Cost entitlement
October 1, 2001, ECB Control No.: 35/97/211

1.  Introduction

[1] The issue of costs in this matter was adjourned pending written reasons on compensation. Those reasons were released on February 12, 2001. See 72 L.C.R. 161. Campbell River Woodworkers' and Builders' Supply (1966) Ltd. was awarded compensation in the amount of $2,100,000 for the market value of the land that was acquired under section 31(1) of the Expropriation Act, R.S.B.C. 1996, c.125 ("the Act"). An advance payment of $1,800,000 was made on January 3, 1997 followed by a further payment of $80,000 on October 5, 1999. At par 100 of the decision the board stated that the compensation awarded of $2,100,000 was 111.7% of the total advance payments of $1,880,000. Since this percentage was less than 115%, under section 45(5) the board had discretion with respect to the amount of costs to be awarded to the claimant. No further discussion was included since the issue of costs was adjourned.

[2] However, there is an issue as to whether the supplementary advance payment of $80,000 on October 5, 1999 was made in compliance with section 20(12). This was not addressed in the February 12, 2001 decision. Section 20(12) provides that "[t]he 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)." If the payment did not comply with section 20(12), then section 45(4) and (5) of the Act need to be considered to determine whether this $80,000 should be excluded from the advance payment. If the $80,000 is excluded, the compensation awarded would be 116.7% of the advance payment of $1,800,000. Since this percentage is more than 115%, under section 45(4) the board would have no discretion and the claimant would be entitled to its costs. This is an application by the respondent seeking an Order confirming that the supplementary advance payment of $80,000 served on the Claimant on October 5, 1999 be included in the calculations for purposes of section 45(5) of the Act.

2.  Background

[3] The circumstances surrounding the second payment by the respondent are as follows. The compensation hearing was originally scheduled for twelve days commencing on Wednesday October 13, 1999 in Campbell River. On August 12, 1999, David Aberdeen, an independent appraiser, was retained by the respondent to provide litigation support for the compensation hearing in this matter. In mid-September 1999 Mr. Aberdeen reviewed the report of the appraiser, Paul Peppiatt, who had been retained by the respondent. As a result of that review the appraisal report was amended to correct two errors and this revision was completed on Friday September 24, 1999. The revised market value was $1,880,000, $80,000 higher than the previous opinion of market value. On Tuesday September 28, 1999, David Aberdeen requisitioned a supplementary advance payment, to reflect this $80,000 increase in the market value, plus interest, to be served on the claimant or its solicitor by October 1, 1999. The respondent initially made out the cheque to the lawyer who had previously been counsel for the claimant. An internal memo dated Thursday September 30, 1999 requests the cheque to be made out to current counsel, John C. Coates, Q.C. "In Trust". On the same day, September 30, 1999, Cam Macleod, the Property Acquisition Coordinator for the Vancouver Island Highway Project and an employee of the respondent, contacted claimant's counsel, Mr. Coates, presumably by telephone, in order to arrange for service of the cheque on Friday October 1, 1999. Mr. Coates resides on Mayne Island and the address of his office on his letterhead is a Rural Route address on Mayne Island that does not specify a street address that can be located by a process server. Very unfortunately on September 29, 1999 a member of Mr. Coates' family had passed away and he told Mr. Macleod that he was unavailable to accept service of the cheque. He recommended that the cheque be served on John McDougall, principal of the claimant instead. Efforts to serve Mr. McDougall at his home in Campbell River were made by the process server on Friday October 1, 1999 and Saturday October 2, 1999. Mr. McDougall subsequently testified that he was in Newfoundland on Friday October 1, 1999. The process server was eventually successful in serving Mr. McDougall on Tuesday October 5, 1999. It was agreed by the parties that there was no basis for alleging that the claimant was avoiding service.

[4] As a result of Mr. Coates' circumstances, there was discussion about starting the scheduled compensation hearing at a later date. On or about October 1, 1999, according to affidavit evidence, both counsel agreed in consultation with the Registrar of the board that the commencement of the hearing would be delayed one day to Thursday October 14, 1999. We were not told whether Mr. McDougall was consulted about the rescheduling of the hearing. The hearing did commence on Thursday October 14, 1999. Thus, Mr. McDougall was served less than ten days before the compensation hearing began.

3. Preliminary Application - Affidavit evidence

[5] A preliminary application was made by the claimant seeking the exclusion of certain correspondence in the affidavit of David Aberdeen, who was acting as agent for the respondent with respect to litigation support in this matter.

[6] Mr. Coates, counsel for the claimant, referred us to Rule 51(10) of the Rules of Court which sets out the law on the content of affidavits. He made a general objection to hearsay in Mr. Aberdeen's affidavit, but this objection was not particularized or vigorously pursued. His main objection was to some correspondence between counsel with respect to the second advance payment and the possible effect of section 20(12). These letters were attached as Exhibits H, I, J, and K to paragraph 15 of Mr. Aberdeen's affidavit. Mr. Coates had two bases for his objection. First he alleged that the four letters in question were not relevant. The interpretation of section 20(12) did not depend on counsels' opinions as set out in the correspondence. Second he submitted that Exhibits I, J, and K were prejudicial to the claimant. He did not object to the first letter from respondent's counsel, Exhibit H, which raised the issue of whether section 20(12) had been considered. However, Exhibits I, J, and K were correspondence between counsel which was meant to be confidential; he had not intended for them to be put before the Board. Counsel for the respondent in placing the correspondence before the Board was being wilfully prejudicial in including Exhibit I and K. While counsel for the respondent in her letters, Exhibit H and J, had reserved the right to bring these letters to the Board's attention, this reservation did not apply to his replies, Exhibit I and K, which should be struck. Mr. Coates referred us to Foote v. Foote (1986), 6 B.C.L.R. (2d) 237 (B.C.S.C.) where the chambers judge, Spencer J., held that particular paragraphs in an affidavit should be expunged because they were irrelevant and wilfully prejudicial. In Foote the mother was seeking an order that the father be denied access to the daughter, aged 41/2, and in her affidavit stated that the father had been arrested and charged with respect to sexual abuse. Because these charges did not proceed to a conviction, the reference to them was irrelevant and prejudicial.

[7] Ms. Crowhurst, counsel for the respondent, submitted that the letters were included to provide all the evidence with respect to the respondent's efforts in making the second advance payment and in notifying counsel for the claimant of this legal issue. This evidence was necessary to show the bona fides of the respondent on this issue. In addition, as indicated above, in Letters H and J she had expressly reserved the right to bring these letters to the attention of the Board with respect to submissions on the date of receipt of the second advance payment and on entitlement to or quantum of costs. The respondent relied on British Columbia Society for the Prevention of Cruelty to Animals v. Barr, [1946] 1 D.L.R. 292 (B.C.C.A.) as authority for the proposition that where the grounds or source of a deponent's belief are not expressly provided, they may sometimes be implied.

[8] Unless it is marked "without prejudice", we do not agree that correspondence between counsel is normally considered to be confidential. It is fairly well understood by counsel that letters between counsel frequently end up in affidavits as evidence of the communications between them that have led to the application. This is particularly so when counsel on one side indicate that they intend to bring the correspondence to the attention of the board on specific applications. We agree with Mr. Coates that his correspondence is not, in fact, relevant to any issue that we must decide. As a result we have given no weight to Exhibits I and K, and indeed have ignored them. However, we do not think that in these circumstances the unusual step of striking these exhibits needs to be taken. See Evans Forest Products Ltd. v. British Columbia (Chief Forester) (1995), 40 C.P.C. (3d) 322 (B.C.S.C.) and Chamberlain v. School District No. 36 (Surrey) (1998), 168 D.L.R. (4th) 222 (B.C.S.C.).

4.  Should the supplementary advance payment be included in the calculations set out in section 45(5)?

4.1 Statutory Framework

[9] Relevant portions of the Act are:

20	(1)	Within 30 days after
		(a)	an order is filed under section 5(4)(b),
		(b)	the approving authority complies with section 18(2) or (3), or
		(c)	an agreement is made under section 3(1),
		the expropriating authority must
		(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
		(e)	serve on the owner a copy of all appraisal and other reports on which the payment is based.
	(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.
	(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).
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.
	(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.

4.2 Respondent's position

[10] The respondent's position was that the circumstances in this case were such that it had endeavoured to serve the claimant within the time limit. It recognized the benefit of the advance payment provisions in section 20, that require the authority to make an advance payment to an owner based on an independent appraisal within 30 days of certain steps in the expropriation procedure. The legislation does provide for supplementary advance payments and the respondent has attempted to explain the factual basis for the reason why the payment was made and the date of its delivery on Mr. McDougall. We were asked to consider the interest that the time limit in section 20(12) was designed to protect. If we hold that the second payment of $80,000 was made outside section 20(12), then the respondent suggested that this payment might be included in the words "or otherwise" in section 45(4) and (5) "under section 20 (1) and (12) or otherwise".

[11] The respondent referred us to a Federal Court decision, Cotton v. The Queen (1976), 10 L.C.R. 39 (F.C.); affd (1976), 10 L.C.R. 350 (F.C.A.), in which certain supplementary offers of compensation were made. The Federal Act required the Minister to make an offer of compensation within 90 days of certain steps, with the amount based on a written appraisal that must accompany the offer. The Federal Court of Appeal upheld the trial division finding that the two supplementary offers (and payments) should be considered as additions to the earlier advance payment made in accordance with the Federal Act. Urie J. speaking for the court stated at p 358 that there was nothing in the section to preclude the Minister amending his initial offer of compensation nor did the section require a written appraisal to justify the supplementary offer. In addition, the supplementary offer stated on its face that the extra money was made pursuant to the statutory provision for the advance offer. There was no suggestion that anyone was deceived or misled by the supplementary offer. The Federal Act, unlike the British Columbia Act, made no express provision for any supplementary payments, and therefore provided no time limit on the supplementary payments. Notwithstanding the differences in statutory framework, the respondent urged us to consider the Federal Court of Appeal's comments on this matter.

4.3 Claimant's position

[12] The claimant's position was that the provision was designed to preclude last minute increases in the advance payment within 10 days of the commencement of the compensation hearing. The payment did not meet the time limitations and should not be included. There was no reason why the error in the appraisal report could not have been discovered at a much earlier date since it had originally been prepared for the purpose of the advance payment in January 1997, over two years before. It referred us to the principle of strict compliance with respect to requirements in expropriation procedure as found in Costello v. Calgary (City) (1983), 26 L.C.R. 97 (S.C.C.). In that case the municipality had sent notice of an expropriation bylaw to one of the property owners 17 days prior to the council meeting rather than the statutory requirement of "not less than three weeks". As a result, the bylaw was void.

[13] With respect to the respondent's argument to include the supplementary payment in the phrase "or otherwise" in section 45(4) and (5) "under section 20 (1) and (12) or otherwise" the claimant referred us to an interpretation of those words in section 46(1) in Jesperson's Brake & Muffler Ltd. v. Chilliwack (District) (1994), 52 L.C.R. 95 (B.C.C.A.); leave to appeal dismissed (1994) 93 B.C.L.R. (2d) xxxviii (S.C.C.). Mr. Justice Finch, in considering what interest was payable under section [46(1)], stated that the Board correctly found that compensation awarded for pure injurious affection came within the words "or otherwise" in reference to "section [20(1)] or [20(12)] or otherwise" since such an award would be one made outside of section [20].

4.4 Analysis

[14] Mr. McDougall was not physically served with the cheque within the time limits specified in section 20(12). The issue is whether the failure to physically serve the cheque within the time limits specified in section 20(12) results in the second payment being excluded under section 45(5).

[15] The debate in the Legislative Assembly on May 19, 1987, during the second reading of what is now the Act, emphasized the importance of the advance payment provisions. The former Attorney General of British Columbia, the Honourable Mr. Brian Smith, stated at p. 1212 of Hansard:

These advance payments provisions are a more important innovation, because they put the owner in funds so that he can take effective measures to obtain substitute premises. The payment does not in any way prejudice his right to have the amount of compensation determined by the Expropriation Compensation Board. So it's full, up front payment in advance of the appraised market value of that land ...

[16] The importance evidently attached to the making of adequate advance payment provisions is reinforced by the interest and cost procedures in section 46 and 45 of the Act respectively. In Golden Valley Golf Course Ltd. v. British Columbia (Minister of Transportation and Highways) (1998), 65 L.C.R. 151 (B.C.E.C.B.); revd on other grounds (2001) B.C.C.A 392, Madam Justice Newbury stated at par 28 "The costs provisions are obviously designed to encourage the expropriating authority not to be overly parsimonious in making an advance payment and therefore to encourage settlement..." At par 87 Madam Justice Rowles commented on the provision for a supplementary advance payment in particular: "Section 20(12) of the Act also indicates the function of sections 3 and 20 as facilitating settlement ... An increased payment may satisfy the owner, thereby causing the owner to discontinue the claim before the Board."

[17] While the objective of advance payments in general is to provide the owner with the amount the authority estimates will be payable as compensation, supplementary advance payments provide the authority with time to estimate some of those losses that are ascertainable only at some point after the date of taking. The supplementary advance payments also provide time for the authority to revise its opinion on the estimate of compensation or to obtain a second opinion.

[18] We do not accept the claimant's argument that the respondent had an obligation to make the second advance payment months earlier. While we agree that it would be desirable for any error in the advance payment appraisal to be discovered early (in order to provide the owner with the amount the authority estimates will be payable as compensation), under section 20(12) the authority had a right to make a supplementary advance payment at any time before the time limit. Although the respondent has no requirement to do so, it has reasonably explained the circumstances surrounding the timing and the amount of the supplementary advance payment.

[19] The rationale for the time limit in section 20(12) of a supplementary advance payment being made "at any time before 10 days before the beginning of a hearing" is to give the claimant a chance to consider the further advance payment and possibly settle the claim prior to the compensation hearing. It has some similarities to the provision for formal offers to settle in rule 37 of the British Columbia Rules of Court, the purpose of which is to encourage settlement, although the objective of costs in expropriation matters is somewhat different from that in civil litigation matters. See Baines v. British Columbia (Minister of Transportation and Highways) (1997), 62 L.C.R. 210 (B.C.E.C.B.). If an offer in a Supreme Court action is delivered at least 7 days in advance of the commencement of the trial, there is a potential for penalties in costs automatically applying from the date that the offer was received. If the offer is received less than 7 days before the trial, then the court may consider the offer and the date that it was delivered in exercising its discretion over costs.

[20] With respect to the principle found in Costello of strict compliance with the requirements set out as part of the expropriation procedure, we agree with this board's comments in Haughton v. Heffley Creek Waterworks District (1999), 66 L.C.R. 1 (B.C.E.C.B.). At p. 12 the board states that "insistence upon strict compliance with statutory requirements in expropriation matters may depend upon the importance attached to the requirement or upon the particular wording of the statute". It distinguished the circumstances in Costello where the non-compliance concerned a notice requirement to an owner about the meeting at which the expropriation bylaw was eventually passed with those in Rogers v. British Columbia (Minister of Transportation and Highways) (1995), 58 L.C.R. 141 (B.C.E.C.B.) where the non-compliance was with respect to the requirements of section 20. In Rogers the board decided as a matter of statutory construction that strict compliance with every requirement of section 20 was not a precondition to the running of time under section 25.

[21] The evidence establishes that Mr. Coates, counsel for the claimant, was contacted on Thursday September 30, 1999 by Cam Macleod, a Property Acquisition Coordinator with the respondent, in order to arrange for service of the cheque for the supplementary advance payment on Friday October 1, 1999. Mr. Coates evidently did not have anyone in his office who could accept service of the cheque on his behalf. Instead, Mr. Coates recommended that the cheque be served on John McDougall, principal of the claimant. The process server attempted service on Mr. McDougall in Campbell River on Friday October 1 and on Saturday October 2, 1999 but Mr. McDougall was in Newfoundland. Mr. McDougall was eventually served with the cheque and the Notice of Supplemental Advance Payment on Tuesday, October 5, 1999, a date that was less than 10 days before the beginning of a hearing to determine the compensation. However, Mr. Coates knew about the advance payment at a date that was within the time limits and the authority, following Mr. Coates' recommendation, had done what it could do to serve the cheque within the time limits. It was only as a result of a series of unfortunate circumstances that actual service of the cheque could not be effected within the time limit: Mr. Coates could not accept service, Mr. Coates did not have anyone else in his office that could accept service on his behalf, and the principal of the claimant, whom Mr. Coates had recommended the authority serve instead, was in Newfoundland during the relevant time frame.

[22] Section 20(2) provides that a payment under section 20(1)(d) is deemed to be made when the expropriating authority tenders the amount of the payment in cash or by cheque, draft, telegraphic or electronic transfer or any other prescribed method. This subsection does not say that it applies to section 20(12). But a cardinal principle of interpretation is that the Act must be read as a whole. If we read section 20(12), 20(1), and 20(2) together, in our opinion, 20(2) can be construed to apply to section 20(12) as well as to 20(1)(d). The increase in the advance payment is deemed to be made at the time that the authority tenders the amount of the payment to the owner or to the order of the owner.

[23] Blacks Law Dictionary 5th ed. defines "tender" as the act by which one produces and offers to a person holding a claim the amount of money which he considers and admits to being due, without any conditions. Essential characteristics of tender are unconditional offer to perform, coupled with manifested ability to carry out the offer, and production of the subject matter of tender. A distinction is made between the actual proffer of money and mere proposal to proffer it. In our view, in the special circumstances of this case, Mr. Macleod's telephone contact with Mr. Coates on Thursday September 30, 1999 and the process server's unsuccessful attempt to serve the cheque on Friday October 1, 1999 and on Saturday October 2, 1999 can be construed to be a tendering of the supplementary advance payment. The essential characteristics are present: an unconditional offer that was communicated to claimant's counsel, a manifest ability to fulfil payment, and production of the cheque, which unfortunately could not be served on Mr. McDougall, despite efforts to do so, as he was in Newfoundland. It was more than a mere proposal to pay money.

[24] In the alternative, we think that it can be said that the principle of estoppel applies in this case. The principle of estoppel has been applied in a number of board decisions including Hollis v British Columbia (Minister of Forests) (1998), 64 L.C.R. 45; Golden Valley; and Hansen v. British Columbia (Minister of Transportation and Highways) (1998), 65 L.C.R. 127; affd (2000) 66L.C.R. 234 (B.C.C.A.). The Court of Appeal has set out a test for estoppel in Litwin Construction (1973) Ltd. v. Pan (1988), 29 B.C.L.R. 88 (B.C.C.A.) at 95:

Has the party invoking the statute affirmed the contract unequivocally by his words or conduct in circumstances making it unfair or unjust for him now to resile from that contract? ... The underlying concept is that of unfairness or injustice and it is not essential to its application that there be knowledge, detriment, acquiescence, or encouragement although their presence may serve to raise the unfairness or injustice to the level requiring the exercise of judgment.

In this case we have a time limitation for a supplementary advance payment. Counsel for the claimant was unable to accept service of the advance payment within the time limit. He had no one else in his office to accept service on his behalf. He recommended that the respondent instead serve the principal of the claimant. The respondent attempted to serve the principal of the claimant within the time limit, but could not do so because the principal was in Newfoundland. We think that in these circumstances it is unfair and unjust for the claimant to now rely on section 20(12) and assert that the respondent's failure to meet the time limit renders the second payment non-complying with section 20(12).

4.5 Conclusion

[25] We have concluded that the supplementary advance payment of $80,000 that was physically served on Mr. McDougall on October 5, 1999 should be included in section 20(12) as a supplementary advance payment. Having found that the supplementary advance payment is included in section 20(12) we do not need to consider the argument as to whether it should be included in the phrase "or otherwise" in section 45(4) and (5) "under section 20 (1) and (12) or otherwise". As a result of the $80,000 being included in section 20(12), it is also included in the calculations for purposes of section 45(5) of the Act. It follows that the board has discretion with respect to the amount of costs to be awarded to the claimant.