REASONS FOR DECISION

1.  INTRODUCTION

[1]  On October 5, 2001, the claimant, Kismet Enterprises Inc. ("Kismet"), filed with the board an application for determination of compensation (the "Form A"). In the Form A, Kismet seeks compensation in excess of $1.0 million from the respondent, the City of Nanaimo ("Nanaimo"). The claim arises out of Nanaimo’s exercise in 1996 of its statutory powers to order from land owned by Kismet the removal of a topsoil pile that Nanaimo had declared to be a nuisance and its subsequent entry onto the land under a court order to effect the removal.

[2]  On October 15, 2001, Nanaimo filed with the board a brief reply to Kismet’s application (the "Form B"). In the Form B, Nanaimo asserts that the subject matter of the claim is personal property, that the board has no jurisdiction to entertain Kismet’s application, that Nanaimo’s actions have already been reviewed and completely authorized by the Supreme Court of Canada, and that the application is frivolous, without merit, and ought to be dismissed.

[3]  On November 5, 2001, Nanaimo filed with the board a notice of motion for an order that Kismet’s Form A be dismissed on the grounds that the board does not have jurisdiction. Nanaimo also seeks an order that Kismet pay Nanaimo’s costs of this application, and an order setting the amount of costs to be paid by Kismet to Nanaimo.

[4]  I heard this application in Victoria on December 7, 2001, acting alone in my capacity as chair of the board and in exercising the powers and jurisdiction of the board pursuant to section 26(5) of the Expropriation Act, R.S.B.C. 1996, c. 125 (the "Act"). Nanaimo was represented by its legal counsel while Kismet was represented by its president and director, Cidalia Plavetic. The hearing lasted for approximately two hours.

2.  BACKGROUND

[5]  Nanaimo’s application is another in a long litany of proceedings before both the courts and this board concerning the topsoil pile. The background is summarized in the following chronology:

	•	Kismet was the registered owner of land located at 6231 Hammond Bay Road in Nanaimo, onto which its tenant, Rascal Trucking Ltd. ("Rascal"), trucked and stockpiled some 15,000 cubic yards of topsoil in early June, 1996.
	•	During July and August, 1996, Nanaimo city council passed resolutions pursuant to section 936 of the Municipal Act, R.S.B.C. 1979, c. 290, ordering Kismet and Rascal to remove the topsoil pile as constituting a nuisance. When the topsoil was not removed, Nanaimo attended at the Hammond Bay Road property to remove it but was prevented by Kismet and Rascal from doing so.
	•	On October 11, 1996, Nanaimo brought a petition in the Supreme Court of British Columbia against Kismet and Rascal for an order declaring that Nanaimo had the jurisdiction under section 936 of the Municipal Act to declare the topsoil pile to be a nuisance and to order its removal. Maczko J. granted the order.
	•	On October 29, 1996, Nanaimo brought a further petition in Supreme Court against Kismet and Rascal for orders declaring that Nanaimo was authorized to enforce the council resolutions, that Kismet and Rascal were in breach of those resolutions, and that Nanaimo was permitted to enter onto the Hammond Bay Road property to remove the topsoil. Rowan J. granted the orders sought on October 31, 1996, and at the same time dismissed a petition brought by Rascal and Kismet seeking to have Nanaimo’s resolutions quashed for lack of requisite jurisdiction.
	•	On November 6, 1996, Nanaimo entered onto the Hammond Bay Road property and removed the topsoil to a municipally-owned park known as Beban Park.
	•	Rascal (but not Kismet) appealed from the orders of Maczko J. and Rowan J. to the British Columbia Court of Appeal and, on May 20, 1998, the Court of Appeal allowed Rascal’s appeal and quashed Nanaimo’s resolutions. See Nanaimo (City) v. Rascal Trucking Ltd. (1998), 49 B.C.L.R. (3d) 164.
	•	Nanaimo appealed from the judgment of the British Columbia Court of Appeal to the Supreme Court of Canada which, on March 2, 2000, allowed the appeal and reinstated the orders of Maczko J. and Rowan J. as well as Nanaimo’s resolutions.  See Nanaimo (City) v. Rascal Trucking Ltd., [2000] 1 S.C.R. 342.
	•	On October 4, 2000, Rascal (but not Kismet) filed with the board a Form A application seeking compensation from Nanaimo for, among other things, the market value of the topsoil removed from the Hammond Bay Road property. The claim was brought under sections 31, 40 and 41 of the Act, which encompass both the expropriation of land and injurious affection with no land taken, as well as under sections 544 and 557 of the Municipal Act, R.S.B.C. 1996, c. 323.
	•	Nanaimo brought a motion before the board seeking to have Rascal’s claims dismissed on the grounds that the board had no jurisdiction. On December 28, 2000, the vice chair of the board, Sharon I. Walls, in written reasons granted Nanaimo’s motion. The vice chair held that the removal of the topsoil under section 936 of the Municipal Act did not meet the constitutent elements of an expropriation as defined in section 1 of the Act. There was no "taking of land" since the topsoil was not land but personal property and Rascal’s lack of consent to the taking of the topsoil was overridden by the fact that it had created a nuisance and brought into play procedures under section 936 that were regulatory in nature and did not provide for payment of compensation. Neither did the topsoil removal meet the necessary common law tests for injurious affection with no land taken in order to qualify Rascal for compensation under section 41 of the Act. Therefore, the board was without jurisdiction. See Rascal Trucking Ltd. v. Nanaimo (City) (2000), 71 L.C.R. 241.
	•	On April 10, 2001, Rascal filed with the board a second Form A. In this application Rascal maintained its claim for compensation for the market value of the topsoil, to which were added numerous other alleged costs and losses, but no longer asserted that an expropriation had occurred. It relied instead on section 312 of the Local Government Act, R.S.B.C. 1996, c. 323, which provides for payment of compensation by a municipality in the exercise of certain powers that do not constitute an expropriation. Section 312 had not been cited in Rascal’s first Form A.
	•	Nanaimo again brought a notice of motion for an order that the board did not have jurisdiction. It submitted that section 312 of the Local Government Act merely replaced section 544 of the Municipal Act, which had been discussed in the board’s earlier decision. Nanaimo maintained that Rascal’s second Form A made essentially the same claim for compensation as in the first Form A and that it raised the same questions and issues considered in the previous dismissal application. Therefore, Nanaimo said, the second Form A application was barred by the principle of estoppel by res judicata vis a vis the reasons provided by the board on December 28, 2000 in dismissing the first Form A application.
	•	In reasons provided orally on June 8, 2001 (since reported at 75 L.C.R. 71), vice chair Walls agreed with Nanaimo that the questions and issues that were raised in the pleadings in the second Form A were fundamentally the same as those on which a final decision of the board had been already made on December 28, 2000 with respect to the first Form A. Section 312 of the Local Government Act did not provide a new basis for determining Rascal’s claim. Therefore, the principle of res judicata applied to bar the second proceeding. The vice chair also ordered that the parties bear their own costs of the first dismissal application but allowed Nanaimo its costs against Rascal with respect to preparation for and attendance at the second dismissal application.

3.  THE ISSUES

[6]  The issues before me on this application concerning Kismet’s Form A are essentially the same as those which were before the vice chair with respect to Rascal’s second Form A. Is Kismet’s application to have its claim for compensation determined by the board barred by the principle of estoppel by res judicata? If so, should Kismet be required to bear Nanaimo’s costs of its dismissal application?

4.  THE PARTIES’ POSITIONS

[7]  Nanaimo takes the position that Kismet is bound by the earlier proceedings even though it was not formally a party to all of them. In the first place, it says, Kismet is bound by the judgment of the Supreme Court of Canada which reviewed and upheld Nanaimo’s actions and which reinstated the orders pronounced in British Columbia Supreme Court by Maczko J. and Rowan J. although Kismet, unlike Rascal, had not specifically appealed from those orders.

[8]  In the second place, Nanaimo says, the board has already determined on two separate occasions that, in the circumstances of this case, there has been neither an expropriation nor any valid claim for injurious affection with no land taken, with the result that the board has no jurisdiction to award compensation. Notwithstanding that the claims before the board on those two occasions were brought by Rascal alone and not by Kismet, Nanaimo asserts that they are also determinative of the issue on Kismet’s application. According to Nanaimo, Kismet is bound by those earlier board decisions as a "privy" of Rascal through the lease and other contractual arrangements pleaded in its application. The principle of estoppel by res judicata therefore prevents Kismet from attempting to relitigate these same issues, yet again, before the board.

[9]  Nanaimo goes further and argues that Kismet’s filing of a Form A application in this matter amounts to an abuse of the board’s process which should be penalized through costs. Nanaimo has provided in tariff form a "bill of costs of the respondent" for the preparation and hearing of this application in which the maximum scale 3 is claimed under the board’s Tariff of Costs Regulation, B.C. Reg. 189/99 (the "Tariff").

[10]  Kismet’s position, as I understood Ms. Plavetic to say, rests on the fundamental proposition that the claimant company is a separate legal entity from Rascal with different interests, was never a party to Rascal’s claim before the board, and is therefore entitled now to make its own claim for compensation.

[11]  Kismet rejects the notion that it is a "privy" of Rascal simply because the two companies entered into a lease and other contractual relations. According to Ms. Plavetic, it would be equally valid to say that Kismet, which had been involved in obtaining from Nanaimo a permit to allow the topsoil to be stockpiled on its property in the first place, had therefore become a "privy" of Nanaimo.

[12]  In Kismet’s submission, the previous rulings of the courts and this board have established only that Nanaimo’s actions in removing the topsoil were lawful and did not constitute an expropriation. There remains, according to Kismet, the question of compensation payable under section 312 of the Local Government Act in respect of Nanaimo’s exercise of its powers, and the claimant company should be afforded the opportunity through a compensation hearing to bring further evidence to bear on the question.

5.  DISCUSSION

[13]  The principle of res judicata has been discussed by the board in my decision in Denault v. Barclay (2000), 71 L.C.R. 285, as well as in the second decision of the vice chair in the Rascal case (75 L.C.R. 71). In both decisions there was reference to the commentary on the subject in J. Sopinka, S.N. Lederman & A.W. Bryant, The Law of Evidence in Canada, 2^nd ed. (Toronto and Vancouver: Butterworths, 1999), at pp. 1068-1092. Counsel for Nanaimo on this application also cited this commentary.

[14]  The authors of the Law of Evidence, at pp. 1068-1069, cite an older decision of the Ontario High Court of Justice in Re Ontario Sugar Co. (1910), 22 O.L.R. 621, at p. 623 (H.C.J.); affd (1911), 24 O.L.R. 332 (C.A.); leave to appeal to S.C.C. refused (1911), 44 S.C.R. 659, as a correct general statement of the common law rule:

No court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court of jurisdiction competent to try such subsequent suit or the suit in which such has been subsequently raised, and has been heard and finally decided by such Court.

[15]  At p. 1078, the authors further explain from the decided cases the principles which come into play:

There are two principles subsumed under the heading res judicata. The first is that any action or issue which has been litigated and upon which a decision has been rendered cannot be retried in a subsequent suit between the same parties or their privies. This principle prevents the contradiction of that which was determined in the previous litigation, by prohibiting the relitigation of issues already actually addressed.

The second principle makes it mandatory that a plaintiff asserting a cause of action must claim all possible relief in respect thereto, and prevents any second attempt to invoke the aid of the courts in the same cause. It is sometimes called "merger" because the plaintiff’s cause of action becomes "merged" in the judgment. The judgment actually operates as a comprehensive declaration of the rights of all parties in respect of the matters in issue.

[16]  In Rascal, the parties to the second proceeding were the same as in the first and the question of res judicata before the board focused simply on whether fundamentally the same questions and issues as between those parties already had been or could have been finally determined in the earlier proceeding. In the present instance, the matter is somewhat more complicated by the fact that one of the parties, Kismet, is a separate legal entity from Rascal and its application for determination of compensation had not been before the board for consideration when the earlier decisions were made. However, as the foregoing review of the law makes clear, res judicata operates not only against the parties, but also against persons in privity with the parties. The question therefore becomes whether Kismet can be considered to be in privity with Rascal.

[17]  Black’s Law Dictionary, 5^th ed. (St. Paul, Minn.: West Publishing Co., 1979) defines "privies" as: "Those who are partakers or have an interest in any action or thing, or any relation to another." These may include, among other kinds, privies in respect to contract and privies in respect of estate and contract. The definition goes on to provide that privies, in the sense that they are bound by a judgment, are those who acquired an interest in the subject-matter after the rendition of the judgment, and privies to a judgment are those whose succession to the rights of property affected occurred after the institution of the lawsuit and form a party to it.

[18]  The authors of The Law of Evidence, at p. 1088, point out that it is impossible to be categorical about the degree of interest which will create privity. They cite decided cases for the proposition that "there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party." Privies in title or estate may include a vendor and purchaser as well as a lessor and lessee.

[19]  A review of the pleadings in Kismet’s Form A in comparison with those in Rascal’s second Form A is highly revealing as to the degree of interest subsisting between the two corporate entities with respect to the subject matter of their respective claims. Both pleadings are focused on the arrangements under which topsoil was brought onto Kismet’s Hammond Bay Road property and the circumstances and alleged consequences of its removal from the property by Nanaimo.

[20]  The pleadings in Kismet’s Form A allege inter alia that, on April 1, 1996, Kismet as registered owner of the Hammond Bay Road property entered into an agreement with an unidentified "Tenant", which other evidence clearly reveals to be Rascal, for use of a portion of the property for topsoil processing. According to the pleadings in Rascal’s second Form A, Kismet’s only requirements and stipulations to Rascal, prior to the latter bringing topsoil onto the property, was that Rascal obtain all necessary permits and approvals from Nanaimo and that Rascal’s activities be lawful. Both sets of pleadings state that the necessary permit was obtained. However, Kismet in its pleadings also alleges that it was to receive from Rascal a royalty of $2.00 per cubic yard of topsoil processed and sold from the property. This constitutes a new allegation of fact concerning the contractual relationship between the two companies which nowhere appears in Rascal’s pleadings.

[21]  The two sets of pleadings recount in similar terms the chronology of events which followed the placement by Rascal of the topsoil on Kismet’s property and the actions taken by Nanaimo to declare the topsoil pile a nuisance and to have it removed.

[22]  The alleged consequences flowing from those events form the basis of the principal claims for compensation made by Rascal in its second Form A and now by Kismet in its own Form A.  What is clearly observable is the close interconnection between these claims.

[23]  Rascal pleaded injurious affection "in that the future development potential as a topsoil processing facility, and as an infill site, and as a future active zoned business site for the subject lands, has been substantially and significantly reduced or eliminated". The pleadings speak of the loss of the topsoil and its value, and the loss in development potential suffered by both Rascal and Kismet, as resulting in loss in value to the property itself in addition to being a personal injury to Rascal’s business or trade. Among the heads of claim for compensation set out in Rascal’s second Form A were the frustration of a lease agreement between Rascal and Kismet, reasonable disturbance damages "such as idled people and equipment and trucks" for a five year period beginning in May, 1996, specific improvements to the property and costs of inventory thrown away, and ongoing administration costs, idled equipment and trucking costs, and supervision costs.

[24]  The statement of claim in Kismet’s Form A first quantifies losses in royalty revenues of $130,000 and future rental revenues of $250,000 which allegedly would have been payable by Rascal to Kismet under the agreement between the two companies. The "loss of the topsoil erection" is stated to amount to $120,000. There then follows under paras. (f) to (j) of Kismet’s statement of claim several claims advanced mainly on behalf of Rascal which are set out in these terms:

	"f.	the loss of the Tenant’s topsoil business, amounts to $100,000.00;
	g.	the loss of the Tenant’s various capital improvements to the Subject Lands, amounts to $30,000.00;
	h.	the loss of the Tenant’s engineering and all other approval costs, now thrown away, amounts to $50,000.00;
	i.	the loss of the Tenant’s ongoing administrative costs, and idled equipment costs dating back to May 15, 1996 and ongoing until May 25, 2001, amounts to $180,000.00;
	j.	the Claimant’s and the Tenant’s legal costs in trying to defend against the Respondent’s exercise of a declaratory power, when a Permit had been issued, amounts to approximately $180,000;"

6.  CONCLUSION

[25]  I agree with Nanaimo in the first instance that, although Kismet was not a party to the appeal from the British Columbia Supreme Court orders pronounced by Maczko J. and Rowan J., it is nevertheless bound by the judgment of the Supreme Court of Canada which upheld those orders and decided that section 936 of the Municipal Act empowered Nanaimo to pass resolutions declaring the topsoil pile a nuisance and ordering its removal.

[26]  Moreover, I am satisfied from my review of the two sets of pleadings that Kismet was and is in privity with Rascal. The pleadings reveal a high degree of identification between the two corporate entities with respect to the matter at issue, extending even to the fact that a large component of Kismet’s claim for compensation is, in reality, a claim by Kismet on Rascal’s behalf. The questions and issues which are raised by Kismet’s Form A are fundamentally the same questions and issues which have already been disposed of by the board in its earlier decisions in the Rascal matter.

[27]  If is, of course, the case that Kismet’s Form A also includes claims for compensation against Nanaimo with respect to lost royalties from the projected topsoil processing business to have been carried on by Rascal and lost anticipated future rental revenues under its lease agreement with Rascal. However, these claims, like those made earlier by Rascal, all flow from the basic proposition that Nanaimo is liable to compensate the claimant companies for losses allegedly resulting from the exercise of its statutory powers to order and effect the removal of the topsoil pile on the Hammond Bay Road property. 

[28]  The board in its first decision in Rascal found no statutory or common law basis under which it could consider an award of compensation in the circumstances. What had occurred was neither an expropriation nor injurious affection with no land taken.  The board in its second decision in Rascal rejected the argument, now again advanced by Kismet, that section 312 of the Local Government Act provided a new basis for a claim to be determined by the board which had not been dealt with earlier. That section had essentially replaced section 544 of the Municipal Act, and the reasoning which the board used in interpreting together the various relevant provisions of the Municipal Act to find no basis for compensation applied equally to section 312.

[29]  In arriving at my decision in this matter, I have found no reason to depart from any of the conclusions of law reached by the board in the two Rascal decisions. Having considered all of the foregoing, I therefore conclude that the board’s decision of June 8, 2001, barring Rascal’s second Form A, is also binding upon Kismet’s Form A. The principle of estoppel by res judicata again applies, the board is without jurisdiction to hear the claim, and as a result Kismet’s application for determination of compensation is dismissed.

7.  COSTS

[30]  The one remaining issue is whether Nanaimo can and should be awarded its costs of this application against Kismet under the Act and the Tariff and, if so, in what amount. Nanaimo specifically seeks the sum of $872.38 in fees, disbursements and applicable taxes.

[31]  The matter of costs was raised by Nanaimo’s counsel with Kismet in a letter dated October 15, 2001, only ten days after Kismet had filed its Form A with the board. In delivering the Form B reply at that time, Mr. McDannold wrote to Kismet in part as follows:

"I also enclose a copy of the Expropriation Compensation Board decisions in Rascal Trucking Ltd. v. City of Nanaimo in E.C.B. Control No. 71/00194 and 41/01/207 where the Board has already determine[d] that it has no jurisdiction to deal with this matter. Your application is clearly frivolous and an abuse of the Board’s process. This letter is to demand that you immediately file a Consent Dismissal Order or Notice of Discontinuance of this proceeding.

If you fail to comply with this demand, the City will bring on a Notice of Motion before the Board to have your Application for Determination of Compensation dismissed with costs awarded against you. A copy of this letter will be produced to the Board at the time of the City’s Motion in support of the Application for costs."

[32]  In my view, Kismet had ample opportunity to review these decisions, obtain whatever legal advice it wished, and reconsider its position before deciding to allow Nanaimo’s dismissal application to go forward to a contested hearing. The result in this case exactly mirrors that in the board’s second decision in Rascal, where the vice chair observed with respect to costs, at pp. 79-80 (75 L.C.R.):

…I do not think that there was a justiciable issue that reasonably warranted being brought to the board. The principle of res judicata raised a significant hurdle on which there was very little chance of success. Mr. Heringa [the claimant company’s president] was representing Rascal Trucking himself and he has no legal training. However, this is not sufficient excuse for bringing the application.

In the result, the vice chair awarded Nanaimo its costs of that application at scale 2 as prescribed in the Tariff.

[33]  The cost regime under the Act does not contemplate that an expropriated owner, however successful in his or her claim before the board, will have to bear the cost of the expropriating authority. The situation is otherwise when the claim is one for injurious affection with no land taken brought pursuant to section 41(3) of the Act. Section 45(6) of the Act provides:

45

(6)

On a claim under section 41(3), the board may award, in its discretion, costs to the claimant or the expropriation authority.

[34]  In this instance, Kismet did not specifically refer to the injurious affection provision under section 41 in bringing its claim, relying on section 312 of the Local Government Act as the basis for its entitlement to compensation without an expropriation having taken place. However, section 312(1) refers to a municipality exercising a power which, inter alia, "injuriously affects property by the exercise of any of its powers". I construe Kismet’s claim as falling within the injurious affection provision of section 41 and, accordingly, being subject to the cost provision in section 45(6) of the Act. In other words, in my view the board has discretion to award costs in this matter against Kismet and in favour of Nanaimo.

[35]  The one difficulty that I have with Nanaimo’s request for the costs of its application is the tariff scale which it seeks to have applied. Nanaimo seeks scale 3, the maximum allowable. When fixing the scale of costs, the board under section 4 of the Tariff must have regard to the difficulty or importance of the matter involved. Scale 1 is for matters of less than ordinary difficulty or importance, scale 2 is for matters of ordinary difficulty or importance, and scale 3 is for matters of more than ordinary difficulty or importance. When fixing the appropriate scale, the board may also take into account such factors as whether a difficult issue of law, fact or construction is involved, whether an issue is of importance to a class or body of persons or is of general interest, and whether the result of the proceeding effectively determines the rights and obligations as between the parties beyond the relief that was actually granted or denied.

[36]  None of the foregoing considerations leads me to the conclusion that this application was a scale 3 matter. I am perhaps fortified in that view by observing that, in the dismissal application which followed the filing of Rascal’s second Form A, Nanaimo sought and obtained its costs of the application at scale 2. I apprehend that, in the present instance, Nanaimo’s request for scale 3 may have been borne out of frustration and a desire to exact what in the Supreme Court would likely be described as "special costs" in order to penalize abusive or reprehensible conduct. In my view, the scale of costs under the Tariff is not intended to serve that function.

[37]  Nanaimo is to have its costs of this application at scale 2. Its draft bill of costs, annexed to a sworn affidavit, is in proper tariff format. In accordance with the items of description set out, I allow Nanaimo 4 units at scale 2 under the tariff of legal costs plus GST and PST for a total of $638.40, and its disbursements as claimed including GST for a total of $51.58. The costs to be paid by Kismet to Nanaimo with respect to this application therefore total $689.98.