November 25, 1999,  E.C.B. No. 39/94/176 (68 L.C.R. 167)

* Fiona M. St. Clair Presided over the hearing of this matter but subsequently left the board and did not participate in these reasons for decision.

REASONS FOR DECISION

1. INTRODUCTION

The claimants, Peter Panagiotis Daflos and Evanthia Daflos ("the Dafloses"), were the registered owners in fee simple of a two acre parcel of property located at 23901 Dewdney Trunk Road in Maple Ridge, British Columbia, legally described as: Parcel Identifier 000-857-076, Lot 11, Section 21, Township 12, New Westminster District, Plan 33977 (the "subject property"). They bought the subject property, which was improved with a one storey "ranch" style residence and detached outbuilding, in May, 1989 for $220,000 and made it their family home. In July, 1991, they attempted unsuccessfully to subdivide the subject property into approximately 11 building lots as part of a joint application with the owners of two neighbouring parcels. Shortly afterward, they listed the subject property for sale at an asking price of $825,000 but received no written offers. Over the years the Dafloses heavily mortgaged and re-mortgaged the subject property, including granting a registered third mortgage for $350,000 in November, 1993 to Peter Daflos's father, the claimant Konstadinos Daflos.

On September 14, 1995, the respondent, The Board of School Trustees of School District No. 42 (Maple Ridge-Pitt Meadows) (the "School District"), expropriated the Daflos's property for the purpose of constructing a new school maintenance facility. The expropriation followed several years of intermittent negotiations between the parties. At the time of the taking the School District made an advance payment of $450,000 under what is now section 20 of the Expropriation Act, R.S.B.C. 1996, c. 125 (the "Act"), for what it estimated was or would be payable as compensation. The advance payment was based on an appraisal report dated August 10, 1994 and updated on January 30, 1995, which valued the subject property for single family residential use at between $430,000 and $450,000. Subsequently, the School District commissioned a further appraisal which estimated the market value of the subject property at the date of expropriation to be $515,000. In August, 1996, the School District made a further advance payment of $65,000. The advance payments totalling $515,000 were sufficient to pay out fully the first and second mortgages registered on title and to pay to Konstadinos Daflos on account of his third mortgage a total of $162,774. The School District says no further compensation is payable.

The Dafloses seek further compensation from the School District and have applied to the board for a determination of the amounts to which they are entitled. In their further amended statement of claim dated August 13, 1997 and filed with the board at the commencement of the compensation hearing, the Dafloses claim $645,000 for the market value of the subject property under section 31 of the Act and $130,084 for disturbance damages under section 34(1)(a) of the Act. Those alleged damages are made up entirely of mortgage expenses which they say they incurred as a direct result of both the threat or "aura" of expropriation associated with the subject property from at least the early fall of 1991 and pre-expropriation delay on the part of the School District. They also claim for disturbance damages under section 34(1)(b) for the reasonable costs of relocating to other land, costs under section 45, interest under section 46, and penalty interest under section 47(b) for what they say was the School District's unreasonable delay in proceeding with the expropriation.

Konstadinos Daflos was formally added as a claimant at a late stage in the proceedings but the parties agree, and the board accepts, that he is an "owner" for the purposes of the Act. He relies primarily on the Dafloses' further amended statement of claim in respect of his own claim for compensation as a security holder for the market value of his security interest. However, he also claims disturbance damages amounting to $5,250 for three months' interest on the principal balance of his third mortgage under section 5(1) of the Expropriation Act General Regulation, B.C. Reg. 451/87 (the "General Regulation").

The compensation hearing in this matter took place in Vancouver, B.C. Both Peter Daflos and Evanthia Daflos gave evidence on their own behalf. The other witnesses for the claimants were Ken Hollett, an accredited real estate appraiser with the firm of Collingwood & Associates, who testified concerning his appraisal report on the subject property dated June 13, 1997, and Norman Starnaman, the mortgage manager for Village Credit Union which held a first mortgage charge over the subject property. Additionally, Adam Andruschak, secretary-treasurer of the School District, was called and cross-examined by the claimants as an adverse witness. The sole witness appearing on behalf of the School District was Reid S. Umlah, an accredited real estate appraiser with Hooker Carmichael Property Consultants Ltd., who testified concerning the appraisal report he had prepared dated June 25, 1997.

2. BACKGROUND

Based upon its assessment of the oral and documentary evidence adduced, the board makes the following background findings in this matter.

2.1 The Daflos Family

Peter Daflos, who was 46 years of age at the date of the hearing, emigrated to Canada from Greece in 1970. Since that time he has been involved primarily in the restaurant business. He testified that, in the years leading up to the expropriation, he owned five such businesses, including a company known as Jim's Pizza (1980) Ltd. He married Evanthia Daflos and the couple have three teenaged children. Evanthia Daflos worked as a cook at the Jim's Pizza outlet and together they operated the business. Until May of 1989 the Dafloses lived in a smaller rancher located on 124th Avenue in Maple Ridge but sold that home in trade and moved to the subject property partly, they testified, to accommodate the needs of a growing family. Initially, one of the Daflos's nieces from Greece who was attending university boarded with them. Also, Konstadinos Daflos emigrated from Greece in the fall of 1989 and lived with the family from time to time for the next six or so years. At the date of the hearing he was 85 years old and residing once more in Greece.

2.2 The Subject Property

The subject property is a long rectangular shaped and generally level parcel. It measures 121.75 feet in width, fronting the north side of Dewdney Trunk Road, and 717.76 feet in depth, for a total area of approximately two acres. The parcel adjacent to the east of the subject property is a municipal works yard and immediately beyond that is an elementary school. The parcels adjacent or close by to the west and north, prior to their acquisition by the School District, comprised residential acreages. At the date of expropriation, the front portion of the subject property to a depth of about 250 feet was improved with a residence and an outbuilding variously described as a garage, barn or workshop. The next 250 feet was improved with a fenced riding circle while the rear 200 feet or so was generally cleared but vacant land.

The residence in which the Dafloses have lived since 1989 is a substantial single storey structure, built in the early 1970s, comprising six bedrooms and three bathrooms, with an attached double garage. There is a minor discrepancy in the evidence provided by the appraisers as to the precise main floor area, but the board is satisfied that it totals approximately 2,950 square feet with the attached garage occupying an additional 576 square feet. At the date of expropriation the residence was evidently in good repair.

Shortly after purchasing the subject property, the Dafloses bought additional furnishings and undertook interior renovations and exterior improvements which included roof repair, driveway paving, landscaping and fencing. Peter Daflos testified that the expenses incurred were largely paid for by his father and that they brought the family's total investment in the subject property up to $300,000. An above ground swimming pool was also added at some point prior to the date of expropriation.

2.3 Mortgage Financing

The history of mortgage financing by the Dafloses with respect to the subject property reveals a pattern of ever-increasing borrowing. Initially, at the time of purchase, the Dafloses secured an amortized first mortgage of $161,000 from the National Bank of Greece. The mortgage was for a three year term with interest at the rate of 12.75% per annum. Within two and a half months, the Dafloses obtained a second mortgage for $58,000, repayable on demand, from the same lender. Interest under this mortgage was calculated at the lender's prime rate plus 2% per annum (15.5% initially). The mortgage was said to be collateral security for the lender's advance of monies to Jim's Pizza (1980) Ltd. In August, 1990, the Dafloses added a third mortgage of $40,000 from the National Bank of Greece. It carried an initial one year term with interest at the rate of 16.5% per annum. In other words, within fifteen months of purchase, the Dafloses had mortgaged the subject property in the total principal amount of $259,000.

It became necessary for the Dafloses to refinance the subject property during 1992. For that purpose they engaged the services of a mortgage broker, Delta Equities Ltd. In July of that year they secured a new amortized first mortgage of $300,000 from Village Credit Union out of the proceeds of which they paid off the three existing mortgages to the National Bank of Greece. The new mortgage was initially for a one year term with interest at the rate of 8.75% per annum. In November they obtained an interest-only second mortgage for $47,000 from private lenders, Germain Paul Bonin and Helen Bonin. This mortgage was also for a one year initial term with interest at 17.16% per annum. Both the first and second mortgages were extended beyond their initial terms. Finally, in November, 1993, as already noted the Dafloses granted a third mortgage for $350,000 to Konstadinos Daflos. Its terms reflected that interest was to run at the rate of 6% per annum and that the mortgage was repayable on demand. Therefore, by the end of 1993, the Dafloses had mortgaged the subject property in the total principal amount of $697,000. Peter Daflos's evidence at the compensation hearing was that, by the time of expropriation, the total indebtedness under the mortgages had reached about $850,000.

The board pauses in its factual narrative at this point to observe that the relevance of the pattern of borrowing to this matter lies in the Daflos's allegations that the School District's conduct prior to expropriation caused them severe economic hardship, forcing them to do further borrowing simply to "stay afloat", to pay a mortgage broker in order to find willing lenders, and to pay mortgage interest at rates significantly above those normally charged. These allegations form the basis for claims for disturbance damages which comprise $6,850 in mortgage brokerage fees paid to Delta Equities Ltd., $7,025 for interest on the first mortgage to Village Credit Union charged at higher than the posted rates, $53,095 in both principal and interest on the new second mortgage, and $63,114 in interest owing on the third mortgage to Konstadinos Daflos. The School District denies that any of these financial costs are referrable to the expropriation. Based largely on Peter Daflos's own testimony, it submits that what really was taking place was an "intermingling" of personal and business funds, the latter going to support restaurant businesses which he indicated had become less profitable.

2.4 Land Use Regulations and Development Efforts

Although from the time they purchased the subject property the Dafloses used it as their family home, they testified that they viewed it as an investment property for redevelopment within the first three years. At that time the immediate vicinity of the subject property, north of Dewdney Trunk Road and known as the "North Cottonwood" area, remained primarily rural residential except for the institutional uses already referred to. The subject property, like those adjacent to the west, was zoned RS-3 (One Family Rural Residential), which required a minimum lot size of 1.98 acres and permitted only one dwelling unit per lot together with associated agricultural uses. It had been removed from the Agricultural Land Reserve in 1988 but was still designated "Agricultural" in the Official Community Plan ("OCP"). However, the neighbourhood was also in transition from rural to urban densities, reflected in the growing number of development inquiries and proposals.

During the spring and early summer of 1991, the Dafloses, who had no previous development experience, agreed to co-operate with the owners of two adjacent parcels in a proposed subdivision of their respective properties. Mr. and Mrs. Lutsch owned a two acre parcel to the west, on which was located a small, one storey rental house. The configuration of the Lutsch parcel was almost identical to that of the subject property. The two parcels were separated by a slightly larger panhandle lot owned by Mr. and Mrs. Bloy on which there was also a single family residence. Together the three parcels created a rectangular assembly comprising 6.37 acres, which the owners proposed to subdivide into 36 single family lots of approximately 6,000 square feet each, retaining the Daflos's residence on a double lot.

In May, 1991, the planning firm, Genesis Development Consultants Ltd., prepared a subdivision plan for use by the owners. On June 21, 1991, Peter Daflos entered into a memorandum of agreement with Mr. Lutsch and Mrs. Bloy with respect to the proposed subdivision. In early July, the owners through a real estate agent, Rick Schmidt, made an application to the District of Maple Ridge to amend the OCP and to have the parcels rezoned RS-1b (One Family Urban (medium density) Residential). In September, the District's planning department recommended that the application be denied as premature. The primary reason given was lack of sewer capacity to service the proposed subdivision. However, the planning department also recommended that staff review the parcels in question for possible inclusion into the urban boundary as an expansion of the Cottonwood urban area. Both those recommendations were accepted by the District's municipal council on October 7, 1991.

The Dafloses made no further efforts to pursue this land assembly after the rejection of the rezoning application. Peter Daflos testified that he believed it would be necessary to wait six months to a year before reapplying, by which time he anticipated that a cannery in the area which had once utilized any excess sewer capacity would be dismantled. In the meanwhile, the Dafloses listed the subject property for sale, apparently trying to capitalize on the indication that the municipality was reviewing the area for possible inclusion into the urban boundary. There was evidence to confirm that the subject property was listed in the multiple listing service catalogue by at least March, 1992 at an asking price of $825,000. On May 30, 1992, the School District purchased the Bloy's property, ending any prospect of proceeding with the land assembly involving the three parcels. There was no documentary evidence of any other development plans by the Dafloses thereafter, but Peter Daflos testified that he had retained an architect to prepare plans for a townhouse development on the subject property sometime prior to early November, 1993.

From the time of the unsuccessful effort to rezone and subdivide in July, 1991 up to the date of expropriation in September, 1995, the subject property continued to be zoned RS-3. In late 1993 it was redesignated "Institutional" within the OCP. On June 13, 1994, the District of Maple Ridge adopted a further amendment to the OCP known as the "North Cottonwood Urban Area Plan". With the exception of those parcels designated for existing or proposed "Institutional" uses, which included the subject property, the North Cottonwood Urban Area Plan proposed mainly single family urban residential redevelopment to a maximum of 7 units per acre. Additionally, land fronting on Dewdney Trunk Road to the west of the subject property was designated for future "Service Commercial" use. These were the relevant OCP designations in place at the date of expropriation.

2.5 Pre-Expropriation Negotiations

During 1991 the School District was reviewing options for the future site of a new maintenance shop. One of those options, proposed by the District of Maple Ridge, was to acquire land adjacent to its municipal works yard comprising the subject property together with the parcels owned by the Bloys and the Lutsches. On July 16, 1991, Mr. Andruschak, the secretary treasurer of the School District, wrote to the deputy planner for Maple Ridge to indicate the School District's agreement with that proposal. He added:

"We want to begin negotiations soon, but understand there is a rezoning application underway. We would like to start negotiations after the application has been dealt with by Council, because it is in our best interest to do so."

On October 8, 1991, one day after Maple Ridge council rejected the rezoning application, the School District at a closed meeting approved the location of the new maintenance facility and directed Mr. Andruschak to proceed with negotiations for acquisition.

The negotiations between the School District and the Dafloses proved to be difficult and protracted. The parties were far apart on the question of what the subject property was worth. The Dafloses also wished to remain in their family home. The School District retained Paul Kundarewich, a real estate appraiser, to attempt to reach an agreement. There is evidence that he visited the subject property as early as June 21, 1991, to carry out an appraisal, and that he pursued discussions with the Dafloses in the late fall of that year. The Dafloses had some harsh words at the hearing for Mr. Kundarewich's methods, which they described as aggressive and intimidating. He had, they said, threatened to isolate the subject property and reduce its value if they failed to co-operate. The Dafloses retained a lawyer, Jeffrey Hayes, to advise them and a real estate appraiser, Brian K. Davies, to act as a consultant in the negotiations.

For several months in early 1992, the parties through their agents and advisors discussed the possibility of entering into an agreement pursuant to section 3 of the Act. However, in April of that year, the School District evidently abandoned that course and, instead, made a direct offer to purchase the vacant rear portion of the subject property approximating one acre in size. The price offered was $100,000, and the offer was made subject to obtaining various approvals and to being able to acquire the adjacent Bloy property. It also provided that the School District would have a right of first refusal to purchase the rest of the subject property, once subdivided, if the Dafloses decided to sell. The Dafloses refused the offer, which Peter Daflos at the compensation hearing described as "insulting". On May 30, 1992, the School District succeeded in purchasing the Bloy property for the price of $445,000. On July 20, 1992, the School District renewed its offer to the Dafloses to purchase the one acre portion but now at a price of $116,000. At the same time, they offered to purchase the whole of the two acre Lutsch property for $230,000. Both offers were refused.

Ultimately, the School District decided to resort to expropriation of the remaining lands it required. On June 8, 1993, the School District approved a bylaw authorizing the expropriation of the Lutsch property. Two weeks later it passed the following resolution:

"That the Board direct the Secretary Treasurer to proceed with the expropriation of the complete parcel of land presently owned by Mr. Daflos and required by the Board for the future Maintenance site facility."

The School District proceeded to expropriate the Lutsch property on October 29, 1993. However, it did not proceed at that time to expropriate the subject property. Mr. Andruschak, during his testimony at the compensation hearing, suggested this was mainly because the School District was continuing to talk to Peter Daflos and considering various alternative proposals he had made. However, it is clear to the board from a review of internal documents of the School District that a more compelling reason for not doing so was lack of approval from the Ministry of Education for the additional funding required. On February 9, 1994, in response to an open letter to both the School District and the District of Maple Ridge from Peter Daflos, expressing his frustrations and asking to be expropriated, the chairman of the School District wrote in part:

"What is clear however, is that the Board intends to expropriate your land which is required for the District's future maintenance and operations centre. The Board regrets it was unable to satisfactorily achieve a mutually agreeable price for the sale of land, and now finds it necessary to expropriate.

The Board has applied to government for the required funds to pay you when the land is expropriated, however, these arrangements are still in process and we await authorization from the government."

By early May, the Dafloses had involved their local M.L.A. in the issue, but it appears that the anticipated funding authorization did not come until the fall of 1994.

2.6 The Expropriation

On November 8, 1994, the School District passed bylaw no. 4-94/95 authorizing the expropriation of the subject property. An expropriation notice dated November 15, 1994 was filed in the New Westminster Land Title Office on November 18, 1994 and was served on counsel for the Dafloses on November 28, 1994. However, it was not until July 12, 1995 that the School District issued a certificate of approval of the expropriation, and not until September 14, 1995 that it filed its vesting notice respecting the subject property in the land title office.

The board finds the explanation for the further delay in expropriation proceedings largely in the fact that the Dafloses, on December 7, 1994, filed with the board a notice of request for an inquiry under section 9 of the Act. The request was based on their contention that the proposed expropriation of the whole of the subject property was not necessary to achieve the objectives of the School District and that its objectives could be better achieved by varying the amount of land to be taken. The board appointed an inquiry officer and its files show that the inquiry officer conducted a hearing into the matter on April 11, 1995. At the request of the parties, the inquiry was twice adjourned to allow settlement discussions to take place, and was permanently adjourned as of May 29, 1995. The intended expropriation could not proceed while the inquiry was still underway.

The settlement which resulted in abandonment of the inquiry concerned only the Daflos's right to remain in their home on the subject property pending resolution of the issue of compensation. At the time of the compensation hearing, the Dafloses were continuing to live there under a lease arrangement. Counsel for the parties drew to the hearing panel's attention the relevant clause of the settlement agreement which was finalized on June 30, 1995. It reads:

[T]he [School] Board will direct the Expropriation Compensation Board to determine the compensation issue as if the Lease had not been granted, without deducting the value of the Tenancy or salvage rights from, or adding any damages resulting or arising from or relating to the continued occupancy by Mr. and Mrs. Daflos to, the compensation otherwise payable.

3. THE ISSUES

Because at the date of the compensation hearing the Dafloses continued to reside on the subject property, the parties agreed that the board's consideration of the claim for disturbance damages for the reasonable costs of relocating to other land under section 34(1)(b) of the Act should be deferred to a later time. That being the case, the issues which the board must determine at this juncture are as follows:

(1) What was the highest and best use of the subject property on September 14, 1995, the date of expropriation, and was that use different from the then existing use?

(2) What was the market value of the subject property on September 14, 1995?

(3) Are the Dafloses entitled to disturbance damages in addition to an award for market value and, if so, do they have compensable claims under section 34(1)(a) of the Act for mortgage expenses?

(4) Is Konstadinos Daflos entitled to disturbance damages for three months' interest on the principal balance of his third mortgage under section 5(1) of the General Regulation?

(5) Has any of the parties caused an unreasonable delay in proceedings such that the party should be subject to interest penalties under section 47 of the Act?

(6) Are the claimants entitled to their actual reasonable legal, appraisal and other costs under section 45 of the Act?

4. HIGHEST AND BEST USE

The board recognizes that it is the determination of the highest and best use of a property at the moment of expropriation which is the cornerstone of any attempt under the Act to estimate the market value of that property. In the present instance, the parties are essentially agreed on the highest and best use of the subject property as of September 14, 1995, the date of expropriation. Mr. Hollett, the Daflos's appraisal expert, expresses it in his report as

. . . a holding investment, with potential for subdivision of the site as part of an assembly with the two adjacent lots to the west, in conformity with the potential uses of the Residential designation, and possibly also the Service Commercial designation. (p. 19)

Mr. Umlah, the appraisal expert retained by the School District, concludes that the highest and best use is

As a holding site for short term single family residential and medium to long term service commercial redevelopment within the context of an assembly. (p. 1)

The rationale for characterizing the subject as a holding property, on which both parties agree, is set out by Mr. Umlah at p. 27 of his report as follows:

It is often assumed that the concept of highest and best use must be associated with some form of immediate productivity or that the land must be fully developed and continually productive to have utility. This assumption ignores the possibility that the highest and best use of a vacant site may simply be to leave it in the state for a prescribed or indefinite period of time. Occasionally, sites are held in a vacant state by investors/developers awaiting certain events which will, at some point in time, result in a specific use.

In their respective discussions, the two appraisers arrive at the same opinion on a number of other salient considerations. First, although at the date of expropriation the subject property (as well as the former Lutsch and Bloy properties adjacent) were designated "Institutional" within the OCP, both appraisers disregard that designation on the grounds that it was put in place to accommodate the School District's proposed maintenance facility. This treatment accords with section 33(g) of the Act which provides:

33. In determining the market value of land, account must not be taken of

(...)

(g) any increase or decrease in value of the land that results from the enactment or amendment of a zoning bylaw, community plan or analogous enactment made with a view to the development in respect of which the expropriation is made.

Accordingly, the appraisers have concluded as to highest and best use on the basis of the most reasonable and probable alternative use. Given that, at the date of expropriation, the remaining lands in the North Cottonwood Urban Area Plan (except for the municipal works yard and the elementary school) were designated within the OCP for mainly single family urban residential redevelopment, and that lands fronting on Dewdney Trunk Road to the west of the subject property were designated for future "service commercial" use, the appraisers agree that the subject property as well as the two adjacent properties to the west would most likely also have had these designations as of September 14, 1995, but for the School District's plans.

Second, based largely on their review of documents in the municipal planning department, both Mr. Hollett and Mr. Umlah calculate that approximately 0.75 of an acre of the subject property offered potential for future service commercial uses under CS-1 zoning while the remaining 1.25 acres offered potential for urban residential subdivision under RS-1b zoning.

Third, there appears to be little or no disagreement on the horizon of development potential for the subject property. With respect to the residential component, both appraisers expressed the view that development could have been achieved in the "short term", which evidently contemplates a period not exceeding three years. With respect to the service commercial component, both Mr. Hollett and Mr. Umlah considered that such development could not have been realized for a number of years because there was insufficient residential development at the date of expropriation to support it. Mr. Hollett opined that such use would have been achieved in the "intermediate term" while Mr. Umlah said the "medium to long term".

Finally, the appraisers seemed to share the view that retention of the residence on the subject property, located as it is within that component which had service commercial potential, would have offered some holding value until such time as service commercial redevelopment was warranted. If the subject property had been assembled with the adjacent Lutsch and Bloy properties, they suggest, the rear portion might have been developed for urban residential use while the front portion retained its RS-3 zoning with the residence providing rental income to help offset holding costs. However, Mr. Umlah cautioned that, since the remainder parcel created by the assembly and subdivision would be below the two acre minimum required under RS-3 zoning, variance approval would be required.

The board accepts the foregoing analyses of highest and best use of the subject property provided by the appraisers in their respective reports. The board defers to the later discussion of the claims for disturbance damage its consideration of the further question as to whether highest and best use was the same as, or different than, existing use.

5. MARKET VALUATION

Because highest and best use of the subject property on September 14, 1995, the effective valuation date, has been determined to be a mixed use, comprising a residential component of 1.25 acres and a service commercial component of 0.75 acres, the board will consider the market valuation of each of these components in turn.

5.1 The Residential Component

Both the Dafloses and the School District relied upon the opinions of value expressed by their respective appraisers. The appraisers, in turn, relied upon the direct comparison approach in arriving at their estimations of the market value of the residential component. Mr. Hollett, the Daflos's appraiser, also performed an analysis of value using both the direct comparison approach and the cost approach on the alternative assumption that the entire subject property would be designated for residential use. However, since Mr. Hollett acknowledged that this was not its highest and best use, little attention need be paid to that alternative. The parties also urged the board to be guided in determining the market value of the residential component by the board's earlier decision in Lutsch v. School District No. 42 (Maple Ridge-Pitt Meadows) (1996), 60 L.C.R. 21, although for somewhat different reasons.

5.1.1 The Daflos's Case

(a) The Appraisal Evidence

It was Mr. Hollett's initial estimation that, under RS-1b zoning and at typical yields for subdivisions in the Maple Ridge area under that zoning, the subject property would have yielded about 11 lots within the context of an assembly with the two adjacent owners. Taking into account the service commercial component on the front portion of the subject property, however, the residential component on the rear portion would, in his opinion, have yielded a total of 7 lots.

In performing his direct comparision analysis, Mr. Hollett utilized 10 residential land sales in the vicinity, which he described as sales of acreages with subdivision potential that were either vacant or had improvements of nominal value. The parcels ranged in size from 1.47 to 8.37 acres and, like the subject property at the date of expropriation, were all zoned RS-3 at the dates of sale. Five of the sales took place during 1993, two years or more prior to the date of expropriation, and four others occurred during 1994. Mr. Hollett's data included the proposed subdivision for each of the parcels, ranging from between 4.0 and 7.3 lots per acre. From these proposed densities, he was able to calculate the price paid per raw lot as well as the price per acre for each sales comparable. The unadjusted prices per raw lot ranged between $40,909 and $67,500 while the prices expressed on a per acre basis ranged between $200,000 and $337,500.

Viewed from the perspective of price per raw lot, Mr. Hollett considered his best comparable in terms of location, date of sale, and development density to be his comparable no. 9. This was a 3.2 acre, irregularly shaped parcel of land at 12221 - 240th Street, fronting the west side of 240th Street and the south side of Heaps Avenue in the North Cottonwood Urban Area, northeast of the subject property. It sold in June, 1994 for $790,000, equating to a price of $246,875 per acre. The purchaser contemplated subdivision at a density of 5.0 units per acre resulting in a price of $49,375 per raw lot.

In Mr. Hollett's opinion, the price per raw lot indicated by comparable no. 9 was supported by his comparable no. 7. This was a much larger, nearly triangular shaped parcel comprising 7.06 acres at 23850 Heaps Road in the North Cottonwood Urban Area, almost directly north of the subject property. The sale date of this comparable, March of 1995, was closest in time to the date of expropriation. In his report Mr. Hollett had indicated a sale price of $1.7 million which equated to $240,793 per acre. Based on a proposed subdivision of the parcel into 35 lots at a density of 4.96 lots per acre, it equated to a price per raw lot of $48,571. However, at the compensation hearing, the Dafloses introduced into evidence through the appraiser a land title transfer document which indicated comparable no. 7 had actually sold for $1.846 million. Adjusting on this basis, Mr. Hollett derived $261,544 as the price per acre and $52,757 as the price per raw lot.

Viewed on a price per acre basis, Mr. Hollett concluded that comparable nos. 8 and 9, supported by comparable no. 7, offered the best sales comparisons. Comparable no. 8 was a rectangular shaped 1.47 acre parcel located at 12087 - 240th Street within the North Cottonwood Urban Area. It was situated to the east and slightly north of the subject property and similarly adjoined the municipal works yard. This parcel sold in September, 1994 for $378,800 which equated to $257,687 per acre. The purchaser anticipated subdividing it into seven lots at a density of 4.76 lots per acre, indicating a price per raw lot of $54,114.

Mr. Hollett took into account what he described as a change of conditions in the Maple Ridge residential market in the period leading up to the valuation date. At pp. 32 and 33 of his report, he observed that most of the comparable sales took place during 1993 and 1994, whereas "demand softened during 1995". This indicated to him that "some downward adjustment" was appropriate to most sales. Accordingly, based on his analysis of the comparables, he estimated the market value for the residential component of the subject property at the date of expropriation to be in the region of $46,000 per raw lot or $240,000 per acre.

Since Mr. Hollett considered that the residential component would have yielded 7 lots at $46,000 per raw lot, he calculated market value on this basis at $322,000. Alternatively, on a per acre basis, 1.25 acres at $240,000 per acre resulted in a market value of $300,000. Mr. Hollett simply averaged the two figures to arrive at the sum of $311,000, his final estimation of the market value of the residential component.

(b) Applicability of the Lutsch Decision

The Dafloses say that what the board determined as to market value in the Lutsch decision is also of assistance in the present case. In Lutsch the valuation date was October 29, 1993, and the highest and best use of the property at that date was held to be short term holding for future residential urban development within the context of an assembly comprising the three properties owned respectively by the Lutsches, the Bloys and the Dafloses. The board considered the evidence of the appraisers for the respective parties, who were in virtual agreement as to the raw lot value of the Lutsch property although not as to the number of lots likely to be obtained from that property or within the assembly as a whole. The Lutsch's appraiser, Mr. Erho, estimated the adjusted value at $45,050 per raw lot while the School District's appraiser, Mr. Umlah, estimated it at $45,000. Mr. Umlah also calculated the adjusted value per acre at $247,253 (rounded to $247,500). The board arrived at its final conclusion as to the proper measure of compensation by applying Mr. Umlah's raw lot value of $45,000 to the two acre Lutsch parcel within a 6.37 acre assembly of the three adjacent properties yielding 36 lots. This calculated to a market value for the Lutsch property of $508,634.

Although the Dafloses seek to rely in some respects on the Lutsch decision, they also point out that there are significant differences with the present case which require adjustment. For one, the expropriation there occurred nearly two years earlier, before changes were made to the OCP which made a portion of the subject property eligible for commercial redevelopment. For another, they say, the value determined in Lutsch should be adjusted to account for the value related to the house located on the subject property. As for any estimated decline in the residential market between the two valuation dates, the Dafloses maintain that the School District should have expropriated the subject property at the same time as they did the Lutsch property. They argue, therefore, that it would be unfair to consider any such decline in determining market value when the intervening delay was a result of the School District's conduct.

5.1.2 The School District's Case

(a) The Appraisal Evidence

For his direct comparison analysis of the residential component, Mr. Umlah selected sales of 7 parcels within the municipal boundaries of Maple Ridge. All of the comparables, he indicated, offered potential for urban redevelopment, mostly for subdivision into residential lots at the maximum density prescribed under RS-1b zoning. All but one were zoned entirely RS-3 at the dates of sale; his comparable no 6, located far to the west of the subject property in West Maple Ridge, had split RS-1/RS-3 zoning. All but two, Mr. Umlah reported, were in a similar raw development state as the subject property, with no active rezoning or subdivision applications in place at the time of sale. Most of the comparables were improved with single family residences capable, according to Mr. Umlah, of generating some holding income during the rezoning and subdivision approval process. The parcels ranged in size between 1.47 and 7.06 acres. Four of the sales occurred in 1994 or early 1995, while three of them took place after the date of expropriation, in two of those cases some eight and nine months later. Like Mr. Hollett, Mr. Umlah had information concerning anticipated subdivision of the parcels from which he was able to suggest probable densities. However, unlike Mr. Hollett, Mr. Umlah focused almost entirely on the price paid per acre for each of the comparables and did not undertake a market valuation based on price per raw lot. The unadjusted prices expressed on a per acre basis ranged between $200,000 and $310,110.

Mr. Umlah relied most heavily on four comparables (nos. 1, 2, 3 and 7) which were all situated within the North Cottonwood Urban Area and which, he said, indicated unadjusted values ranging from $217,703 per acre to $257,687 per acre. The first three were the same comparables upon which Mr. Hollett primarily relied (his comparable nos. 7, 8 and 9). However, Mr. Umlah made adjustments involving those three which contributed to a significantly different estimate of market value for the subject property's residential component.

Three express factors entered into Mr. Umlah's adjustments: first, what he observed as a softening of the market for residential land after the early months of 1994 and particularly in the late spring and early summer months of 1995; second, the imposition of higher development cost charges ("DCCs") by the District of Maple Ridge; and third, what he considered the less desirable location of the subject property in relation to most of the comparables. With respect to market conditions in Maple Ridge generally, Mr. Umlah made reference to the prices being paid for serviced RS-1b zoned lots in the neighbourhood of the subject property and concluded that they had dropped approximately 10% since the spring of 1994. In addition to falling prices for the end product, he said, developers were also faced with increasing costs to develop urban lots because of higher DCCs, which were increased by 12% in September, 1994 and by a further 2% in September, 1995, negatively influencing the price which a developer could afford to pay for urban residential land.

These market observations caused Mr. Umlah to make downward adjustments of 15% for the parcel located at 12221 - 240th Street (Umlah's comp. no. 3; Hollett's comp. no. 9), which sold in June, 1994, and the parcel at 12087 - 240th Street (Umlahs' comp. no. 2; Hollett's comp. no. 8), which sold in September, 1994, suggesting time adjusted values for the two of approximately $219,000 per acre and $210,000 per acre respectively.

The parcel located at 23850 Heaps Road (Umlah's comp. no. 1; Hollett's comp. no. 7) sold in March, 1995, much closer in time to the valuation date and after the time when the major increase in DCCs occurred. Nevertheless, Mr. Umlah was of the view that it, too, required a time adjusted value because, as he put it in his report, "the downward trend in pricing was not significantly felt until the late spring/early summer months of 1995" (p. 40). Furthermore, he said, the price paid for this comparable required further downward adjustments because the sale included an attractive vendor take-back mortgage resulting in substantial savings to the purchaser prior to actual completion of the sale. Like Mr. Hollett in his report, Mr. Umlah reported the price paid at $1.7 million. Despite the introduction at the hearing of the land transfer document indicating a price of $1.846 million, Mr. Umlah remained satisfied from his discussions with the vendor and purchaser that $1.7 million was the correct figure. Based on that figure, the unadjusted price per acre was $240,793. However, Mr. Umlah referred in his report to conversations with the purchaser which indicated to him that $200,000 per acre was a more reasonable value for the parcel as of the date of expropriation, given the terms of sale and the changes which continued to take place in the market place.

Mr. Umlah also placed particular weight on his comparable no. 7, which comprised two adjacent parcels of land totalling 8.36 acres, located just west of the subject property at 23831/53 Dewdney Trunk Road in the North Cottonwood Urban Area. It sold in May, 1996, roughly eight months after the valuation date, for $1.82 million which equated to an unadjusted price per acre of $217,703. At the hearing this comparable came to be referred to as the "Hall/McCoach properties" after the names of the two vendors. Under the terms of sale the vendors collectively agreed to receive $200,000 down and to carry the balance of the purchase price secured by mortgages at an annual rate of 7.5% until May, 1997, when the balance would become payable.

Like the subject property, the Hall/McCoach properties offered short term potential for urban residential lot development on the north portion and holding potential for future service commercial use on the portion fronting Dewdney Trunk Road. Prior to the sale an application was made to rezone the rear portion comprising 5.57 acres for urban residential development under the RS-1b designation while leaving the remaining front portion comprising 2.79 acres under the existing RS-3 designation for holding purposes. The application had proceeded to third reading before Maple Ridge council. The parties to the transaction had agreed to allocate a value of $1.1 million to the residential portion and $720,000 to the future service commercial portion and these values were reflected in the registered mortgage documents. On the basis of this allocation, Mr. Umlah initially calculated a value of $197,487 per acre for the residential portion. However, he pointed out, part of the plan for subdivision included dedicating and constructing a requisite road allowance which reduced the developable area of the residential portion to 4.98 acres, indicating a net value of $220,883 per acre.

Mr. Umlah made an upward time adjustment of 5% to reflect what he considered might have been slightly improved market conditions in the intervening months between the valuation date and the date of sale of the Hall/McCoach properties. He made a downward adjustment of 10% to account for the fact that this comparable was much more "ripe" for redevelopment than the subject property, having already proceeded to third reading on rezoning and having received preliminary layout approval. Accordingly, he arrived at adjusted values of $186,625 per gross acre and $207,900 per acre net of the road allowance.

In the final analysis, Mr. Umlah's adjusted values for his comparable nos. 1, 2, 3 and 7 ranged from $186,625 per acre to $219,000 per acre. At p. 45 of his report, he concluded as follows:

Given the subject site's proximity to the existing Works Yard and the potential for some of the lots to lie adjacent to future commercial development fronting Dewdney Trunk Road, we have apportioned a value of $200,000/acre to the rear +/- 1.25 acres of land which offers raw redevelopment potential into urban residential building lots.

This resulted in his final estimation of $250,000 as being the market value of the residential component.

(b) Applicability of the Lutsch Decision

In directing the board's attention to the Lutsch decision, the School District alludes to what it says were common factors between the Lutsch property and the subject property: essentially they were of the same size and dimensions, shared the same history and were part of the same assembly. The School District acknowledges the differences in the date of taking and in the highest and best use. It submits, however, that if the subject property had been expropriated at the same time as the Lutsch property, it would have shared the same highest and best use. It further points out that Mr. Hollett under cross-examination conceded that, although he did not know the value of the house located on the Lutsch property, the only difference in value between the two properties at that time might have been in the value of the respective houses. According to the School District, the Dafloses, rather than having been disadvantaged by any delay in expropriation, have actually benefitted by a market valuation based on highest and best use which now includes a more valuable service commercial component.

5.1.3 Analysis and Conclusion

(a) The Appraisal Evidence

Many of the comparables which the appraisers utilized were ultimately accorded little weight by them for reasons which the board largely accepts as valid. Mr. Hollett's comparable nos. 1, 2, 4 and 6 indicated proposed densities which were either far higher or lower than what he considered likely for the subject property. They therefore reflected values per raw lot or per acre which presumably would have required unacceptably large adjustments. The board observes that they were also all sales which occurred either in 1993 or early in 1994 and were parcels situated in mostly superior locations at a considerable distance from the subject property. Mr. Hollett considered his comparable no. 10, located some distance south of the subject property, to be a much inferior parcel accessed by a long narrow panhandle with low utility, encumbered by a ravine which considerably reduced its developable site area, and unable to be developed until sewer was extended to it from a half mile to the north. Of all the comparables it indicated the lowest price per acre and one of the lowest per raw lot.

Mr. Hollett appeared to place some weight on his comparable no. 3, an 8.37 acre parcel just south of the subject property comprising four lots which he said sold between September 1993 and January 1994 for $2.37 million (Mr. Umlah gave evidence that they were actually acquired between 1991 and 1993). At a proposed density of 5.5 lots per acre, the price equated to $51,521 per raw lot or $283,154 per acre. However, he ultimately relied more on his comparable nos. 7, 8 and 9 which he said were closest to the subject property in terms of geographic location, proposed units per acre, and sale date. Curiously, alone among his residential land sales, Mr. Hollett did not undertake any analysis of his comparable no. 5, a parcel similar in size to the subject property with a comparable density potential. It reflected the highest raw lot value of any of his sales comparisons. However, it was also a parcel quite far removed from the subject property and its sale was the most remote in time from the valuation date.

Mr. Umlah's comparable no. 4 was the same as Mr. Hollett's comparable no. 10 and appears not to have been given much weight in light of its clearly inferior features. Indeed, although the sale price indicated a price per acre (net of the ravine) of $200,000, according to Mr. Umlah the developer purchaser indicated that a price closer to roughly $145,000 per acre would have been warranted at the valuation date, given the anticipated higher than normal off-site costs and softer market conditions. His comparable no. 5 comprised three separate titled properties sold in June, 1996 for a price which equated to $310,110 per acre. One of these properties, Mr. Hollett's comparable no. 1, had sold previously in February, 1994 for a price equating to $300,000 per acre. Mr. Umlah said all three properties were sold at that time for an average price of $321,138 per acre. He included this comparable in his analysis even though the sale took place nine months after the effective date of valuation simply to illustrate what he described as the uppermost limit of value for urban residential land in the vicinity and the change in market conditions since 1994. Mr. Umlah's comparable no. 6, as indicated earlier, was a parcel far distant from the subject property in a built-up residential area of West Maple Ridge. Although the site was similar in overall size to the subject property, it was, in Mr. Umlah's estimation, a superior location in several respects. The parcel was acquired in October, 1995 by the District of Maple Ridge for park expansion at a price which equated to $278,543 per acre.

The board accepts that it should accord primary weight to three comparables upon which both appraisers placed particular emphasis, namely Mr. Hollett's comparable nos. 7, 8 and 9, which are also Mr. Umlah's comparable nos. 1, 2 and 3. It considers that they are most comparable to the subject property in terms of location, date of sale, and undeveloped state. Before turning to its analysis of those sales comparisons, however, the board must also consider the Hall/McCoach properties upon which Mr. Umlah also strongly relied as his comparable no. 7.

During the hearing the Dafloses introduced evidence concerning this transaction on the basis of which they argued that it was an unreliable sale for comparison purposes for several reasons. First, they submitted, the prices for both the residential and service commercial portions of the properties were rather arbitrarily allocated by the parties without the benefit of actual dimensions. Second, the mortgage documents contained reversion provisions which indicated, they said, that the transaction was in the nature of an option to purchase, or alternatively, a sale which in May, 1997 would complete only at the purchasers' option. Third, they reported, the McCoach transaction had actually collapsed in the sense that title to the service commercial portion was to revert to the McCoaches, while completion of the Hall transaction had been extended for a further year in consideration for extension fees and interest. Fourth, the vendors had evidently remained in possession of their properties during the "option period" without compensation to the purchasers. Finally, there was some suggestion of an inequality of bargaining power based on the fact that the McCoaches were retirees while the purchasers were active developers.

The board agrees with the Dafloses that this sale was a highly unusual transaction upon which it would be inherently unsafe to rely. Moreover, the transaction post-dates the expropriation by roughly eight months and the board has difficulty in assigning significant weight to a sale about which a willing seller and willing buyer in the open market could not have known at the effective date of valuation.

Returning to the three primary comparables, the first question which the board must resolve is what unadjusted value to assign to the sale of the parcel at 23850 Heaps Road (Hollett's comp. no. 7; Umlah's comp. no. 1). It remains something of a mystery as to why the parties to this transaction indicated to the appraisers a sale price of $1.7 million, whereas the land title document filed as an exhibit indicated a price of $1.846 million. Generally speaking, the board would prefer to rely on the filed document as evidence of what actually took place. In this case, however, the transaction is also somewhat unusual in that it provided for an initial downpayment of only $200,000 in March, 1995, with the balance of the purchase price to be carried by the vendor without interest or installment payments until December, 1996. It is open to speculation whether the higher price reflected in the filed document included consideration for vendor financing. In any event, the board concludes that it should disregard the filed document for the purposes of this valuation and stay with the figure of $1.7 million which both appraisers initially used.

The next question is whether the board in this instance should base its determination of market value upon price per raw lot, price per acre, or some combination of the two. Ideally, the board considers that the value of a potentially developable parcel is best reflected by establishing the raw lot value rather than a per acre value. In the board's view, this is more likely to ensure the appropriate value of the parcel reflecting its true potential. The determination of raw lot value is, however, most appropriately predicated on planning evidence as to what layout is most likely to be feasible in all of the circumstances. The main difficulty in the present case is that, apart from Mr. Hollett's calculations of lot yield based on the proposed assembly in 1991, neither party tendered any such evidence.

A similar situation arose in the Lutsch case. There, it appears from the board's reasons that both appraisers undertook valuations based on raw lot value and the municipal planner was called to give evidence. However, the board in Lutsch observed at p. 34:

Since no independent planning evidence was presented, we are left to draw our own conclusions as to how an individual application might have fitted into an overall plan for the neighbourhood, in the absence of the School District acquisitions and scheme.

Ultimately, however, the board arrived at its conclusion of the proper measure of compensation by reference first to what it determined to be the raw lot value of the Lutsch parcel.

In the present instance the board is prepared to consider raw lot value on the basis of Mr. Hollett's estimation that the subject property's residential component could reasonably have yielded 7 lots. This calculates to a density of 5.6 units per acre. However, it is also of the view that the per acre value must be accorded consideration.

Viewed collectively, the three best comparables indicate unadjusted values ranging from $48,571 to $54,114 per raw lot and $240,793 to $257,687 per acre. This observation necessarily leads to the larger issue of what adjustments should appropriately be made in order to arrive at a determination of value for the subject property's residential component.

In the board's view, neither appraisal report is entirely satisfactory in the manner in which it addresses the adjustment issue. Mr. Hollett makes a downward adjustment for time based on what he acknowledges to be a decline in the market between the sales dates of the respective comparables and the date of expropriation, but offers no quantified basis for the adjustment. He also gives no indication of having taken into account the possible effect of increased DCCs on the local market. Although his report refers to parcel location, size, and proposed density, he evidently makes no adjustments to his preferred comparables based on these considerations, nor does he account for factors which may be unique to any of the three sales comparisons such as favourable vendor financing.

The board finds Mr. Umlah's treatment of the adjustments to be more detailed and comprehensive. As indicated earlier, he makes downward adjustments for time on a percentage basis on the strength of some evidence from the market and in further recognition of the probable impact of increased DCCs on the price a developer would pay for raw developable land. He does not appear to adjust for parcel size but does adjust for location, although the degree of adjustment on that account is unclear. He also identifies in the terms of sale a further downward adjustment to be made to one of the three preferred comparables. However, while Mr. Umlah notes the presence of improvements on these parcels which might contribute some holding value, he makes no express adjustment in respect of them. He was criticized by the Dafloses for paying too much heed to what he was told by developer purchasers and evidently adjusting downward based on the subjective market observations they provided. The board agrees that his report appears to place more weight than is supportable on what developers said they would have paid as compared with the sales which actually transpired.

In order to arrive at a reasonable conclusion as to the market value of the residential component, the board considers that it should make adjustments, where applicable, to the three primary comparables for intervening changes in market conditions, the impact of increased DCCs, locational factors and terms of sale. The board is guided in its timing adjustment by the percentage figure suggested by Mr. Umlah. Additionally, with respect to Mr. Hollett's calculations based on the raw lot prices of the comparables, the board is of the view that adjustments must be made to those prices to take into account the lower proposed densities and correspondingly higher prices per lot than what the subject property's residential component was expected to obtain. The adjustments for density are based purely on the percentage difference between the expected lot yield of each comparable and that of the subject property in the absence of any other evidence.

The parcel at 12221 - 240th Street (Hollett's comp. no. 9; Umlah's comp. no. 3) requires downward adjustment in recognition of the fact that its sale in June, 1994 is the most remote in time from the valuation date and would not have reflected the impact of increased DCCs in September, 1994 on the market for undeveloped sites. The parcel is better located in the sense of having three road frontages and not being adjacent to a works yard. The proposed lots are larger, reflecting a density of 5.0 units per acre. A downward adjustment of 10% to the price per raw lot is indicated in order to reflect lower density and therefore higher lot prices. A further downward adjustment of 12% reasonably takes into account timing, the effect of increased DCCs and locational considerations. This results in an adjusted price per raw lot of $39,105 and an adjusted price per acre of $217,250.

The parcel at 12087 - 240th Street (Hollett's comp. no. 8; Umlah's comp. no. 2), having been sold in September, 1994, also requires a downward adjustment for timing but not in respect of the imposition of higher DCCs since that increase occurred at approximately the same time as the sale and an informed purchaser can be assumed to have factored it into the price paid. There is no compelling reason to adjust for location. Like the subject property, this comparable backs onto the municipal works yard. The proposed lots reflect a significantly lower density at 4.76 units per acre. On a price per raw lot basis, the indicated downward adjustment for lower density is on the order of 15%. Additionally, a 10% downward adjustment for timing seems appropriate. This results in an adjusted price per raw lot of $41,397 and an adjusted price per acre of $231,918.

The parcel at 23850 Heaps Road (Hollett's comp. no. 7; Umlah's comp. no. 1) sold in March, 1995, roughly six months before the valuation date and well after the time when higher DCCs would presumably have been factored into the price paid. The board accepts that there should be a slight downward adjustment for what Mr. Umlah identified as the "downward trend in pricing" which occurred during the late spring and summer of 1995, although little actual evidence was offered in support of that observation. This was also the sale which both appraisers recognized included favourable vendor financing, indicating a slight further downward adjustment. Once again, the proposed lots are larger, reflecting a density of 4.96 units per acre. The board considers that a downward adjustment of 10% to the raw lot price is indicated for lower density and a further 5% is reasonable for the other factors described. This results in an adjusted price per raw lot of $41,528 and an adjusted price per acre of $228,753.

In arriving at its final conclusion as to the market value of the subject property's residential component, the board assigns equal weight to the three comparables and to the two bases of calculation. The average price for the three adjusted comparables per raw lot calculates to be $40,677. Based on Mr. Hollett's estimate that the residential component would yield 7 lots, its resulting value would be $284,739. The average price per acre calculates to $225,974. Therefore, the value of the 1.25 acre residential component on this basis would be $282,468. Accordingly, the board concludes that the appropriate measure of compensation for the subject property's residential component as of the date of expropriation is the sum of $283,604, an average of the two approaches.

(b) Applicability of the Lutsch Decision

Because the Lutsch decision involved the market valuation of an expropriated adjacent property which bore strikingly similar characteristics to the subject property, the conclusions reached there are necessarily of interest. In Lutsch the board accepted that the adjusted value per raw lot on October 29, 1993, the date of expropriation, was $45,000. It indicated that the adjusted value per acre was around $247,500. This seems reasonably consistent with the conclusion reached in the present proceedings on evidence which points to an intervening decline in prices for developable residential land.

No account can be taken of the Daflos's argument, which was not in any case strenuously pursued, that the board consider the School District's delay in expropriating the subject property during a period of declining prices. The board's statutory obligation is to award as compensation to an owner the market value of the owner's interest at the date of the expropriation, which all parties in this instance agree was September 14, 1995. Any remedy for loss in respect of an alleged delay must be sought elsewhere under the Act.

The board also is unable to accept the Daflos's submission, in so far as it relates to the residential component, that the value determined in Lutsch should be adjusted to account for the value related to the house located on the subject property. This argument is misplaced in the sense that the Daflos's residence was located on that portion of the subject property which is recognized to comprise the service commercial component. Any value which the residence arguably may contribute must, accordingly, be considered in that context.

5.2 The Service Commercial Component

As with the residential component, the appraisers relied upon the direct comparison approach to arrive at estimations of market value for the service commercial component of the subject property.

5.2.1 The Daflos's Case

Mr. Hollett selected for direct comparison analysis only two sales of service commercial sites. His comparable no. 11 was a 1.5 acre, rectangular parcel of vacant land at 24009 Dewdney Trunk Road, at the northeast corner of Dewdney Trunk Road and 240th Street, just east of the subject property. It sold in December, 1995, approximately three months after the valuation date, for $670,000, equating to a price per acre of $446,667. The site was purchased by a major oil company for future service station development. His comparable no. 12 was a 0.69 acre, seemingly square parcel of land located at the intersection of 232nd Street and 128th Avenue in Maple Ridge, a considerable distance northwest of the subject property. According to Mr. Hollett, the parcel was improved with a small building of nominal value. It sold in June, 1993, more than two years prior to the valuation date, for $280,000, equating to a price per acre of $405,544.

The Daflos's appraiser viewed comparable no. 12 as a dated sale of a site with less traffic exposure than the subject property and therefore inferior in terms of its location. He appears to have relied entirely on comparable no. 11 in arriving at his conclusion of value. Mr. Hollett indicated that it enjoyed a superior corner exposure but evidently considered that any such advantage over the subject property was completely offset by the ability of the Daflos's residence to provide holding income. He therefore effectively made no adjustment to this comparable and, based on the market evidence which it provided, estimated the land value of the subject property's service commercial component to be in the region of $445,000 per acre. Accordingly, he calculated the market value of that 0.75 acre component to be $333,750.

5.2.2 The School District's Case

Mr. Umlah utilized the service commercial portion of the Hall/McCoach properties (his comparable no. 7) in his direct comparison analysis. This was the sale in May, 1996 in which the parties had allocated a combined value of $720,000 to that portion, the net developable area of which Mr. Umlah calculated to be 2.38 acres. This suggested to him an unadjusted value per acre of $302,521. Applying the same 5% upward adjustment for timing and 10% downward adjustment for "ripeness" of development as he did to the residential portion, Mr. Umlah arrived at an adjusted value per acre for the net service commercial portion of $285,882.

Additionally, Mr. Umlah selected four other parcels (comparable nos. 8 through 11) which had either sold or were being offered for sale based upon their potential for service commercial use. These four parcels ranged in size from 0.47 to 1.50 acres and reflected unadjusted prices per acre ranging from $349,000 to $650,000.

The School District's appraiser appears to have assigned relatively little weight to his comparable nos. 8, 9 and 11. Comparable no. 8 was said to be a superiorly located parcel fronting the south side of the busy Lougheed Highway in an established commercial district of West Maple Ridge. Although requiring rezoning, it was sold subject to rezoning in January, 1994 at the price of $650,000 per acre, and was subsequently improved with a fast food restaurant. Comparable no. 9 was a smaller parcel which, Mr. Umlah said, offered immediate development potential in a superior corner location near the downtown core of Maple Ridge, some distance west of the subject property. It sold in June, 1995 at a price equating to $478,723 per acre. Comparable no. 11 was a somewhat stale listing at $349,000 of a triangular shaped, one acre vacant parcel some distance southwest of the subject property, at the corner of Lougheed Highway and Haney By-pass. Mr. Umlah considered it inferior to the subject property.

Together with comparable no. 7, Mr. Umlah placed greatest reliance on his comparable no. 10, which is the same as Mr. Hollett's comparable no. 11, the parcel at 24009 Dewdney Trunk Road. At the date of sale in December, 1995, the parcel was designated for service commercial use in the OCP and was already zoned CS-1 (Service Commercial). It was Mr. Umlah's opinion that the price paid for the parcel, at $446,667 per acre, represented a value greater than that which would apply to the subject property, given its constructed corner location and the fact it was already zoned for its intended use. Accordingly, he applied a downward adjustment of 20% to reflect what he said, by comparison, was the "raw" nature of the subject property and its interior orientation. This resulted in an adjusted price for the parcel of $357,334 per acre.

Mr. Umlah's analysis suggested to him a value range lying between $285,882 per acre as indicated by his adjusted price for the net commercial portion of comparable no. 7, and $357,334 per acre as indicated by the adjusted price of his comparable no. 10. From this he derived a final conclusion of value for the service commercial component of $350,000 per acre. While this value was close to that estimated for comparable no. 10, Mr. Umlah noted that it also included some consideration for the holding value of the existing dwelling on the subject property. Accordingly, he calculated the market value of the 0.75 acre service commercial component to be $262,500.

5.2.3 Analysis and Conclusion

Use of Mr. Umlah's comparable no. 7 (the Hall/McCoach properties) for direct sales comparison is superficially attractive because the properties were in close proximity to the subject property and, like it, contained a portion fronting Dewdney Trunk Road which had future service commercial potential. However, as noted earlier when discussing the residential component, this transaction considerably postdated the effective valuation date and was fraught with peculiarities making it an inherently unreliable comparable.

The board views the sale of the parcel at 24009 Dewdney Trunk Road (Hollett's comp. no. 11; Umlah's comp. no. 10) as undoubtedly the best comparable in the circumstances, notwithstanding that it also postdates the expropriation by approximately three months.

There are again, however, problems concerning adjustments. The difficulty with Mr. Hollett's analysis of this parcel is that he makes no adjustment for its superior location and the fact that it is already zoned for its intended use and therefore, in that sense, effectively development ready. He also does not take into account in any calculable way the holding period likely required before service commercial use of the subject property could be realized. He simply refers to the holding income potential of the Daflos's residence as offsetting any negative factors.

For his part, Mr. Umlah makes what appears to be a rather arbitrary 20% downward adjustment to the comparable for superior location and readiness for development without offering any calculation upon which to base his choice of that percentage figure. There is also no attempt to quantify the consideration which he says he makes for the holding value of the existing dwelling.

In the board's opinion, the preferred way to value the subject property's future service commercial potential is, first, to discount by the probable number of years of the holding period before that use would have become feasible and, second, to add to that discounted figure the capitalized value of the net holding income likely to have been derived from rental of the residence on the subject property during that same period. Such an exercise is made difficult in this instance by uncertainty around the choice of the appropriate discount period and by an absence of market evidence upon which to estimate the holding income.

The appraisers seemed essentially in agreement that the holding period for future service commercial use on the subject property was an intermediate term, which on the evidence suggests to the board a period perhaps of approximately five years. Although the best comparable at 24009 Dewdney Trunk Road, very close to the subject property, was already zoned for service commercial use at the date of sale, the evidence before the board on highest and best use was that the immediate neighbourhood had not yet reached a stage of growth to support such use. It therefore seems probable that this comparable, located in a superior corner location, nevertheless required a holding period of some lesser duration before actually being developed for its intended future use as a service station. Working with the rather limited information that it has, the board concludes that the additional holding period for the subject property's service commercial component over and above that indicated for this comparable would likely have been on the order of three years.

That being the case, the board in the first instance uses the unadjusted value of $446,667 per acre for the comparable, indicating an unadjusted value for the subject property's 0.75 acre service commercial component of $335,000, and applies to it what the board considers a reasonable discount rate of 9% for the three year additional holding period. This calculates to an adjusted value of $258,681.

At the end of the holding period the improvements on the subject property's service commercial component would have no value unless they could be converted to some form of commercial or retail use. Peter Daflos in his testimony before the board suggested that such a conversion was entirely possible. However, the board is unconvinced, concluding that there was probably an inherent functional obsolescence in the Daflos's residence which made demolition more likely than conversion in the circumstances.

The real question is what holding value in the form of rental income might have been reflected in the residence during the holding period which the board has identified. Because the comparable at 24009 Dewdney Trunk Road was a vacant parcel without any apparent potential for holding income during the two year delay estimated for its development, the adjustment made with respect to the subject property should span the entire five year holding period. In the board's view, the appropriate formula for calculating holding value would be to estimate the gross annual rental income, allow for estimated expenses, and capitalize the net income over the five year period. No evidence was produced at the hearing to flesh out this formula, and the board is necessarily thrown upon its own resources to attempt to arrive at an appropriate figure. Doing the best that it can in these circumstances, the board makes an adjustment based on a reasonable net rental income for the house situated on the 0.75 acre parcel, after adjusting for property taxes, insurance, repairs and maintenance, and a vacancy allowance, at $900 per month capitalized at 7% for five years. This calculates to $44,280, an amount which the board considers reasonably reflects the holding value.

Accordingly, the board concludes that the appropriate measure of compensation for the subject property's service commercial component as of the date of expropriation is the total of the discounted land value at $258,681 and the capitalized holding value of the improvements at $44,280, or the sum of $302,961.

5.3 Summary Conclusion

The board has determined the market value of the 1.25 acre residential component to be $283,604 and of the 0.75 acre service commercial component to be $302,961. It therefore awards as compensation to the Dafloses for the market value of their expropriated interest in the subject property the sum of $586,565.

6. DISTURBANCE DAMAGES

6.1 The Question of Existing Use

A critical question before the board in this case is how best to treat the existing use of the subject property at the date of expropriation. More specifically, was the existing use the same as, or different from, its highest and best use? The answer to that question is important to the claims for disturbance damages in light of section 31(1) of the Act, which states:

31. (1) The board must award as compensation to an owner the market value of the owner's estate or interest in the expropriated land plus reasonable damages for disturbance but, if the market value is based on a use of the land other than its use at the date of expropriation, the compensation payable is the greater of

(a) the market value of the land based on its use at the date of expropriation plus reasonable damages under section 34, and

(b) the market value of the land based on its highest and best use at the date of expropriation.

6.1.1 The Daflos's Case

The Dafloses say that the highest and best use of the subject property at the date of expropriation was also its actual use at that date. Accordingly, in their submission they are entitled not only to the market value based on highest and best use but also to reasonable damages for disturbance pursuant to section 31(1)(a). In this case the damages claimed are entirely for mortgage expenses.

The Daflos's case rests primarily on their stated intentions with respect to use of the subject property. At the date of expropriation in September, 1995, the Dafloses were continuing to live there in a substantial residence which they used as a home for themselves and their family. However, they maintain that they purchased the subject property in 1989 with a view to holding it for the purpose of future redevelopment. The objective, as Peter Daflos described it, was to subdivide the rear portion of the subject property for residential use in the short term and to continue to reside in the house on the front portion until such time as it was feasible to redevelop that portion for service commercial use. Their ownership of the subject property was therefore in the nature of a holding investment the value of which would increase in recognition of its potential.

Consistent with what he described as his "three year plan", Peter Daflos took steps during the spring and summer of 1991 to have the rear portion of the subject property rezoned and subdivided in the context of a land assembly with the adjoining property owners, the Bloys and the Lutsches. However, in his view the plan was frustrated by the involvement of the School District, the intentions of which became known to the District of Maple Ridge, to potential purchasers, and to the financial institutions with which the Dafloses were dealing. In pursuit of its development, the School District also acquired both the Bloy and Lutsch properties.

The Dafloses rely on the opinion expressed by their appraiser, Mr. Hollett, that the highest and best use of the subject property at the date of expropriation, if no account is taken of the proposed development by the School District, was its existing use as a holding investment. They also submit that Mr. Umlah reached the identical conclusion.

In support of their submissions, the Dafloses also rely upon the board's decision in Lutsch. In that case, which determined the compensation claims for market value and disturbance damages of the neighbouring owners, Mr. and Mrs. Lutsch, the board observed that the owners had bought their property in July, 1989 for the specific purpose of holding it for future urban residential development. In the meantime they had rented out the house situated on the property. The parties agreed that the highest and best use of the property was short-term holding for future residential development. At p. 37 of the decision, the board concluded:

In our view, this is the same as the use to which the property was being put by the Lutsches at the time of expropriation. This means that [s. 31] operates so as to entitle them to disturbance damages as defined in [s.34].

6.1.2 The School District's Case

The School District submits that the highest and best use of the subject property at the date of expropriation was different from its then existing use. Its highest and best use was for short term single family residential and medium to long term service commercial redevelopment within the context of an assembly. Its existing use, according to the School District, was essentially as a single family residential acreage. That use was consistent with the zoning and the character of the neighbourhood. Accordingly, based on the evidence as to actual use and certain previous decisions of the board, the School District contends that there is no entitlement to disturbance damages in this case.

Like the Dafloses, the School District focuses on evidence of the owners' intentions. In that regard the School District maintains that the Dafloses purchased the subject property in 1989 for the purpose of accommodating a growing family (including Peter Daflos's father, Konstadinos Daflos, and a niece from Greece) and with the intention of remaining there at least while their children were attending the nearby school. It points to the improvements which the Dafloses made to the residence and other aspects of the subject property as being consistent with their primary use of it as residential. Whatever potential the subject property might have possessed in 1989 for urban residential development, the School District suggests that Peter Daflos would have had to be "omniscient" to recognize its potential for service commercial use at that time, some five years prior to the amended designation in the OCP.

In support of its position that the Dafloses are not entitled to disturbance damages in these circumstances, the School District refers to several decisions of the board where, after determining that the highest and best use of the expropriated land was greater than its existing use, disturbance damages were denied: Nygard v. Surrey (District) (1989), 41 L.C.R. 122 at p. 141; Vision Homes Ltd. v. Nanaimo (City) (1994), 54 L.C.R. 103 at p. 123 (aff'd C.A. (1996), 59 L.C.R. 106); and Kliman v. School District No. 63 (Saanich) (1994), 54 L.C.R. 242 at p. 269 (aff'd C.A. (1997), 60 L.C.R. 246). The School District points out that in each of these cases the existing use was found to be single family residential or rental residential whereas the highest and best use was for residential subdivision or townhouse development in the short term.

With respect to Mr. Hollett's opinion that the highest and best use of the subject property was also its existing use, counsel for the School District makes reference to page 44 of his report in which he states:

If the Expropriation Compensation Board accepts this valuation based upon the property's proposed future use, there would be no disturbance damages. If the Board determines value based upon its existing use, damages would be payable under Section 34.

Although the evidence was that of the Daflos's own appraiser, counsel for the Dafloses objected to it as going to the "ultimate issue".

6.1.3 Analysis and Conclusion

Where compensation for expropriated land is based on the market value of that land in its highest and best use, which is different from its existing use, care must be taken not to overindemnify the owner. Section 31(1) of the Act, which generally excludes claims for disturbance damages in such a case, has often been construed as a statutory enactment of the so-called "rule against double recovery": see E.C.E. Todd, The Law of Expropriation and Compensation in Canada, 2nd ed. (Scarborough, Ont.: Carswell, 1992), pp., 306-313; J.A. Coates and S.F. Waque, New Law of Expropriation (Scarborough, Ont.: Carswell, 1997 rel 2), pp. 35-79 to 35-86.

The rule was first enunciated and applied by the English Court of Appeal in Horn v. Sunderland Corporation [1941] 2 K.B. 26; [1941] 1 All E.R. 480. In Horn the expropriated owner had been using his land for farm purposes but sought compensation based on its immediate suitability for use as a building subdivision. He also sought disturbance damages in respect of his residence and out-buildings on the land and his costs of relocation. These damages were disallowed, principally on the basis that the value of buildings or other improvements were incompatible with the highest and best use and would have had to be removed in order to permit such use and that the owner himself would have had to vacate the land at his own expense upon sale. The rule against double recovery established in Horn was applied by the Supreme Court of Canada in Saskatoon (City) v. Smith-Roles Ltd. (1978), 15 L.C.R. 104, 86 D.L.R. (3d) 321, [1978] 2 S.C.R. 1121, 5 W.W.R. 79.

In Nygard, the first case to come before the board in which this question arose, the board determined market value based on a use of the land other than its existing use as single-family residential acreage. The board disallowed compensation for disturbance damages, expressly citing the principle against double recovery in Horn and Saskatoon.

Although other Canadian jurisdictions have in their expropriation statutes a provision similar to section 31(1), the scope of the provision in some cases appears to be aimed directly at avoiding double recovery. In Manitoba and Ontario, for example, the provisions state that, if the market value of land is determined on the basis of a use other than its existing use, no allowance is to be made for damage attributable to the disturbance which would have been sustained by the owner in putting the land to that other use: see Todd, Law of Expropriation, p. 311. Other items of damage claimed not resulting in double recovery might be allowed.

In light of recent authority, however, it appears that section 31(1) goes further. The most definitive statement on the subject is that provided by the British Columbia Court of Appeal in Kliman (60 L.C.R. 246). The appellate judgment was not cited to the board by the parties in the present proceeding. In that case the property in question at the time of taking was within the Agricultural Land Reserve (the "ALR") and the residence on it was occupied by a tenant. The board in its compensation decision (54 L.C.R. 242) agreed with the parties that the highest and best use of the property was for residential development subject to exclusion from the ALR and to rezoning. It considered that, but for the expropriation, there was a very strong likelihood that those subject conditions would have been met, although not by the date of taking. The board was therefore not prepared to accept a characterization of the property in its existing use as a "development property". The board concluded at p. 269:

As the market value based on the highest and best use at the date of expropriation is greater than the market value based on the existing use at the date of expropriation, disturbance damages are not compensable.

On appeal from the board's decision disallowing all disturbance damages in that case, the claimants advanced an argument that they had incurred a particular loss (ie. frustration of an interim agreement for purchase and sale) the nature of which was not caught by section 31(1) of the Act because an award in respect of that loss would not result in double recovery. The genesis of section 31(1), they submitted, was the common law rule against double recovery.

The Court of Appeal rejected the submission in these words at p. 251:

The difficulty with the appellants' argument is that it calls for an interpretation of the Act which the words will not reasonably bear. Although there is some force in the contention that the cases on expropriation fashioned a rule in language similar to [s. 31] in order to prevent double recovery (see Horn v. Sunderland Corp., [1941] 1 All E.R. 480 (C.A.)), the legislature has seen fit to employ language that embraces all forms of damage whether resulting in double recovery or not. (...)

The damages alleged to be suffered by the appellants on frustration of the interim agreement cannot escape falling under [s.34] and, indeed, no other kind of damages are contemplated by [s.31]. Section [31] denies recovery of damages when the compensation for highest and best use, different from present use, is greater than present use plus disturbance damages.

In the board's view, there is the potential for unfairness to claimants where a narrow definition of existing use results in the disallowance of all disturbance damages. Equally, an expansive definition could result in overcompensation in some cases. Not infrequently, claimants before the board endeavour to equate highest and best use with existing use by characterizing the land in question as a holding property for future development. They do so even where, as in the present instance, the property or some part of it may be improved and occupied for single family residential or rental purposes. They argue that such subsidiary use contributes some holding value to the property. They also do so whether the development horizon is near or far.

The claimants in Kliman also advanced such an argument. They submitted on appeal that they qualified for disturbance damages under section 31(1)(a) of the Act because they were using the land as a holding property for development when the taking occurred and market value was fixed on that usage. The Court of Appeal declined to disturb the board's finding on the issue. The Court said at p. 252:

There is a reasonable basis for the Board's treatment of the use of the land at expropriation as different from the highest and best use. On that date the appellants had a single parcel of agricultural land with a rental home. In reaching a value on highest and best use the Board had to postulate an entirely different situation - a release from the Land Reserve and an approved subdivision for 16 single family lots. What the appellants characterize as a use is nothing more than their intention for the property.

In so deciding the Court of Appeal also made clear its view that the question of use is a matter of fact or mixed fact and law and that it is for the board to decide how it will characterize "use" in a particular case, notwithstanding that in other cases a different finding may have been reached as to the present use of property being redeveloped at the time of taking. Faced with this somewhat vexed question, the board must endeavour to take a principled approach which meets the twin objectives of fairness and logical consistency.

Consistent with what the Court of Appeal said in Kliman, the board considers that existing use cannot be determined merely by reference to the subjective intentions of the particular owner either at the time of purchase or at the date of expropriation. It is also necessary to take into account what practical use the owner was making of the property at the date of taking. The case for equating highest and best use with existing use seems strongest where the property in question is vacant and non-producing land in the process of being developed or simply being held for its future development potential. It is perhaps weakest where, despite having recognized future development potential, the property is already substantially improved for, say, residential use and is owner-occupied.

The present case falls more clearly within the latter end of the spectrum just described. The board accepts that the Dafloses probably purchased the subject property in 1989 with an eye to future redevelopment. They also participated in an early unsuccessful attempt to rezone and subdivide the rear portion for urban residential development. However, it is also evident that they bought the subject property to accommodate the needs of a growing (and extended) family. The improvements subsequently made were for that purpose. At all relevant times the Dafloses were determined to try to preserve and remain in their substantial family home. In these circumstances, and in light of what authoritative cases such as Kliman have decided, it is difficult to reach any other conclusion than that the existing use of the subject property at the date of expropriation was primarily that of a residential acreage, not a development property. That being the case, the board is unable to accept that the highest and best use of the subject property at the date of expropriation was also its existing use.

6.2 The Claim under Section 34(1)

Section 34(1) of the Act provides:

34. (1) An owner whose land is expropriated is entitled to disturbance damages consisting of the following:

(a) reasonable costs, expenses and financial losses that are directly attributable to the disturbance caused to the owner by the expropriation;

(b) reasonable costs of relocating on other land, including reasonable moving, legal and survey costs that are necessarily incurred in acquiring a similar interest or estate in other land.

It follows from what the board has determined under section 31(1) that the Dafloses are not entitled to disturbance damages under section 34(1) in addition to market value of the subject property based on its highest and best use. All of the appraisal evidence was directed to valuation based on highest and best use, and it is reasonable to infer that all parties considered that such a valuation would lead to the appropriate assessment of compensation.

If it had been shown that the compensation payable for the market value of the subject property based on its existing use together with reasonable damages for disturbance exceeded the compensation payable based simply on highest and best use, the Dafloses would, of course, have been entitled to that greater amount pursuant to section 31(1). However, no evidence was produced at the hearing to quantify the market value of the subject property based on its use for single family residential purposes.

The only information available to the board on this question is contained in an appraisal of Kenneth N. Rogers, AACI, commissioned by the School District and based upon which it made its initial advance payment. The appraisal is dated August 10, 1994, and is attached to the School District's reply to the application for determination of compensation filed with the board on April 15, 1996. That appraisal estimated the subject property's market value at $450,000 on August 5, 1994, based on a highest and best use described as single family residential under the two acre zoning.

This appraisal was not otherwise before the board and Mr. Rogers was not called to testify. However, the board considers that the appraisal provides at least some indication that value based on existing use was in a lower order of magnitude than value based on highest and best use which incorporates both residential subdivision and service commercial components. Even if the claims for disturbance damages in respect of mortgage expenses exceeding $130,000 and relocation costs as yet undetermined could have been sustained, it seems to the board highly improbable, considering as well the decline in the residential market between mid-1994 and the date of expropriation, that the resulting figure would have been greater than that already obtained under highest and best use.

It is therefore unnecessary for the board to delve further into the considerable body of evidence adduced concerning the Daflos's financial difficulties and mortgaging requirements in the years leading up to the expropriation, which they contended were directly attributable to the disturbance caused by the expropriation and which the School District maintained were causally unconnected and too remote. In the circumstances, the Daflos's claim for compensation under section 34(1)(a) must be dismissed. Although the hearing of their claim for relocation costs under section 34(1)(b) was deferred, it follows that this item also is not compensable.

6.3 The Claim under the General Regulation

Section 5(1) of the General Regulation provides:

Disturbance damages for security holders

5.(1) When the expropriated land is subject to a security interest, the expropriating authority shall pay to the security holder 3 months' interest at the rate prescribed in the security document or, if no rate is prescribed, at the rate that would normally be payable in respect of the security on the amount of outstanding principal.

Pursuant to this provision, the claimant Konstadinos Daflos has claimed disturbance damages for three months' interest on the $350,000 principal balance of his third mortgage at the rate of 6% per annum prescribed in the mortgage document. This calculates to the sum of $5,250. Mr. Andruschak, the secretary treasurer of the School District, acknowledged at the hearing that no such disturbance damage had been incorporated into either of the advance payments made to the senior Mr. Daflos.

This claim appears to be on a different footing from the Daflos's claim for disturbance damages under section 34(1). In the board's view, this claim bears no relation to the basis upon which market value has been determined under section 31(1). It is not, therefore, subject to the same strictures applied by the Court of Appeal in Kliman. Konstadinos Daflos was the owner of a security interest in the subject property and the compensation which he seeks is for disturbance of that security interest akin to a prepayment penalty or bonus. Because the principal balance of his third mortgage was only partially paid out from the advance payments made by the School District, it may well be in this instance that he is entitled to the proceeds of the compensation awarded in excess of the advance payments and, in that sense, is the beneficiary of the board's determination of a higher market value based on highest and best use. However, the board considers that the appropriate way to view this question is from the perspective of a security holder whose interest would have been paid out irrespective of the manner in which the market value of the expropriated property was determined. Accordingly, the board concludes that it can and should award three months' interest in the sum of $5,250 to Konstadinos Daflos under section 5(1) of the General Regulation.

7. INTEREST UNDER SECTION 46

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.

The School District made advance payments under section 20 totalling $515,000. The board has determined compensation for the market value of the subject property at $586,565. Therefore, subject to the imposition of any interest penalties, the Dafloses are entitled to interest under section 46(1)(a) on the excess amount awarded of $71,565. At the date of the compensation hearing, the Dafloses remained in residence on the subject property, but under a written agreement the terms of which as disclosed to the board would appear to contemplate that they are not to be penalized with respect to their occupancy in the board's determination of compensation payable. Accordingly, for the purpose of confirming their entitlement to interest, the board considers that the Dafloses should be deemed to have given up possession as of September 14, 1995, the date of expropriation. Interest on the excess amount awarded runs from that date at an annual rate that is equal to the prime lending rate of the banker to the government, pursuant to section 46(2) of the Act.

Additionally, section 46(4) provides:

46.(4) If the amount of the payment under section 20(1) or (12) or otherwise is less than 90% of the compensation awarded, excluding interest and business loss, the board must order the expropriating authority to pay additional interest, at an annual rate of 5%, on the amount of the difference, calculated from the date that the payment is made to the date of the determination of compensation.

The parties are agreed that the School District made an initial advance payment of $450,000 between August 31 and September 5, 1995. It made a further advance payment of $65,000 on August 23, 1996. These amounts in total constitute approximately 87.8% of the amount of compensation awarded. Although the payments when viewed collectively therefore come close to meeting the threshold established under section 46(4), they nevertheless fall somewhat short and the provision for additional interest therefore applies.

The decision of the board in Richland Farms Ltd. v. British Columbia (Ministry of Transportation and Highways) (1991), 46 L.C.R. 66, established the basis upon which an award for additional interest is to be made. First, by comparing the method for calculation of interest under section 46(1) with that under section 46(4), the board determined that, while interest under section 46(1) compounds annually, additional interest under section 46(4) provides for simple interest only. Second, the calculation of additional interest runs from the date of each advance. In Richland the former chair, J.H. Heinrich, Q.C., after considering at some length the policy underlying section 46(4), stated at p. 77:

If an advance payment pursuant to s. [20](1) is to have any significance as to date and amount, I could not conclude otherwise than that the first calculation of interest must run from the date of the first advance. Accordingly, I find that the legislature intended that interest payable pursuant to s. [46](4) is to be adjusted by using as a base the date on which the first advance payment was made, and when necessary, as a base, the dates on which any subsequent advance payments were made under s. [20(12)].

For the purpose of calculating additional interest, the board deems the first advance payment to have made on September 1, 1995. Accordingly, subject to the imposition of any interest penalties, additional interest at the annual rate of 5% is to be calculated on the sum of $136,565 from September 1, 1995 to August 22, 1996 inclusive. Additional interest after the second advance payment is to be calculated on the sum of $71,565 from August 23, 1996 to the date of the board's decision.

In the board's view, it follows that Konstadinos Daflos is also entitled to interest on his award of $5,250 from the date of expropriation, pursuant to sections 46(1)(b) and 46(2), and to additional interest on the award at the annual rate of 5% from September 1, 1995, pursuant to section 46(4).

8. PENALTY INTEREST UNDER SECTION 47

The Dafloses and the School District accuse each other of an unreasonable delay in proceedings and seek to invoke the interest penalty provisions of section 47 of the Act. Section 47 provides:

47. If, in the opinion of the board, an unreasonable delay in proceedings under this Act has been caused by an owner or the expropriating authority, the board may penalize

(a) the owner, by depriving the owner, in whole or in part, of the interest to which he or she is entitled, or

(b) the expropriating authority, by increasing, by not more than double, the interest it is required to pay.

Since the Daflos's claim for penalty interest against the School District under section 47(b) is for an earlier period than that asserted by the School District under section 47(a), the board will consider the applicability of these provisions in the reverse order.

8.1 Penalty Interest under Section 47(b)

Although the board is unable to consider the Daflos's claim against the School District for disturbance damages for delay, it recognizes that many of the same arguments advanced by the parties in that context are germane to their claim for penalty interest.

8.1.1 The Daflos's Case

The Dafloses say that, although the School District knew from the summer of 1991 that it wished to acquire the subject property for its proposed new maintenance facility, it delayed action on that acquisition for more than three years before finally issuing its expropriation notice in November, 1994. According to them, the School District delayed for close to another year thereafter before actually completing the expropriation in September, 1995. In the meantime, the Dafloses say, the threat or "aura" of expropriation surrounding the subject property prevented them from effectively dealing with it, causing them to incur expenses and losses.

The Dafloses submit that the delay was unreasonable and probably deliberate. Their theory is that there was a deliberate attempt on the part of the School District to effect as low as possible a price for the purchase of the subject property. They point to the School District's stated intention in July, 1991 to delay the start of negotiations until after the rezoning and subdivision application brought by the Dafloses, the Bloys and the Lutsches had been dealt with by the municipality as evidence of the School District's acting in its own financial interest. They allude to probable collusion between the School District and the District of Maple Ridge both then and later. They refer to the evidence of Peter Daflos concerning his ongoing discussions with Paul Kundarewich, the School District's authorized agent, who was said to have threatened deliberate delay in an effort to place the Dafloses in such a difficult financial situation that they would have to sell the subject property at the price offered by the School District. The Dafloses submit that the board should draw an adverse inference from the School District's failure to call any evidence from Mr. Kundarewich or others to contradict Peter Daflos. They refer to the School District's purchase of the Bloy property in May, 1992 for $445,000 and contrast that price with the much lower amount they say was being offered to the Dafloses at about the same time for either the whole or the rear portion of the subject property. The Dafloses also cite further delay of more than a year between the expropriation of the Lutsch property and their receipt of an expropriation notice regarding the subject property. Notwithstanding Peter Daflos's pleas to the School District to be expropriated, and a clear indication that expropriation would take place, the Dafloses say this further delay was attributable to the fact that the School District simply did not have the funding to proceed with acquisition of the subject property.

In their claim for compensable delay, the Dafloses rely upon the majority judgment of the Supreme Court of Canada in Toronto Area Transit Operating Authority v. Dell Holdings Ltd. (1997), 142 D.L.R. (4th) 206, 60 L.C.R. 81. Although the case concerned a claim for pre-expropriation disturbance damages resulting from delay, the Dafloses say that the principles set forth by the court are also applicable when considering whether to impose penalty interest on an expropriating authority.

First, they refer to the Supreme Court's treatment of the power of expropriation as expressed at p. 213 (D.L.R.):

The expropriation of property is one of the ultimate exercises of governmental authority. To take all or part of a person's property constitutes a severe loss and a very significant interference with a citizen's private property rights. It follows that the power of an expropriating authority should be strictly construed in favour of those whose rights have been affected.

Second, they cite what the Court had to say at p. 214 about the remedial nature of the governing legislation:

Further, since the Expropriations Act is a remedial statute, it must be given a broad and liberal interpretation consistent with its purpose. Substance, not form, is the governing factor.

Finally, according to the Dafloses, the Supreme Court in Dell Holdings adopted an extended definition of expropriation which supports a claim for penalty interest for unreasonable delay in proceedings even when the delay in question precedes rather than follows the formal taking. At p. 220 the Court observed:

The courts have long determined that the actual act of expropriation of any property is part of a continuing process. In McAnulty Realty, supra, at p. 283, Duff J. noted that the term "expropriation" is not used in the restrictive sense of signifying merely the transfer of title but in the sense of the process of taking the property for the purpose for which it is required. Thus whether the events that affected the value of the expropriated land were part of the expropriation process, or, in other words, a step in the acquisition of the lands, is a significant factor for consideration in many expropriation cases.

8.1.2 The School District's Case

The School District denies that there was intentional delay on its part to acquire the subject property. While acknowledging that the acquisition was protracted, the School District says this was not the result of any unreasonableness or mala fides on its part. Rather, it attributes the delay primarily to the fact that the parties were unable to reach a negotiated agreement. According to Mr. Andruschak, there was no strategy to try to isolate the subject property or drive down its value. The School District, he said, made offers necessarily based on its own appraisals and encouraged counter-offers.

The School District says the first stumbling block was the unsupported value which the Dafloses attributed to the subject property. It points to evidence of a meeting between Paul Kundarewich and Peter Daflos in December, 1991, at which, according to a letter from Mr. Kundarewich written in January, 1995, Mr. Daflos indicated that his property was worth between $600,000 and $700,000. It refers to the Daflos's listing of the subject property for sale by at least the spring of 1992 for $825,000 and suggests this asking price was established to try to extract a higher price in ongoing negotiations with the School District. It also refers to Peter Daflos's testimony at the hearing during which he said he expected that, if he had succeeded in having the subject property rezoned and subdivided in 1991, its value would have been even higher, on the order of $1.2 million. After the School District purchased the Bloy property and ended the possibility of a three parcel assembly, Mr. Daflos thought its value for a stand-alone townhouse development was probably more on the order of $700,000. According to the testimony of Mr. Andruschak, Mr. Daflos was asked to support his verbal estimations with appraisals but none was disclosed.

The second stumbling block to achieving an early settlement, the School District submits, was the Daflos's continued desire to remain in their family home. According to Mr. Andruschak, the School District was always interested in acquiring the entire subject property for its school maintenance facility but nevertheless tried to find a way to accommodate the Daflos's needs by proposing initial acquisition of only the rear portion.

The School District says that other actions taken by the Dafloses were also inconsistent with their expressed wish to resolve the expropriation quickly. In particular, their request for an inquiry under the Act in December, 1994 necessarily had the effect of prolonging matters.

The School District questions the applicability of the Dell Holdings decision to this matter, noting that it dealt with expropriation legislation in Ontario. It cites the comment made by the British Columbia Court of Appeal in Patterson v. British Columbia (Ministry of Transportation and Highways) (1997), 62 L.C.R. 89 at p. 102, agreeing with the board "that decisions from other jurisdictions based on different legislative provisions should be viewed with caution." The School District relies instead on the board's decision in Lutsch, where a similar claim by the owners for penalty interest for delay preceding the taking was denied.

8.1.3 Analysis and Conclusion

The initial question which the board must determine is whether, under the applicable law, it can entertain a claim for penalty interest for unreasonable delay in proceedings by the School District prior to the time when the expropriation occurred and the Dafloses filed their application for determination of compensation.

In Lutsch, as noted above, the owners also claimed penalty interest for what they said was an unreasonable delay in the expropriation. They maintained that the School District should have expropriated their property at about the time it acquired the Bloy property in May, 1992, rather than leaving them in an ongoing state of uncertainty for more than another year. The board looked to the definitions of "proceeding" in the Supreme Court Act and the Supreme Court Rules to conclude that no remedy was available under section 47. The board stated at p. 39:

However we might view the School District's conduct here, we do not consider that s. [47] addresses the type of delay the Lutsches say occurred here. Section [47] speaks of "an unreasonable delay in proceedings under this Act." We consider "proceedings" in this context to mean the administrative law process involving a claimant's claim for compensation, beginning with the filing of the Form A Application to Determine Compensation, and concluding, if the matter is not settled between the parties, with a hearing before the board and the board's decision. We do not consider an expropriating authority's actions or omissions before an expropriation to come within the scope of the term "proceedings under this Act."

The board's reasoning with respect to penalty interest in Lutsch was evidently drawn from a slightly earlier decision of the board in Bayview Builders Supply (1972) Ltd. v. British Columbia (Minister of Transportation and Highways) (1996), 59 L.C.R. 263. In that case the expropriating authority had indicated its intention, beginning in February, 1990, to acquire part of the owner's land but, having reversed itself on at least one occasion thereafter, did not formally expropriate until November, 1993. The owner had initially filed a Form A application in November, 1991 alleging "constructive expropriation", which it subsequently had to amend in light of changes in the expropriating authority's plans. The owner argued before the board that the delay in actually expropriating was an unreasonable delay of three and a half years caused entirely by the authority, which created uncertainty and contributed to the cost and expense suffered by the owner. The owner sought double interest under section 47 from February, 1990. However, the board, while sympathizing with the owner, used identical reasoning to that cited above to conclude that it could not impose penalty interest for any period prior to when the formal expropriation occurred and the final Form A was filed.

An appeal from the board's decision in Bayview with respect to penalty interest was allowed by the British Columbia Court of Appeal (reported at 66 L.C.R. 176). The appellate judgment was rendered after the compensation hearing in the present matter concluded. The Court referred to the decision of the Supreme Court of Canada in Dell Holdings as confirming that a statute such as the Expropriation Act is a remedial statute to be given a broad and liberal interpretation consistent with its purpose and as observing that the actual act of expropriation of any property is part of a continuing process, not the mere transfer of title. The Court of Appeal looked beyond those sources cited by the board in defining "proceeding". At p. 191 the Court said:

The Dictionary of Canadian Law (2nd ed., 1995) defines (or describes) "proceeding" very broadly indeed - "one of those words of very wide import that must be interpreted according to that context in which it is used". The context in this case is that of a remedial statute - a context quite different from court rules of procedure.

In the result the Court of Appeal found that delay in the period between February, 1990 and November, 1991, when the first Form A was filed, was not unreasonable and was not atrributable to the expropriating authority. However, it did hold the authority responsible for what it viewed as unreasonable delay in the two years thereafter before the expropriation was completed and the matter was set down for hearing. The Court declined to order double interest since it found that this was not a case of deliberate foot-dragging or bad faith on the authority's part, but instead increased by 50% the interest the authority was otherwise required to pay during the two year period.

The board considers that the decision of the Court of Appeal in Bayview has the effect of broadening the ambit of its discretion to award penalty interest. In the present instance the board is of the opinion that it can award such interest to the Dafloses under section 47(b) of the Act for any identified period of unreasonable delay, notwithstanding that at such time the School District had not completed the expropriation of the subject property and the Dafloses had not filed an application for the determination of compensation.

The further question which the board must therefore determine is whether there was compensable delay on the part of the School District. The board has considered the evidence bearing on this question and has reached the following conclusions.

First, although the School District became interested in acquiring the subject property together with the lands of the two adjacent owners by at least June, 1991, there is no convincing evidence to indicate that it acted in concert with the District of Maple Ridge at that time to thwart approval of the owners' rezoning and subdivision application. The board is satisfied that the application was rejected for reasons independent of the School District's plans, in particular because of lack of sewer capacity. To find that the School District delayed the start of negotiations with the owners until after rejection of the application in early October, 1991, in order to gain a financial advantage presupposes that the School District knew in advance what the outcome of that application would be. The board is unable to reach that conclusion. It accepts Mr. Andruschak's evidence at the hearing that the School District waited for Maple Ridge council's decision in order to clarify the zoning status of the properties in question and to facilitate meaningful negotiations.

Second, the board accepts that the School District thereafter embarked on a course of negotiations with the various owners aimed at acquiring the properties it needed on a consensual basis. It succeeded in reaching agreement with the Bloys for the purchase of their property by May, 1992. Negotiations with the other owners, the Lutsches and the Dafloses, proved far more difficult. In the board's view, it was reasonable up to a point for the School District to persevere in those efforts. With respect to the Dafloses, the evidence largely supports the School District's contention that meaningful negotiations foundered as a result of the owners' unsupported estimations of what the subject property was worth and their insistence upon being allowed to remain in residence there. On the other hand, while the offers made to the Dafloses for the whole or a part of the subject property were based upon appraisals commissioned by the School District, it strikes the board that these offers were probably too low, compounding the problem.

The Dafloses clearly felt ill-treated by the School District's property negotiator, Paul Kundarewich. It would have assisted the board's estimation of his role if Mr. Kundarewich had been called by the School District to testify. However, it was also open to the Dafloses to call Mr. Kundarewich, as they did Mr. Andruschak, as an adverse witness. According to the evidence of Peter Daflos, another participant in some of the discussions which took place between him and Mr. Kundarewich was the realtor, Rick Schmidt. He also was not called to testify at the hearing by the Dafloses. Neither was the real estate appraiser, Brian Davies, who acted as their consultant in the negotiations. In these circumstances the board is not prepared to draw the adverse inference the Dafloses apparently seek that the School District was negotiating in bad faith.

Finally, however, a point was reached beyond which it became unreasonable for the School District to forebear using its powers of expropriation to acquire the subject property if it wished to avoid exposure to a claim for compensable delay. In the board's view, that point was reached with the completion of expropriation of the Lutsch property on October 29, 1993. As the board already found in its much earlier discussion of pre-expropriation negotiations, the School District initially intended to expropriate the subject property at about the same time. However, it was primarily lack of additional funding approval to acquire the subject property which delayed for another year the issuance of an expropriation notice to the Dafloses, finally received on November 28, 1994. Such a delay may have been necessary and prudent from the School District's perspective, but it is not one which the Dafloses should be expected to endure without such reasonable compensation as the board is enabled to award. The delay was unreasonable in the sense cited by the Court of Appeal in Bayview at p. 192, as "such delay as it would not in the circumstances be reasonable to expect the other party to put up with".

In the board's view, the delay was not the result of deliberate foot-dragging or bad faith. It was, as the School District acknowledged in correspondence with Peter Daflos, a circumstance dictated by finances. The board therefore concludes that it would be reasonable to increase by 50% the interest the School District would otherwise be required to pay to the Dafloses in respect of the period from October 29, 1993 to November 28, 1994.

After the expropriation notice was served on November 28, 1994, any further delay was mainly attributable to the Daflos's decision to request an inquiry and the process which that decision set in train. Accordingly, the board considers that the period from November 28, 1994 to the date of vesting on September 14, 1995, is not one in which there was compensable delay.

8.2 Penalty Interest under Section 47(a)

The School District, in turn, seeks an interest penalty against the Dafloses for what it asserts was their unreasonable delay in proceeding with the compensation hearing. The hearing was initially set to begin on September 9, 1996, but was adjourned at the last moment at the Daflos's request and did not actually begin until August 18, 1997. The Dafloses sought an adjournment on the basis that their legal counsel, Mr. Hayes, had ceased to represent them and his accounts remained unpaid, that they were unable to retain another lawyer and would be forced to represent themselves, and that they had made plans over a year earlier to be out of the country from the end of June through the end of August, 1996, and accordingly had no time to prepare. Peter Daflos testified during the compensation hearing that a death in the family in Greece caused them to go abroad even somewhat earlier than originally planned. In granting the adjournment on September 5, 1996, the board granted leave to the School District to raise the issue of penalty interest at the compensation hearing.

The School District maintains that the real reason for seeking the adjournment was that the Dafloses had not filed or served Mr. Hollett's appraisal report within the time prescribed or even by September 5, 1996, when the adjournment application was heard. This was the case, it says, even though Mr. Hollett had been retained in March, 1995, had produced a written report at that time, and had only to update his report for the purposes of the hearing. The Dafloses had also failed to produce a list of documents pertaining to their plans to develop the subject property. Because the application was brought so late in the day, the School District says it necessarily incurred preparation costs some of which were thrown away. The delay, it indicates, was also contrary to the spirit of the agreement under which the Dafloses remained in residence on the subject property pending resolution of the issue of compensation. In support of the proposition that denial of interest is appropriate for the period of delay caused by the failure to serve expert reports in a timely fashion, the School District cites the decisions of this board in 343146 B.C. Ltd. v. British Columbia (Minister of Transportation and Highways) (1991), 46 L.C.R. 128, and Ferancik v. Langley (Township) (1996), 60 L.C.R. 123, and of the Ontario Land Compensation Board in Russell Road Realties Ltd. et al. v. Regional Municipality of Ottawa-Carleton (1979), 21 L.C.R. 245.

The board has reviewed the evidence concerning the adjournment which was canvassed during the hearing of the application on September 5, 1996 as well as during the compensation hearing itself. It concludes that the September, 1996 dates for the compensation hearing were set with the concurrence of the Daflos's legal counsel at the time, Mr. Hayes. Accordingly, it was not reasonable for the Dafloses to rely upon their previously planned trip abroad as part of the reason for seeking an adjournment. There was no mention of a death in the family as contributing to the need for adjournment during the hearing of that application. Mr. Hayes resigned as counsel on or about April 29, 1996. The reason offered by the Dafloses was that they "did not see eye to eye" with Mr. Hayes. Certainly, if the Dafloses apprehended as a result that they could not proceed as scheduled, they should have formalized an application to the board for adjournment at that time. The board is satisfied that all accounts from Mr. Hayes's law firm which were submitted to the School District for advance payment up to that time were paid in accordance with agreements concluded between counsel for the parties. It appears to the board that much of the lack of preparedness to proceed, including perhaps the failure to file and serve an updated expert appraisal report, flowed from the Daflos's failure to instruct new counsel and from their own alternative plans in the intervening period.

In all of the above-noted circumstances, the board considers that the delay in proceedings occasioned by the Dafloses was unreasonable, and that they should be deprived of the interest to which they would otherwise be entitled for the period from September 5, 1996 to August 17, 1997 inclusive, pursuant to section 47(a) of the Act.

The board finds no compelling reason to apply the penalty interest provisions of section 47(a) or (b) to the award made to Konstadinos Daflos for three months' interest on the principal balance of his third mortgage pursuant to section 5(1) of the General Regulations.

9. COSTS UNDER SECTION 45

As a result of the compensation hearing, the Dafloses have been awarded $586,565 for the market value of the subject property. This amounts to $71,565 or 113.9% more than the advance payments already received. Additionally, Konstadinos Daflos has been awarded $5,250. These two awards together amount to 114.9% more than the advance payments. Section 45(5) of the Act provides:

45.(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.

The board considers that it has a discretion in this matter with respect to costs pursuant to section 45(5), and the question becomes whether it should exercise that discretion to deny to the claimants Peter and Evanthia Daflos or the claimant Konstadinos Daflos any part of their actual reasonable legal, appraisal and other costs.

As it turned out, the claimants were partially successful in their submissions with respect to market value and penalty interest. The claimant, Konstadinos Daflos, succeeded in obtaining an award for disturbance damages with respect to his third mortgage, but the claimants, Peter and Evanthia Daflos, failed in their attempt to establish entitlement to an award under section 34(1). However, all of these claims raised justiciable issues which reasonably warranted having them brought to the board for determination. On a final determination of costs under sections 45(9) and (10), should one become necessary, the parties will be in position to adduce evidence and make submissions for or against particular reductions based on such considerations as the number and complexity of the issues, the degree of success achieved, or the manner in which the case was prepared and conducted. However, at this stage the board is of the view that the claimants, Peter and Evanthia Daflos, and the claimant, Konstadinos Daflos, are entitled to be paid the costs necessarily incurred by them for the purpose of asserting their claims for compensation and damages.

THEREFORE IT IS ORDERED THAT

(1) The School District shall pay compensation to Peter and Evanthia Daflos in the amount of $586,565 for the market value of their fee simple interest in the expropriated subject property pursuant to section 31(1) of the Act.

(2) No interest shall be payable by the School District to Peter and Evanthia Daflos for the period from and including September 9, 1996 to and including August 17, 1997, pursuant to section 47(a) of the Act.

(3) Subject to item (2) the School District shall pay to Peter and Evanthia Daflos:

(a) Interest on the amount in item (1) from and including September 14, 1995, until paid, with adjustments to take into account moneys paid by the School District to or on behalf of the Dafloses pursuant to section 20(1) and (12) of the Act. Pursuant to section 46(2) of the Act, interest shall be calculated annually at the following rates:

(i) Eight and three-quarters per cent (8.75%) from September 14, 1995 to December 31, 1995;

(ii) Seven and one-half per cent (7.5%) from January 1, 1996 to June 30, 1996;

(iii) Six and one-half per cent (6.5%) from July 1, 1996 to December 31, 1996;

(iv) Four and three-quarters per cent (4.75%) from January 1, 1997 to June 30, 1997;

(v) Four and three-quarters per cent (4.75%) from July 1, 1997 to December 31, 1997;

(vi) Six per cent (6.0%) from January 1, 1998 to June 30, 1998;

(vii) Six and one-half per cent (6.5%) from July 1, 1998 to December 31, 1998;

(viii) Six and three-quarters per cent (6.75%) from January 1, 1999 to June 30, 1999;

(ix) Six and one-quarter per cent (6.25%) from July 1, 1999 to December 31, 1999.

(b) Additional interest on the amount of $136,565 from and including September 1, 1995 to and including August 22, 1996 and on the amount of $71,565 from and including August 23, 1996 to the date of determination of compensation at the annual rate of 5% pursuant to section 46(4) of the Act.

(4) The amount of interest otherwise payable by the School District to the Dafloses pursuant to item (3) shall be increased by 50% for a period calculated to run from and including October 29, 1993 to and including November 27, 1994 (the "penalty period"), pursuant to section 47(b) of the Act. For the purpose of making the calculation required in relation to item (3)(a), the rates of interest indicated thereunder shall be averaged and the average rate applied on a per diem calculation to the penalty period in order to arrive at an amount which shall then be increased by 50%. In relation to item (3)(b), the amount of additional interest payable during the first year beginning September 1, 1995 shall first be determined, that amount shall be increased by 50%, and the resulting amount shall be applied on a per diem calculation to the penalty period.

(5) The School District shall pay compensation to Konstadinos Daflos in the amount of $5,250 for three months' interest on the amount of outstanding principal under his registered security interest, pursuant to section 5(1) of the General Regulation.

(6) The School District shall pay to Konstadinos Daflos:

(a) Interest on the amount in item (5) from and including September 14, 1995, until paid, in accordance with the rates set out in item (3)(a), pursuant to sections 46(1) and (2) of the Act.

(b) Additional interest on the amount in item (5) from and including September 1, 1995 to the date of determination of compensation at the annual rate of 5% pursuant to section 46(4) of the Act.

(7) The School District shall pay to the claimants Peter and Evanthia Daflos, and to the claimant Konstadinos Daflos, their actual reasonable legal, appraisal and other costs of, and incidental to, the application and hearing before the board in such amount as may be agreed upon, and failing such agreement in such amount as may, upon application to the board, subsequently be determined and allowed by the chair.

(8) The claim of Peter and Evanthia Daflos for compensation for disturbance damages pursuant to section 34(1) of the Act is hereby dismissed.