $5,316 on account of land value.

9.  INTEREST

[72] Section 46(1) of the Act provides:

46 (1)	The expropriating authority must pay interest on any amount awarded in excess of any amount paid by the expropriating authority under section 20(1) or (12) or otherwise, to be calculated annually,
	(a)	on the market value portion of compensation, from the date that the owner gave up possession, and
	(b)	on any other amount, from
		(i) the date the loss or damages were incurred, or
		(ii) any other date that the board considers reasonable.

[73] The board has determined the market value portion of the award in the sum of $239,963. The section 3 agreement into which the parties entered provided that the date fixed for possession would be the date upon which the initial advance payment was made. That payment, in the sum of $231,162, was made on June 23, 1997. Accordingly, pursuant to section 46(1)(a), interest accrued on the unpaid balance of the market value portion of the award from that date until the further advance payment on account of compensation totalling $21,750 was made on June 6, 2000.

[74] The parties have agreed on the amount of $1,815 as compensation for disturbance damages. These damages included $1,345 for travel costs and $470 for a property tax adjustment. No information was provided as to the dates on which these damages were incurred in order for the board to determine from what date interest should reasonably run.

[75] The parties have also agreed on the amount of $6,152.98 for pre-taking entry damages. The claimant has submitted that interest on this amount should run, not from the date of possession on June 23, 1997, but rather from the date when the respondent first entered upon the subject property for the purpose of making surveys, inspections, examinations, soil tests or the like in connection with its highway project. The respondent did not challenge this submission.

[76] With reference to section 46(1)(b), the board considers that it has discretion to make an award of interest on the pre-taking entry damages award for a period prior to June 23, 1997. However, there was again no evidence before the board concerning the nature of these damages, when they were first incurred, or whether they were cumulative over time. Claimant's counsel in final submissions simply stated that pre-taking entry had taken place sometime in 1993.

[77] From its review of the statutory rates of interest prescribed pursuant to section 46(2) and (3), the board considers it unlikely that the respondent's payment of $2,750 on account of interest on June 6, 2000 would have fully compensated the claimant for the interest owed on the market value portion of the award, the award for disturbance damages, and the award for pre-taking entry damages taken together.

[78] However, given the uncertainties surrounding the calculation of interest on the awards for disturbance damages and pre-taking entry damages, the board defers making a final determination as to interest, leaving it to the parties in the first instance to endeavour to reach agreement and make the necessary interest calculations. Either party will be at liberty to apply to the board with the requisite evidence, if necessary, for a final determination if agreement cannot be reached.

[79] For greater clarity in calculating the interest payable under section 46(1), the board observes that, pursuant to section 46(2) and (3), the rates applicable to the period in question are as follows:

(i)	Seven and one-quarter per cent (7.25%) from January 1, 1993 to June 30, 1993;
(ii)	Six per cent (6.00%) from July 1, 1993 to December 31, 1993;
(iii)	Five and one-half per cent (5.50%) from January 1, 1994 to June 30, 1994;
(iv)	Eight per cent (8.00%) from July 1, 1994 to December 31, 1994;
(v)	Eight per cent (8.00%) from January 1, 1995 to June 30, 1995;
(vi)	Eight and three-quarters per cent (8.75%) from July 1, 1995 to December 31, 1995;
(vii)	Seven and one-half per cent (7.50%) from January 1, 1996 to June 30, 1996;
(viii)	Six and one-half per cent (6.50%) from July 1, 1996 to December 31, 1996;
(ix)	Four and three-quarters per cent (4.75%) from January 1, 1997 to June 30, 1997;
(x)	Four and three-quarters per cent (4.75%) from July 1, 1997 to December 31, 1997;
(xi)	Six per cent (6.00%) from January 1, 1998 to June 30, 1998;
(xii)	Six and one-half per cent (6.50%) from July 1, 1998 to December 31, 1998;
(xiii)	Six and three-quarters per cent (6.75%) from January 1, 1999 to June 30, 1999;
(xiv)	Six and one-quarter per cent (6.25%) from July 1, 1999 to December 31, 1999;
(xv)	Six and one-half per cent (6.50%) from January 1, 2000 to June 30, 2000;
(xvi)	Seven and one-half per cent (7.50%) from July 1, 2000 to December 31, 2000;
(xvii)	Seven and one-half per cent (7.50%) from January 1, 2001 to June 30, 2001;
(xviii)	Six and one-quarter per cent (6.25%) from July 1, 2001 to December 31, 200l.

10.  COSTS

[80] Because the compensation awarded to the claimant is less than the amount paid by the respondent under section 20, the board has a discretion with respect to the awarding of costs under section 45(5) of the Act. The respondent requested the board, if it found it had such a discretion, to adjourn the matter of costs until after the compensation decision had been rendered in order to permit the respondent to make submissions on the question. The claimant has sought her costs but did not oppose the respondent's submission. Neither party made any submission as to the scale on which costs falling under the Tariff of Costs Regulation, B.C. Reg. 189/99, should be awarded. In these circumstances, the board has decided to adjourn the matter of costs, pending a further application by either of the parties.