REASONS FOR DECISION

INTRODUCTION

[1]  This board rendered its decision on compensation in this matter on February 10, 2003. This decision is presently unreported and is found on the board's web site at ECB No. 57/01/232 - 66/01/232. The issue of costs was adjourned for all of the claimants but for Edith Ferguson.

[2]  Section 45(4) of the Expropriation Act, R.S.B.C. 1996, c. 125 ("the Act"), provides that if the compensation awarded is greater than 115% of the amount paid by the authority under section 20 or otherwise, the authority must pay the owner's costs (emphasis added). Section 45(5) provides that if the compensation awarded is 115% or less of the amount paid by the authority under section 20 or otherwise, the board has a discretion to award the owner all or part of his or her costs. In this case the advance payments and the awards of compensation contained in the February 10, 2003 decision together with the relevant percentages are set out below for each of the claimants but for Ms. Ferguson:

Claimant	Advance Payment Mar 9, 2001	Advance Payment Mar 20, 2002	Total Advance Payment	Total Comp'n	Percentage of Advance Payment
Clements	$3,000	$550	$3,550	$3,695	104%
James	$5,000	$4,400	$9,400	$8,039	86%
Penfold	$4,100	$4,500	$8,600	$8,765	102%
Potter	$4,000	$4,800	$8,800	$8,465	96%
Warner	$4,100	$1,000	$5,100	$5,315	104%

[3]  Because the compensation awarded to Ms. Ferguson was greater than 115% of her total advance payment, she has already been awarded her costs under section 45(4) and the Tariff of Costs Regulation, B.C. Reg 189/99 ("the Tariff") at Scale 2. See the compensation decision at para 235. All of the other claimants have been awarded less than 115% of the total advance payments that they received. Therefore under section 45(5) we have discretion as to the award of their costs.

[4]  The claimants and the respondent, the Corporation of the City of Penticton, have now made written submissions on the amount of costs that should be awarded to the claimants other than Ms. Ferguson. We received the claimants' submissions on March 5, 2003, the respondent's submissions on March 21, 2003, and the claimants' reply on April 3, 2003.

Claimants' Position

[5]  The claimants set out the test that the board has used in determining the costs to be awarded when there is discretion under section 45(5). The test is whether the claims raised justiciable issues which reasonably warranted having them brought to the board for determination. See Daflos v. School District No. 42 (Maple Ridge-Pitt Meadows) (1999), 68 L.C.R. 167 (B.C.E.C.B.) at 222 and Baines v. British Columbia (Minister of Transportation and Highways (No 2) (1997), 62 L.C.R. 210 at 215.

[6]  The claimants provide a number of reasons that support the test having been met in this case. The authority of Ingham v. Creston (Town) (2000), 70 L.C.R. 126 (B.C.E.C.B.) was recognized by the board as providing some basis for the award of a reduction in market value when a street is widened. In the present case, the board in its compensation decision rejected arguments by the claimants under section 33 of the Act on the basis of a finding of fact by the board that had not been pled or explicitly argued by the respondent. The claimants point out that the second advance payments were provided only eleven days before the compensation hearing, a circumstance noted by the board. Further, the second payments were allocated to the value of the land expropriated, rather than the reduction in market value of the remainders, or for disturbance losses. Finally, the claimants emphasize that they should not be penalized in bringing forward claims for reduction in market value or personal losses that were ultimately rejected by the board. They return to this point in answer to the respondent's arguments on entitlement to costs.

[7]  The claimants referred us to a number of cases including Baines which reviewed several cases in which entitlement to costs was discussed. In some cases, notwithstanding the award being less than 115% of the advance payment, the board has awarded the claimant 100% of their costs. These cases include Surrey Animal Hospital Ltd. v. British Columbia (M.O.T.H.) (1993), 51 L.C.R. 37; Roadmaster Auto Centre Ltd v. Burnaby (1997), 62 L.C.R. 127. See also Sequoia Springs West Development Corp. v. British Columbia (Minister of Transportation and Highways) (2001), 71 L.C.R. 315. In a number of other cases the board awarded 100% of the costs for some time until the claimant ought to have realized that it no longer had a justiciable case to bring forward or that it was no longer reasonable to pursue the claim. After that point, which was usually one week after the last advance payment, the board reduced the costs awarded to a lesser percentage such as 90% (for legal costs) in Sutherland v. Langley (Township) (1999), 68 L.C.R. 49 (B.C.E.C.B.) (80% of appraisal costs were awarded in this case); 50% in Morton Estate v. British Columbia (Minister of Transportation and Highways) (1999), 67 L.C.R. 278 (B.C.E.C.B.); and 25% in Apland v. British Columbia (Minister of Transportation and Highways) (1996), 60 L.C.R. 107 (B.C.E.C.B.). Finally, in some cases, the board after reviewing the relevant factors awarded a lesser percentage of costs for the whole proceedings. These include Morse v. British Columbia (Minister of Transportation and Highways) (2000), 68 L.C.R. 245 (B.C.E.C.B.) where 90% of the claimant's total costs was awarded, Gonev v. Richmond (City) (2000), 71 L.C.R. 251 (B.C.E.C.B.) where 80% of the claimants' costs were awarded, and Husband v. Langley (1996), 59 L.C.R. 221 where 75% of the claimants' costs were awarded.

[8]  The claimants' ultimate submission is that they are entitled to 100% of their costs or, in the alternative, to 90% of their costs.

Respondent's Position

[9]  The respondent also referred us to the test for costs as set out in Daflos and Baines. While conceding that the issue of costs for claimants in expropriation proceedings is more generous than in civil litigation, the respondent submits that this "bias [in favour of claimants] is not absolute". It referred us to Golden Valley Golf Course Ltd. v. British Columbia (Minister of Transportation and Highways) (2001), 73 L.C.R. 81 (B.C.C.A) and the comments therein as to sections 45(4) and (5) being intended to encourage settlement by including an element of risk to both parties. The board had reduced the costs to which the claimants were entitled in a number of cases including Sutherland and Apland referred to above, as well as Shah v. School District No. 75 (Mission) (1996), 58 L.C.R. 87 (B.C.E.C.B.), where costs after the date when the claimant ought to have realized that it was unreasonable to continue to rely on the expert reports were reduced to 50%.

[10]  With respect to the market value of the land taken, the respondent says the parties were relatively close going in to the hearing. After the respondent had received the claimants' appraisals it increased its advance payments under this heading. The compensation awarded for the land actually taken from all the claimants but for Ms. Ferguson totalled $21,618 which was only 88% of the $24,450 allocated to the market value of the land in the advance payment.

[11]  As to the reduction in market value, Penticton says it allocated nothing in the advance payment for this item because its appraiser was not able to discern any reduction. The respondent submits that the claimants' theory under section 33 as to the designation of Government Street as an arterial road was flawed and that the claimants' appraiser who had grown up in Penticton conceded that Government Street had not been a quiet residential street in the last 30 years. It says that the board's finding of nil compensation under this heading supports the respondent's position. In addition the respondent draws our attention to some criticisms of the appraiser's report in the compensation decision, including the issue of double compensation by claiming damages for loss of amenities as well as costs to replace those amenities. The respondent says Ingham v. Creston (Town) (2000), 70 L.C.R. 126 (B.C.E.C.B.) is different enough on its facts that it cannot be used to justify the claimants proceeding with this claim.

[12]  With respect to the claim for personal losses, the respondent notes the low rate of recovery for these claimants (only $2,260 awarded out of a total of $24,703 claimed), in relation to the time spent to present multiple claims for multiple owners. The respondent says that this relative lack of success confirms the tenuous links of many of these claims to the project. Penticton points out that it could not have made advance payments for these personal losses and, in fact, faced difficulties in responding to these claims at the hearing when many of them were amended during the hearing or advanced only during the hearing. In these circumstances, the claimants were not reasonable in bringing forward their claims for personal losses and this should be considered in the board's award of costs.

[13]  The respondent submits that in all the circumstances the claimants should be awarded only 50% of their legal costs until the second advance payment and no costs thereafter. According to the respondent, the claimants should be denied all costs for appraisal reports and evidence.

Analysis and Conclusion

[14]  We found the submissions from both counsel helpful in determining this issue.

[15]  First of all we recognize the special cost regime for expropriated owners and the fact that as involuntary litigants in a matter that is in the public interest they are in principle entitled to some compensation for the costs of seeking professional advice. However, we agree with the comments from the Court of Appeal in Golden Valley as to the intention of section 45(4) and (5) in providing some incentive for settlement by introducing an element of risk to both parties. In those cases where the compensation awarded is 115% or less of the advance payment and the board has some discretion as to costs the board, unlike the courts, has not used the final outcome as an automatic determinant of cost entitlement. As both parties have agreed the test as set out by the board is "whether there were legal or valuation issues that made it reasonable for the claimant to [continue to] pursue the claim". See Shah v. School District No. 75 (Mission).

[16]  One of the factors in determining reasonableness in pursuing the claim is whether the claimants received more compensation than the advance payment even though the comparative ratio falls below 115%. In some of the cases that were referred to by counsel, the claimants, while not meeting the minimum 115%, did receive substantially more money than the advance payments, a factor that is commented on in these decisions. See Sequoia, Sutherland and Daflos where the compensation awarded was close to 115% at 113.6%, 113.75%, and 114.9% of the advance payment, respectively. However, in the present case the five claimants other than Ms. Ferguson received little or no additional compensation, after pursuing this matter through a hearing.

[17]  On the other hand as we pointed out in the compensation decision the claimants did not receive the second advance payments until less than two weeks before the compensation hearing. Mr. Yardley, counsel for the respondent, replied that this second payment was in response to the claimants' appraisal reports. But in any event, the claimants cannot be said to have been unreasonable in continuing with their claims until these payments were made.

[18]  Another principle with respect to cost entitlement is that claimants should not necessarily be penalized for advancing arguments that are unsuccessful. The board has sometimes distinguished between different types of unsuccessful arguments. In Morse, for example, the board was of the view that Morse had been reasonable to pursue the claim for multi family residential development despite the ultimate lack of success. However, the evidence for claims for "project influence" and for costs thrown away on rezoning was very tenuous. In the board's opinion, it had been unreasonable for Morse to pursue these particular claims without better evidence. Similarly, the case law did not support the claim for property purchase tax when no replacement property had been purchased. In Sutherland the board commented on two factors that led it to reduce the claimant's costs despite the claimant having obtained compensation close to the 115% minimum (113.75%). These factors were the ill-conceived pursuit of market value based on the Development Method and the absence of proof of a substantial disturbance damage claim.

[19]  In the present case, it is our opinion that the claimants may have been reasonable in advancing some argument based on section 33 or some claim for reduction in market value even though in the end we rejected these claims. There was also the authority of Ingham, although we found the facts in the present case to be quite different. However, in our opinion, the valuation model used in the before and after approach was flawed, not only in its assumptions, but also in applying the most broad brush unit values to the single family residential properties. As a result we had no confidence that the before and after valuations reflected the market value of the subject properties as defined in the Act: what a willing buyer and seller would have agreed on as the sale price on the relevant date. It was unreasonable to pursue this model that ignored the reality of Government Street as a busy through street for many decades.

[20]  With respect to the personal losses we have already observed in the compensation decision at para. 172 that closer scrutiny of these claims before the hearing should have eliminated some of them. The evidence for a number of these claims was minimal and more importantly the link between some claims and the project was tenuous. Other cases of the board on economic loss indicate that the claims for economic loss advanced in this case had little chance of success. It was unreasonable to pursue a number of these claims through a hearing. We also agree with the respondent that several of these claims being advanced or amended late in the day increased the time required to deal with them at the hearing.

[21]  After considering all the circumstances we conclude that the five claimants in this decision are entitled under section 45 and the Tariff of Costs Regulation, B.C. Reg. 189/99 to 100% of their costs until one week after the second advance payment and 65% after that date. We see no reason to differentiate between the five claimants although somewhat different factors apply to each one. The legal and appraisal costs will be at Scale 2.