|
March 21, 2003, E.C.B. 24/95/235
| Between: |
Heinz
Eckervogt and T.D. Oilfield Services Ltd.
Claimant |
| And: |
Her
Majesty the Queen in right of the Province of British Columbia
as represented by the Minister of Employment and Investment
Respondent |
| Before: |
Sharon
I. Walls, Vice Chair
Lesley Eames, AACI, P.App., Board Member* |
| Appearances: |
Timothy
S. Preston Q.C., Counsel for Heinz Eckervogt
Alan V.W. Hincks, Counsel for the Respondent |
| *
Lesley Eames' appointment on the board expired in
July, 2002. She continued as a member of the panel
and participated in these reasons for decision pursuant
to section 53(7) of the Expropriation Act,
R.S.B.C. 1996, c. 125. |
REASONS FOR DECISION
1. APPLICATION
[1] This board rendered
its decision on compensation in this matter on November
26, 2001. See 75 L.C.R. 161 (B.C.E.C.B.). The issues
of interest and costs were adjourned. The claimant Heinz
Eckervogt and the respondent, the Crown, have now made
written submissions on these issues. The other claimant
in this proceeding, T.D. Oilfield Services Ltd., did
not participate in the submissions on interest and costs.
Neither did Walter Yates who brought a separate application
for compensation that was heard with the claim for compensation
in this proceeding.
[2] Mr. Eckervogt was the
lessee of three placer gold mining leases on a tributary
of the Tatshenshini River, in the north-west corner
of British Columbia near the Yukon Territory border.
T.D. Oilfield Services Ltd. and Mr. Yates had both been
granted a right to mine specific portions of the leases.
In 1993 the Crown established a new Class A Provincial
Park that included the land described in the three placer
leases. Mining activity was prohibited in a Class A
Provincial Park and eventually the Crown conceded that
it had expropriated the claimants' interests. For further
background with respect to this claim see the 2001 decision
on compensation.
[3] The primary issue in
these submissions was whether Mr. Eckervogt was entitled
to costs under section 45 of the Expropriation Act,
R.S.B.C. 1996, c. 125 ("the Act"). Section
45(4) provides that if the compensation awarded is greater
than 115% of the amount paid by the authority under
section 20 or otherwise, the authority must pay
the owner's costs (emphasis added). Section 45(5) provides
that if the compensation awarded is 115% or less of
the amount paid by the authority under section 20 or
otherwise, the board has a discretion to award the owner
all or part of his or her costs. Because of the circumstances
surrounding the advance payment the parties are not
in agreement as to the amount that was paid to Mr. Eckervogt.
They also are not in agreement as to the amount of compensation
awarded and whether accrued interest should be included
or not.
2. BACKGROUND
[4] The sequence of events
with respect to the advance payment and the eventual
compensation by this board was as follows:
- On October 15, 1993, the Crown established a new
Class A Provincial Park that included the land described
in the three placer leases;
- In May 1995 the two claimants filed a Form A or
Application for Determination of Compensation under
the Act;
- In May 1996 the parties agreed to submit the claims
to a private Arbitrator, Douglas Campbell;
- Between October 16, 1996 and January 7, 1997 the
arbitration occupied 17 hearing days;
- On May 19, 1997, the Arbitrator released an Award
in which he assessed some compensation to the two
claimants;
- On July 18, 1997, the respondent filed a petition
in the Supreme Court of British Columbia alleging
arbitral and legal errors in respect of the Arbitration
Award;
- On September 8, 1997, the respondent wrote a letter
to the claimants saying that a cheque for an advance
payment had been requisitioned on August 29, 1997.
Because there was an undetermined issue as to the
interest of Mr. Yates in the lower lease, the respondent
stipulated some proposed terms for the payment associated
with that lease;
- On September 10, 1997, the Arbitrator released another
Award in which he assessed total compensation to the
two claimants in the amount of $3,917,681 plus interest;
- On September 18, 1997, the claimants filed a Notice
of Motion to be heard by this board on September 30,
1997 seeking an order requiring the respondent to
make an advance payment under section [20] of the
Act;
- On September 26, 1997, the respondent forwarded
a cheque to the two claimants. The cover letter stated
that the cheque was enclosed "pursuant to section
[20] of the … Act"; The cover letter went
on to state that the money was tendered "on condition
that first of all the monies be allocated as follows:
| Eckervogt's interest in the lower
lease |
$25,000 |
| Eckervogt's interest in the middle
lease |
$70,000 |
Eckervogt's interest in the upper
lease
[other monies were allocated to the second claimant]
|
$5,000 |
- There were also terms with respect to the payment
for the lower lease and Mr. Yates' undetermined interest.
These terms had been modified since the letter of
September 8, 1997;
- On October 16, 1997, the Arbitrator released an
Amended Arbitration Award in which he allocated the
compensation between the claimants, including $1,933,140
plus interest to Mr. Eckervogt;
- On November 3, 1997, Mr. Eckervogt returned $25,000
of the payment made on September 26, 1997 to the respondent.
This money was returned because Mr. Eckervogt and
Mr. Yates could not agree on the disposition of the
$25,000 allocated for the lower lease. (See compensation
decision at para 5);
- In June 1998 the Supreme Court ordered that the
Arbitration Award be quashed;
- A hearing was conducted before this board over 18
days between March 8, 1999 and May 10, 2000;
- On November 27, 2001, this board awarded Mr. Eckervogt
$110,000 for the market value of his interest in the
three leases;
3. INTEREST
[5] There is no issue that
under section 46(1) of the Act Mr. Eckervogt
is entitled to interest on his award of $110,000 from
the date on which he gave up possession of the leases,
October 15, 1993, taking into account the money paid
by the Ministry to the claimant on account of compensation.
Interest is to be calculated annually at the rates specified
in section 46(2) and (3). (We note that interest on
an award for disturbance damages would not necessarily
run from October 15, 1993.)
4. COSTS
4.1 Is Mr. Eckervogt
entitled to his costs under section 45(4) as of right?
[6] The relevant provisions
of the Act are:
| |
45 |
(3) |
Subject to subsections
(4) to (6), a person whose interest or estate in
land is expropriated is entitled to be paid costs
necessarily incurred by the person for the purpose
of asserting his or her claim for compensation or
damages. |
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|
(4) |
If the compensation
awarded to an owner, other than for business losses,
is greater than 115% of the amount paid by the expropriating
authority under section 20(1) and (12) or otherwise,
the authority must pay the owner his or her costs. |
| |
|
(5) |
If the compensation
awarded to an owner is 115% or less of the amount
paid by the expropriating authority under section
20(1) and (12) or otherwise, the board may award
the owner all or part of his or her costs. |
| |
20 |
(1) |
Within 30 days after |
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(a) |
an order is filed under section
5(4)(b), |
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(b) |
the approving authority complies
with section 18(2) or (3), or |
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|
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(c) |
an agreement is made under section
3(1), |
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the expropriating
authority must |
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(d) |
pay to the owner the amount the
expropriating authority estimates is or will be
payable to that owner as compensation, other than
for business loss referred to in section 34(3),
and |
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(e) |
serve on the owner a copy of
all appraisal and other reports on which the payment
is based. |
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(2) |
|
A payment is deemed to be made
under subsection (1)(d) at the time that the expropriating
authority tenders the amount of the payment to or
to the order of the owner in cash or by cheque,
draft, telegraphic or electronic transfer or any
other prescribed method. … |
| |
|
(4) |
If, before taking
action under subsection (1), the expropriating authority
is in doubt as to whether a person is an owner or,
if an owner, as to the nature and extent of his
or her interest, it may apply to the board for |
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|
|
(a) |
a determination respecting the
state of title to the land, and |
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(b) |
an order respecting the nature
and extent of the interest of any owner of the land |
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for the purpose of
determining to whom and in what amounts the payment
proposed to be made by the authority under subsection
(1) is to be distributed. … |
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(6) |
After hearing an
application under subsection (4), the board may,
in respect of the payment that the expropriating
authority proposes to pay to an owner to comply
with this section, order |
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|
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(a) |
to whom and in what amounts payment
must be made, or |
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(b) |
that money be paid into court
to be paid out as the court may subsequently direct. |
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(7) |
On complying with
an order made under subsection (6), the expropriating
authority is deemed to have complied with subsection
(1). |
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(8) |
To assist the expropriating
authority in making payment under this section,
an owner must, on the authority's request, provide
the authority with any information relevant to estimate
the compensation to which the owner is or will be
entitled. |
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(9) |
An owner who withholds
relevant information may be penalized by the board
in costs and interest to which he or she would otherwise
be entitled. |
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(11) |
The board may, on
application by the expropriating authority and on
being satisfied that the authority cannot practicably
comply with subsection (1), extend, subject to conditions
the board considers appropriate, the period within
which the payment is required to be made under that
subsection. |
| |
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(12) |
The expropriating
authority may, at any time before 10 days before
the beginning of a hearing to determine compensation,
increase the amount of its advance payment made
under subsection (1). |
[7] The first issue to
be decided is the amount of the advance payment.
[8] Mr. Eckervogt says
that, although $100,000 was sent to him in the September
26, 1997 letter, the $25,000 allocated for his interest
in the lower lease was a conditional payment. Because
he could not accept the condition he returned the payment
to the Crown. Mr. Eckervogt submits that the Act does
not contemplate conditional advance payments and this
portion of the advance payment should be ignored. If
the advance payment is only $75,000, the compensation
awarded of $110,000 is greater than 115% of the amount
paid by the authority and Mr. Eckervogt is entitled
to his costs under section 45(4).
[9] The Crown says that
the condition in the cover letter for the $100,000 permitted
Mr. Eckervogt to keep the entire payment. The allocation
of the payment between Mr. Eckervogt and Mr. Yates depended
on facts that were exclusively within the knowledge
of Mr. Eckervogt and Mr. Yates. Mr. Eckervogt's decision
to return the $25,000 appears to have arisen from some
disagreement between Mr. Eckervogt and Mr. Yates. In
any event section 20(2) of the Act provides that
an advance payment is deemed to have been made when
the authority tenders the cheque.
[10] In this case, because
it was the loss of a right to mine by the declaration
of the area as a Class A park, the Crown did not initially
concede that this was an expropriation. The advance
payment was made long after the date on which the owner
gave up possession and thus there was no compliance
with respect to the provision of an appraisal report
and the time limits specified in subsection 20(1). As
the chronology above makes clear, the payment was finally
made in response to the claimants bringing an application
seeking an order that an advance payment be made, at
the same time that the Crown was taking steps to challenge
the Arbitrator's decisions.
[11] The condition in the
September 26, 1997 cover letter from the Crown was as
follows:
Because there is an outstanding
issue as to whether Walter Yates has an interest in
the lower lease at all pursuant to the amendment to
the terms of the arbitration lease I have decided
to make one allocation to the lower lease but I am
concerned that if you decide to distribute half of
those monies to Walter Yates now and later on a determination
is made that he has no interest we are going to be
left holding the bag. Therefore, this money is being
advanced on the understanding that we will be indemnified
by Eckervogt if in fact that situation becomes a problem.
I hope this satisfies your concerns about the earlier
conditions that I imposed on the advance payment and
if you have any suggestions for amending the terms
to make it more clear as to what are our intentions,
please give me a call.
This letter and accompanying payment
were made, in effect, as a settlement of the claimants'
application. In due course, as a result of these terms,
the $25,000 allocated to Mr. Eckervogt's interest in
the lower lease was returned to the Crown on November
3, 1997 because Mr. Eckervogt and Mr. Yates were not
able to agree.
[12] It is true that the
facts relating to Mr. Yates' interest in the lower lease
were exclusively within the knowledge of Mr. Eckervogt
and Mr. Yates. However, even assuming that Mr. Yates
had a valid agreement for the right to mine the lower
lease as the board eventually decided in its decision
on compensation, the legal consequences of Mr. Yates'
interest were far from clear, a fact that is demonstrated
by the letter allocating the advance payments. Mr. Eckervogt
has pointed out that the Crown did not make any effort
to have the relative interests of Mr. Eckervogt and
Mr. Yates in the lower lease formally determined through
an application to the board under subsection 20(4).
If it had, under subsection 20(7), it would have been
deemed to have complied with subsection 20(1). In the
condition attached to the payment, counsel for the Crown
was attempting to protect the Crown from one potential
consequence. (We note that the Act provides a
specific procedure for this potential problem in section
20(2) whereby the board must certify any overpayment
to an owner as a debt due and payable to the authority.
Of course, such a safeguard may turn out to be a dry
judgment, a situation that the condition attached to
the payment attempted to avoid.) In any event, the Crown
in setting out this condition, ignored other procedural
steps available under subsections 20(4) and (7) of the
Act that would ensure the Crown retaining its
statutory advantages arising from this payment. When
the payment was returned because of the conditions that
had been imposed, no effort was made at that time to
preserve the statutory advantage available to the Crown
by bringing an application under section 20(4) to the
board. Neither did the Crown attempt to work out any
new conditions for the advance payment. In such circumstances
we conclude that the Crown is not entitled to any statutory
advantage arising from this portion of the advance payment.
[13] The Crown says that
under section 20(2) a payment is deemed to be made when
the authority tenders the payment to the owner. Despite
our comment in the compensation decision at para 151,
we conclude that when section 20 is read as a whole,
deemed payment under section 20(2) is not effective
if the advance payment was conditional and procedures
under the Act to protect the authority's position under
section 20(4) have not been followed.
[14] We conclude that the
advance payment to Mr. Eckervogt was $75,000. In the
board decision dated November 27, 2001, Mr. Eckervogt
was awarded a total of $110,000 as compensation for
the market value of his interest in the three leases.
Thus the compensation awarded to Mr. Eckervogt was more
than 115% of the advance payment made by the respondent
on September 26, 1997 and under section 45(4) Mr. Eckervogt
is entitled to his costs.
[15] In the circumstances
we do not have to decide on the alternative submission
as to whether the outstanding interest should be included
in determining the amount of compensation that was awarded
under section 45(4).
4.2 Scale of costs
[16] Mr. Eckervogt seeks
costs for those services that were incurred after June
28, 1999 under the Tariff of Costs Regulation,
B.C. Reg 189/99 (the Tariff) at Scale 3 while the Crown's
position is that Scale 2 is appropriate.
[17] The relevant provisions
of the Tariff are as follows:
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3 |
(3) |
If costs are payable
under section 45 of the Act, the board may, when
it makes an adjudication of compensation following
a hearing, fix the scale, from Scale 1 to 3 in section
4(1), under which the costs will be assessed. |
| |
4 |
(1) |
When fixing the scale
of costs, the board must have regard to the following
principles: |
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(a) |
Scale 1 is for matters of less
than ordinary difficulty or importance; |
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(b) |
Scale 2 is for matters of ordinary
difficulty or importance; |
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(c) |
Scale 3 is for matters of more
than ordinary difficulty or importance. |
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(2) |
When fixing the appropriate
scale under which costs will be assessed, the board
may take into account any of the following: |
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(a) |
whether a difficult issue of
law, fact or construction is involved; |
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(b) |
whether a difficult appraisal
issue is involved; |
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(c) |
whether an issue is of importance
to a class or body of persons, or is of general
interest; |
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(d) |
whether the result of the proceeding
effectively determines the rights and obligations
as between the parties beyond the relief that was
actually granted or denied. |
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(3) |
Subject to section
3(3), if |
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(a) |
costs are payable under section
45 or 48 of the Act, or |
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(b) |
payment of assessed costs has
been agreed to on a settlement but no scale has
been fixed or agreed to, |
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the costs must be
assessed under Scale 2 unless a party, on application,
obtains an order of the board that the costs be
assessed under another scale. |
[18] Mr. Eckervogt says
that this matter presented difficult issues in that
there was a fundamental disagreement as to the appropriate
method of valuation. At the time that the hearing concluded,
neither the Court of Appeal's decision in Casamiro
Resource Corp. v. British Columbia (2000), 70 L.C.R.
81 nor the board's decision in Premanco Industries
Ltd. v. British Columbia (Ministry of Environment, Lands
and Parks) (2000), 71 L.C.R. 6; leave to appeal
to B.C.C.A. refused, (2001), 72 L.C.R. 1 (B.C.C.A.)
had been released. The claimants had to prepare their
case without the benefit of these decisions and as a
result the legal and appraisal issues were more open
to dispute.
[19] The Crown says that
there is a default provision for scale 2 at section
4(3) of the Tariff. The case of Premanco was
a mining claim with many similarities to the present
claim. In the Premanco decision with respect
to cost issues at (2002), 72 L.C.R. 150 this board awarded
legal costs on Scale 2.
[20] We agree that this
case shared many similarities with Premanco;
in both there were mineral properties on which there
had been some mining; in both there were claims seeking
valuation under the Discounted Cash Flow approach and
in both these claims were rejected by the board in favour
of other appraisal methods. While there were some issues
in Eckervogt that were unique, there were also some
additional issues in Premanco. We see no reason
why this board's observations as to why Scale 2 was
appropriate in the decision on cost issues in Premanco
should not apply to this case. As a result all costs
assessed under the Tariff should be assessed at Scale 2.
[21] In summary, we conclude
that Mr. Eckervogt is entitled under section 45 to his
actual reasonable legal, appraisal and other costs until
June 28, 1999. After that date, under section 45 his
reasonable legal and appraisal costs are under the Tariff
at Scale 2.
THEREFORE IT IS ORDERED THAT
the respondent, as represented by the Minister of Employment
and Investment shall pay the Claimant, Heinz Eckervogt:
| 1. |
Interest on the $110,000
awarded as compensation for market value pursuant
to section 46(1) of the Act from October 15, 1993
until paid with adjustments to take into account
moneys paid by the respondent to the claimant as
compensation. Pursuant to section 46(2) of the Act,
interest shall be calculated annually at the following
rates: |
| |
a) |
Six per cent (6.00%) from July
1, 1993 to December 31, 1993. |
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b) |
Eight per cent (8.0%) from July
1, 1994 to December 31, 1994. |
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c) |
Eight per cent (8.0%) from January
1, 1995 to June 30, 1995. |
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d) |
Eight and three-quarters per
cent (8.75%) from July 1, 1995 to December 31, 1995. |
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e) |
Seven and one-half per cent (7.5%)
from January 1, 1996 to June 30, 1996. |
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f) |
Six and one-half per cent (6.5%)
from July 1, 1996 to December 31, 1996. |
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g) |
Four and three-quarters per cent
(4.75%) from January 1, 1997 to June 30, 1997. |
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h) |
Four and three-quarters per cent
(4.75%) from July 1, 1997 to December 31, 1997. |
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i) |
Six per cent (6.00%) from January
1, 1998 to June 30, 1998. |
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j) |
Six and one-half per cent (6.5%)
from July 1, 1998 to December 31, 1998. |
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k) |
Six and three-quarters per cent
(6.75%) from January 1, 1999 to June 30, 1999. |
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l) |
Six and one-quarter per cent
(6.25%) from July 1, 1999 to December 31, 1999. |
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m) |
Six and one-half per cent (6.5%)
from January 1, 2000 to June 30, 2000. |
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n) |
Seven and one-half per cent (7.5%)
from July 1, 2000 to December 31, 2000. |
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o) |
Seven and one-half per cent (7.5%)
from January 1, 2001 to June 30, 2001. |
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p) |
Six and one-quarter per cent
(6.25%) from July 1, 2001 to December 31, 2001. |
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q) |
Four per cent (4.00%) from January
1, 2002 to June 30, 2002. |
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r) |
Four and one quarter per cent
(4.25%) from July 1, 2002 to December 31, 2002. |
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s) |
Four and one-half per cent (4.5%)
from January 1, 2003 to June 30, 2003. |
| 2. |
Pursuant to section
45 of the Act the actual reasonable legal, appraisal,
and other costs for the purpose of asserting his
claim for compensation or damages until June 28,
1999. After that date pursuant to section 45 the
legal and appraisal costs are under the Tariff
of Costs Regulation, B.C. Reg. 189/99 at Scale
2. |
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