March 20, 2006, E.C.B. No. 93/95/266

REASONS FOR DECISION

1.  INTRODUCTION

[1]  This decision of the Expropriation Compensation Board results from a decision of the British Columbia Court of Appeal, dated January 3, 2003, (78 L.C.R. 1) directing reconsideration of a portion of a board decision dated February 15, 2000, (69 L.C.R. 1) issued under the authority of the Expropriation Act, R.S.B.C. 1996, c. 125.

[2]  In the previous decision, this board awarded compensation to the claimant, Sequoia Springs West Development Corp., for 29 acres of lands taken by the Minister of Transportation and Highways ("MoTH") on March 31, 1995 for the construction of a portion of the Inland Island Highway on Vancouver Island known as the Campbell River Bypass. This taking bisected a large development property owned by the claimant known as District Lot 66 (DL 66). The board decision was appealed and cross-appealed to the Court of Appeal.

[3]  The Court of Appeal set out the background information and grounds of appeal as follows:

[3] The lands taken were part of a 234 acre property. Before the taking Sequoia Springs was in the process of developing the property as a residential golf course community. The taking bisected the property from the southwest to the northeast corner. The remaining two parcels, separated by highway, were approximately 91 acres and 114 acres. It was said that after the taking they were unsuited to development of a golf course. Sequoia Springs said that in addition to compensation for the partial taking, it was entitled to compensation for costs thrown away, diminution in value of the remaining lands, disturbance damages and damages for delay in development caused by the taking.

[4] Because the expropriating authority and Sequoia Springs had made an agreement under s. 3 of the Act whereby Sequoia Springs agreed to the transfer of land but did not agree to the compensation to be paid, the Expropriation Compensation Board was required to determine the amount of compensation payable. The hearing proceeded on the basis that the expropriating authority had paid Sequoia Springs $1,425,000 as advance payments under s. 20 of the Act. After the Board issued its decision it was determined, in a matter relevant to the cross appeal on costs, that MoTH had paid Sequoia Springs an additional $54,500, bringing the total of advance payments to $1,479,500.

[5] The Expropriation Compensation Board ordered MoTH to pay Sequoia Springs:

1. compensation under s. 40 of the Act for the market value of the land that was acquired and the reduction in market value of the remaining land, in the sum of $1,480,000;

2. compensation under s. 40 of the Act for business losses in the sum of $200,000; and

3. its actual reasonable legal, appraisal and other costs to June 28, 1999 and its costs as prescribed in The Tariff of Costs Regulation, B.C. Reg. 189/99 after that date.

A. The Grounds of Appeal

[6] Sequoia Springs contends that it should be awarded a greater sum. It contends the Expropriation Compensation Board erred:

1. in using after acquired evidence to determine a significant and substantial downward adjustment to a comparable property, thereby negatively affecting the market value of the lands;

2. in failing to award damages for costs thrown away in developing the halted golf course project;

3. in failing to award damages for work done and costs incurred between May 1993 and the actual taking in July 1, 1995, because of the prospect of expropriation.

[7] The Minister of Transportation and Highways contends in the cross appeal that the Expropriation Compensation Board erred:

1. in awarding any disturbance damages;

2. in its conclusions with respect to the highest and best use; and

3. in its award of costs to Sequoia Springs, particularly in giving effect to an offer to settle made shortly before commencement of the hearing (the Calderbank letter issue).

[4]  The Court of Appeal found that the board had erred in not providing compensation to the claimant for some costs thrown away. The Court referred the matter back to the Board in the following terms:

[56] It follows that I would remit the matter of costs thrown away to the Expropriation Compensation Board for assessment of damages for business loss relating to the lands taken. On this, Sequoia Springs has asked for an order that it be allowed to adduce further evidence. That is a question, in my view, for the Board to decide.

...

Summary

[79] I would allow the appeal to the extent only of remitting for assessment the issue of costs thrown away on the taken lands. I would dismiss the cross-appeal.

2.  EVIDENCE IN THE RECONSIDERATION HEARING

[5]  The original panel was not able to hear the referral back so the board panelled three members, none of whom was on the original panel. In November 2005, the board convened two pre-hearing conferences conducted by the presiding member of the panel. In the letter following the November 3 pre-hearing conference the presiding member noted the following:

The parties were agreed that it would be necessary and appropriate for the board to hear some additional evidence. The proposal is that the claimant will call as witnesses the principal of the company, Mr. Brown, and the landscape architect, Mr. Reid, who testified at the original hearing. Mr. Reid is preparing a précis of evidence in which it is anticipated he will provide a percentage of the overall costs that are applicable to the lands taken.

The claimant raised an additional issue of the cost of the highway overpass. As this was the first time it was raised, the respondent acknowledged it as a possible issue and advised they would need information on the current development plan.

The respondent has retained an engineer, Mr. Bower (sic), to review the expenses claimed to provide his opinion on how they compare with what private contractor charges.

[6]  As indicated, the parties agreed to additional evidence. In addition to the witnesses indicated above, the claimant called one of the heavy machinery operators who had worked on the site prior to and after the taking.

3.  THE CLAIM

[7]  At the conclusion of the reconsideration hearing, the claimant summarized its claim as follows:

The claimant also claimed interest and its costs under the Act.

4. ISSUES

[8]  The issues in the reconsideration hearing were:

5.  INTERPRETATION OF THE COURT OF APPEAL ORDER

5.1  Lands Taken/Remnant Lands

[9]  The claimant submitted that the Order "relating to the lands taken" encompassed all the work the claimant had undertaken on the development and the work to remediate the remainder or remnantland due to the respondent’s taking. The respondent submitted that the Order was limited to the lands taken and did not include any work done on the remnant lands for the development or for the remediation.

[10]  The board finds that the Court of Appeal Order does not encompass consideration of costs thrown away on work done to the remnant lands, for the reasons that follow.

[11]  The pertinent discussion in the Court’s decision on costs thrown away is at paragraphs 38 to 42:

[38] This issue should be seen, in my view, in two parts, by considering the claim for costs thrown away on the lands taken, and the claim for costs said to be thrown away on the lands still owned by Sequoia Springs. In case of the lands taken, any expenses incurred by Sequoia Springs on lands taken are surely costs thrown away (apart from the issue of double recovery which I address below). In the case of the remnant parcels, the question is whether the costs are indeed thrown away, that is, whether it is established that the monies spent are without present benefit.

[39] Most of the claim for costs thrown away related to the remnant lands. The Expropriation Compensation Board concluded that monies spent on the remaining lands were not proven to be lost, observing that any development would have required clearing, fill, compacting and grading.

[40] In my view, this conclusion is not unreasonable. Despite able submissions on behalf of Sequoia Springs, the conclusion of the Expropriation Compensation Board that these expenses, for the various reasons given, are not established losses is not a decision with which this Court, in my view, should interfere.

[41] I have come to a different conclusion, however, on those costs expended on the lands taken.

[42] The Expropriation Compensation Board did not address, expressly, costs incurred on the lands taken. However, from the photographs in evidence and review of the path of the highway right of way, it is, I consider, clear that some work had been done by Sequoia Springs on the land that was taken. Disregarding for the moment the issue of double recovery, Sequoia Springs is entitled to be paid for expenses incurred on the lands taken as reasonable business losses caused by the taking.

[12]  The Court’s decision is dated January 3, 2003. The parties disagreed on the interpretation of the decision and the wording of the settled order. The Court heard further submissions on that issue. This panel was provided with a Memorandum from the Court dated July 22, 2004, which decided the issues in disagreement without providing extensive reasons. With the exception of one typographical error, that Memorandum contained the final Order which was entered on August 24, 2004:

"This Court Orders that the appeal of Sequoia Springs West Development is allowed to the extent only that the claim for compensation for costs or expenses incurred or expended by the Appellant relating to the lands taken is remitted to the Expropriation Compensation Board."

[13]  The panel has reviewed the Memorandum of July 22, 2004 and the parties’ submissions in context with the Court’s written decision. At paragraph [38] of the written decision, the Court specifically divided costs thrown away into the two aspects of the remnant lands and the lands taken and accepted the board’s decision on the remnant lands. The issue for the Court, as stated at paragraph [41], was the board’s handling of the costs expended on the lands taken. At paragraph [42], the Court found that the claimant was entitled "to be paid for expenses incurred on the lands taken …" We find that decision was not altered by the Memorandum of July 22, 2004 and that the entered Order must be interpreted according to the Court’s written decision. Accordingly, we find that our mandate in the reconsideration is limited to costs thrown away on the lands taken and does not include consideration of costs associated with the remnant lands, either for the development or for remediation.

[14]  As discussed below, the remediation claim for $130,000 pertains solely to remnant lands. The board finds that claim is outside the mandate of the reconsideration.

5.2  Expenses Relating to Construction of the Overpass

[15]  The claimant has claimed for costs and expenses arising out of the mandatory requirement to fund a pedestrian overpass over the Inland Highway, across the lands taken, pursuant to a Development Works Agreement with the District of Campbell River. The claimant’s contribution is $850 per residential unit.

[16]  The claimant submitted that an award for funding of the overpass was not addressed and provided for in the original hearing, as before and after development costs were not utilized. The claimant further submitted that if the funding was addressed in the original hearing, it was based on an estimated cost of only $120,000.

[17]  The respondent submitted that the overpass issue is not within the terms of the Order from the Court of Appeal and further submitted that an award would constitute double recovery as an allowance for the cost of the overpass was included in the compensation already awarded and paid.

[18]  In the original decision, in quantifying the award for the land taken, the board utilized the Direct Comparison Approach for the "before" scenario and the Development Approach for the "after" scenario. In the "after" scenario, there is an allowance for "Pedestrian/Service Crossing" in the amount of $300,000 which is adopted from the Graeme & Murray appraisal report of October 19, 1998 (Appendix 2, Subdivision with Highway, Item 7.0). In that report, this issue is addressed as follows, at page 10, under 5.0 Cost Estimates:

Two items are noted for off site costs. The first relates to the wetlands area which was estimated by the District at $600,000. The developer’s share of this was to be $180,000 but in lieu of this contribution the Developer will be asked to contribute 50% of the footbridge crossing for the (sic) with highway.

We have discussed the question of off-site costs with the District and as reported the $180,000 contribution to the Wetland enhancement is to be put against the footbridge with the developer contributing that figure ($180,000) plus $120,000 to the half cost of the footbridge crossing, estimate $600,000. The District anticipates no other off-site costs. The District staff 1 were asked who was to contribute the remaining 50% of the bridge costs but no details were provided on this aspect.

[19]  In the Direct Comparison Approach "before" scenario, there clearly is no reference to any adjustment for the cost of an overpass over the highway that is the subject of the taking. There is also no allowance for Wetland contribution.

[20]  Based on the appraisal evidence and the original decision, the board finds that the previous award for market value compensation for the lands taken included an allowance of $300,000 for the developer’s share of the cost of the overpass. Since this issue was decided in the previous award which was upheld by the Court of Appeal, the panel finds that we are without jurisdiction to consider a further award. Additionally, we are of the view that to award a further allowance would amount to double recovery.

6.  CLAIM FOR COSTS OR EXPENSES THROWN AWAY

6.1   Claimant’s position

[21]  The claimant is seeking the following compensation for costs or expenses relating to the land taken:

• $700,000 for golf course construction during the period 1993 to March 1995.
• $130,000 for remedial work during the period April 1995 to 1996.

[22]  The foundation for the claim is the claimant’s estimate that 44% of expenses incurred on golf course construction and 24% of expenses incurred on remedial work were thrown away because they related to the taking. The amounts claimed are calculated as follows:

• Golf course construction: 44% of expenses during the relevant period totalling $1,576,379.85 or $693,607.11 rounded to $700,000.
• Remedial work: 24% of expenses during the relevant period totalling $531,258.15 or $127,501.95 rounded to $130,000.

[23]  The determination of the percentages of expenses thrown away because of the taking are derived from the report of David Reid, a Landscape Architect and Planner, who was retained by the claimant. Mr. Reid estimated that 20% of the total length of the golf course was within the land taken and that a further 24% located on the remnant land was directly affected by the taking for a total of 44%. The 24% claim with respect to the remedial work after the taking is for the remnant land directly affected by the taking.(The claimant would have done no remedial work on the land taken).

[24]  Mr. Reid’s determination of the percentages of the golf course affected by the taking were based on a plan, drafted by him in 2005, showing the approximate alignment and location of the golf course fairways. He drafted this plan because the claimant had not prepared one showing the location of the golf course being constructed prior to the taking, either at the time the work was being done or before or subsequent thereto. The claimant did not have a contemporaneous plan in evidence either in the original board hearing or in this reconsideration hearing. Mr. Reid based his plan on a topographical and cadastral map and air photos taken in 1996 and 2003. He verified his estimate of the location of the golf course with Mr. Brown.

[25]  The claimant provided the following material in support of its claim to have incurred golf course construction costs prior to the taking totalling $1,576,379.85:

• Lists of the individual pieces of equipment and the total number of hours spent by each during the period November 1993 to December 1994, and an estimate of the number of hours spent in the months of January to March 1995. An hourly rental rate was ascribed to each machine and applied to the hours of use. This yielded a total of $907,477 for equipment use.
• A list of the total amount of wages and benefits paid to each employee for the period November 1993 to March 1995 including an amount of $253,240.40 for Mr. Brown calculated at $70.00 an hour plus benefits. The amounts listed totalled $503,552.88. This amount was reduced by $10,000 with respect to Jeff Wilson that was awarded in the previous decision of the board, and by $9,582 for wages relating to ravine fill, yielding a net total wage claim of $483,971.
• A list of wages paid to Craig Brown, B.J. Brown and Doug Brown during 1994 supported by copies of the related payroll records. These totalled $13,536 and are listed as additional wages.
• Copies of third party supplier invoices totalling $6,1
• 29.71 listed as environmental compliance.
• Copies of third party supplier invoices totalling $142,943.14 listed as construction costs.
• A list of amounts paid to an insurance agent and to ICBC totalling $22,323 listed as insurance.

[26]  The following material was supplied in support of the claim to have incurred remedial work after the taking totalling $531,258.15:

• A list of the individual items of equipment and an estimate of the total number of hours spent by each in the period April to December 1995. These hours multiplied by the hourly rental rate yielded a total of $196,664. The hours spent in 1996 by a Hitachi excavator, Bobcat and Hydroseeder yielded a further sum of $74,790 for a total of $271,454.
• A list of the total wages and benefits paid to each employee for the period April to December 1995, including an amount of $89,436.04 for Mr. Brown, all of which totalled $172,037.29. An additional amount of $16,130 was claimed for time spent in 1996 by Tim Bartel [436 hours at $26.00 an hour] and P.Gagnon [282 hours at $17.00 an hour] for operating a Bobcat and Hydroseeder. This yielded a total of $188,167.29 which was listed in the final claim at $192,530.40 for reasons which are not known to the board.
• An invoice from Highland Engineering for $1,173.75 for an application for permission to fill at 16 th Ave.
• Copies of third party supplier invoices totalling $66,100 listed as material.

6.2  Respondent’s position

[27]  The respondent says the claim should be limited to costs incurred or expended on the land taken and should not include costs related to the remnant land.

[28]  The respondent also says that claims for matters that were decided by the board in its 2000 decision are not within the scope of the matter remitted to the board by the Court of Appeal. The respondent says these include claims for:

• The salary of Jeff Wilson.
• The salary of Barrie Brown.
• Expenses for boots, vests, chains and a saw.
• Brochure expenses.
• Environmental remediation work not necessitated by the respondent’s taking.

[29]  The respondent further says that costs must be reasonable. It says that:

• The equipment used by the claimant was leased from related companies and that the hourly rental rates charged were too high.
• The costs listed by the claimant include items which are unrelated to the golf course.

[30]  The respondent questions the validity of the location of the golf course estimated by Mr. Reid in 2005. It points out that there were no plans prepared either before or at the time that the work was going on in 1994. It says the Reid layout has numerous problems including a uniquely long 625 yard hole, conflicts between greens or fairways and tees, travel distances between greens and tees, requirement for large amounts of earthwork and access problems for residential development.

[31]  The respondent submitted a report by A.J. Baur, a registered professional engineer. Mr. Baur is experienced in the design, development and construction of land development projects, golf course developments and major earthmoving projects. His retainer included providing an analysis, investigation, reporting and costing for following items:

1. Using the labour and equipment hours claimed by Sequoia Springs, comment on the hourly rates charged, and determine what cost would have been charged by an arms length private third-party contractor undertaking the same amount of work.
2. Develop a construction cost estimate for the clearing, grubbing, and grading works done within the DL 66 between November 1993 and March 1995 on the entire property and in preparation for a golf course.
3. Determine the amount of earthworks undertaken within DL 66 outside the highway right-of-way between November 1993 and March 1995, develop a construction cost estimate for the work, and identify what area of the proposed golf course is within the earthwork area.
4. Using the 2005 Campbell River OCP conceptual development plan for Sequoia Springs, determine what works done between November 1993 and March 1995 do not support the 2005 conceptual development and estimate the value of these excess works.

[32]  Mr. Baur reviewed the hourly equipment rental rates used by the claimant and determined that they were higher than those set out in a rental rate guide published by the Province of British Columbia which he referred to as the "Blue Book". He also estimated the time required to do the clearing, grubbing and grading and offered his opinion that the time required for golf course development would not differ significantly from highway development.

[33]  Mr. Baur estimated the value of the clearing, grubbing and grading work carried out by the claimant through an examination and comparison of aerial photographs taken on September 30, 1993 and August 23, 1996.

[34]  Mr. Baur also estimated the extent of bulk earthworks carried out on the property, outside the highway right of way, between September 9, 1992 and April 14, 1999 by comparing topographic maps developed from aerial photography on those two dates. He determined the number of cubic metres of earthworks by applying a standard civil engineering computer program to the information developed from the topographic maps. He was unable to calculate the earthworks carried out by the claimant on the land taken because he did not know what was done by the claimant prior to the taking and what was done by the respondent after the taking.

[35]  Mr. Baur’s estimates of costs are as follows:

[36]  Mr. Baur used the golf course lay out and location estimated by Mr. Reid and the Sequoia Springs/Kingfisher Conceptual Development Plan, which was enacted by the council of the District of Campbell River on February 22, 2005, to estimate the amount of costs thrown away on the remnant lands. The 2005 development plan allocates approximately 50% of the 82.7 hectare remnant lands for 600 to 800 residential dwelling units, 10% for roads, and 40% for greenways including park area and an area proposed for the expansion of the existing golf course. Mr. Baur estimated the cost of work carried out by the claimant outside the land taken that is surplus to the 2005 development plan to be:

[37]  The respondent says that if the Reid golf course layout is accepted as the work that was underway in 1994, the claim should be $162,676 made up of $87,452 for costs outside of the land taken that are surplus to the 2005 development plan, plus $75,224 for clearing and grubbing within the land taken. This scenario necessarily assumes that compensation is for costs thrown away on the remnant land as well as for those costs thrown away on the land taken.

[38]  However the respondent argues that the Reid golf course layout should not be accepted and that compensation should be restricted to costs thrown away on the land taken. In this event the respondent says that the claim should be less than $125,000 comprising $75,224 for clearing and grubbing on the land taken plus an amount not exceeding $49,687 for other costs relating to the land taken. The amount of $49,687 was calculated by applying the percentage of the area of the land taken to the total area of the property (12.6%) to the respondent’s estimate of the costs observed by Mr. Baur outside of the right-of-way, other than those not related to the golf course, which it considered might possibly have been adversely affected by the taking. This does not account for some clearing on the west side or other factors that may have contributed to the abandonment of the golf course.

6.3  Board’s Analysis

6.3.1  Use of the Reid Plan for the Golf Course

[39]  The single common ground in the expert evidence was the use of the Reid report to determine the location of the golf course that is the subject of the claim. However, even this common factor is the subject of some controversy.

[40]  The respondent submits that the claimant should be estopped from introducing the Reid plan in evidence. The board does not accede to that submission. We have reviewed the legal basis of this submission and find that it is akin to an argument that the issue is res judicata. We find that the direction of the Court of Appeal — to review evidence of costs thrown away — coupled with the agreement of the parties that additional evidence would be adduced, displaces any argument that the board is bound by the evidence and findings of the previous panel on this aspect of the evidence.

[41]  The golf course location postulated by Mr. Reid has not been proven to be definitive and correct. However, we find that it is the only available plan of what might have been in progress at the time and we find that it accords with the descriptions provided by the witnesses who were working on the property at the time. In order to properly assess the costs thrown away, the experts retained by both parties found the Reid plan to be useful. The board believes it was reasonable for both Mr. Reid and Mr. Baur to use this plan, in the absence of a more timely and accurate plan, in making the calculations contained in their reports.

6.3.2  Expert Approaches to Assessing Costs Thrown Away

[42]  The claimant and respondent take different approaches to the determination of the claim. However, both experts determine some total costs expended on different aspects of development and then estimate the portion of these costs that was thrown away.

6.3.2.1  Determining Total Costs

[43]  The claimant has based its claim on the amounts spent. However, there are some difficulties with the invoices that were submitted. We acknowledge the claimant’s statement that:

It is obvious that financial and accounting records were not kept in a way that contemplated being able to prove the cost or value of work in specific areas on the property, or related expense to the specific activities, or specific work undertaken within specific time periods.

[44]  The largest category of claimed expenses is for machine rental. For this cost we have only the total number of hours worked by each machine from 1993 to December 31, 1994, and an estimate of questionable accuracy of the 1995 machine time between the periods before and after the taking. There is no description of the work done during those periods of time. The enormous difference in the required hours of excavator time estimated by Mr. Baur and the hours claimed is a matter of concern. The concern is exacerbated by the fact that Mr. Brown was developing residential subdivisions on DL 1390 and DL1392 in 1993 and 1994 and the acknowledged deficiencies in accounting could have led to the misallocation of expenses.

[45]  The second largest category of cost is wages. For this we have a single total of wages and benefits claimed for each individually named person during the period 1993 to March 31, 1995, and similar totals of each person’s wages for the balance of 1995 and each subsequent year. There is no description of the nature of the work carried out other than the generalized testimony of Mr. Brown and Mr. Bartel.

[46]  The respondent has based its calculations primarily on cost estimates prepared by Mr. Baur from his estimate of the work done based on aerial photographs and topographic mapping. The board accepts the methodology used by Mr. Baur as a reasonable way to determine the value of the work done. It also has the advantage of providing a specific value attributable to different classes of work and, in the case of bulk earthworks, the amount of work done in different locations.

[47]  Mr. Baur’s work appeared to be carefully done. His determination of the location of cleared areas were generally consistent with the golf course map prepared by Mr. Reid except for hole 4 where Mr. Baur could see no evidence of clearing. The location of the three areas that he identified as the sites of bulk earthworks was not contested.

[48]  Generally speaking, the board considers the methodology used by Mr. Baur for determining some of the total development costs to be preferable to that of the claimant. This is primarily because of the paucity of information provided by the claimant with respect to the actual costs incurred in different kinds of work and on the different areas of the subject property. However,pursuant to sections 34 and 40 of the Act, the board must determine the "reasonable costs, expenses and financial losses (emphasis added)". In order to determine whether the claimant’s incurred costs are reasonable, we have analyzed the claim, evidence and calculations provided by both parties and compared the results.

6.3.2.2  Portion of Total Costs Thrown Away

[49]  Oncewe have determined some of the total development coststhere are a number of different ways to determine the percentage of costs thrown away on the lands taken. The alternatives include:

1. The 20% calculation used by the claimant based on Mr. Reid’s analysis of the amount of the golf course yardage located on the lands taken.
2. The relationship of the area of land taken to the total area of Lot 66 which amounts to 12.6%.
3. The ratio of the 7.5 hectares of land cleared and grubbed on the land taken to the 47.5 hectare total cleared and grubbed both as estimated by Mr. Baur. This amounts to 15.7%.

[50]  Alternative 2 would be appropriate if the claimant’s costs had been incurred evenly across the subject. However there is no evidence that such is the case. Accordingly the board considers alternatives 1 and 3 to be preferable to alternative 2. The board concludes that alternative 3 is the most reliable. It is based on Mr. Baur’s examination of aerial photographs, in conjunction with Mr. Reid’s plan, which enabled him to estimate the location and extent of the work that was carried out. We consider this to be an appropriate measure in the absence of any record maintained in or around the time that the work was carried out.

6.3.3  Board’s Findings on the Claimant’s Calculations

[51]  The claimant has provided calculations of expenses which are used in the determination of its claim broken down between the periods before and after the taking.

[52]  The $130,000 claim for remedial costs after the taking is 24% of $531,258, rounded. This claim is for work between April 1995 and 1996. As stated above,we find that this work relates to the remnant lands which we have determined to be outside our mandate. Accordingly, we disallow this portion of the claim.

[53]  The amounts listed by the claimant prior to the taking are as follows:

These amounts are less than those presented to the board in 2000 and also reflect reductions made during the course of this hearing.

[54]  We have reviewed and analyzed these costs and our findings are set out below.

i)  Equipment rental rates

[55]  Equipment rental is the largest category of expense and represents 58% of the costs pre taking.

[56]  The equipment is owned by companies related to the claimant. The rental charge is based on an hourly rate for each piece of equipment. All of the operating costs including fuel, repairs and maintenance, insurance and operator wages have been paid by the project and are included in other categories of cost.

[57]  Mr. Baur compared the rental rates charged by the claimant to those set out in the Blue Book rate guide published by the Province of British Columbia. The introduction to this publication states:

"The rates listed in this publication are intended as a guide which reflects as closely as possible the market rates within the Equipment Industry. They are intended primarily for use within government sponsored projects, but are also made available for private industry use through Crown Publications Inc. …"

Mr. Baur said the Blue Book lists industry accepted rates for construction equipment. The information contained in the extracts from the Blue Book provided by Mr. Baur appears to be detailed and comprehensive. Mr. Baur testified that a publication referred to by the claimant, published by the Island Equipment Owners Association, was not used as often as the Blue Book.

[58]  The claimant provided a copy of rates for hydraulic excavators contained in the 1993 edition of the Island Equipment Owners Association Membership Roster and Industry Rate Book. This rate sheet did not say whether the rates listed were "all found" but it seems likely that such is the case because the hourly rental rates listed are similar to the "all found" rates in the Blue Book:

[59]  The board finds the Blue Book to be more comprehensive and detailed than the Island Equipment Owners publication. Mr. Baur’s statement that the Blue Book was used more often than the Island Equipment Owners publication was not disputed, and the claimant provided only Island Equipment Owners rates for excavators in 1993. The board finds the Blue Book rates to be an appropriate yardstick for determining whether the rental rates for equipment used by the claimant belonging to related companies are reasonable for the purposes of sections 34 and 40.

[60]  The Baur report sets out the Blue Book "all found" and "all found less operator" rates for equipment used by the claimant. The "all found less operator" rate includes all ownership costs, operating costs, insurance and profit. Accordingly, the equipment rental rate sought by the claimant must be increased to include operating costs in making a comparison with the Blue Book rental rates.

[61]  The claim includes the following equipment operating costs in the construction costs claimed for the period 1993 to December 31 1994:

The board has not set out the additional costs claimed to March 31, 1995 because there is uncertainty about equipment hours during the first three months of 1995. This matter is discussed below.

[62]  The $9.27 hourly operating cost rate must be added to the equipment rate sought by the claimant in order to make a valid comparison with the Blue Book "all found less operator" rate. The board recognizes that the hourly fuel consumption and insurance costs will vary by machine, however we find that the use of an overall average rate does not materially distort the total figures produced by the table set out in the next paragraph.

[63]  The following is a comparison of the 1994 hourly rates claimed for equipment with significant usage, and the Blue Book rates:

Multiplying the 1993/1994 hours by the rate differential produces:

The total price differential of $286,364 represents 37% of the $777,826 claimed for these items of equipment during the 1993/ 1994 period.

[64]  The claimant submitted that the long term leasing obviated charges for time allowances for moving lesser used equipment on and off site and the board has taken this into consideration. We find that the claim for equipment usage shows that 89% of the total machine hours represented time on equipment where the individual machines averaged between 20 and 45 hours a week. Given this high usage, we find that any additional time allowance would be small and we have taken that into consideration in our overall view of the claim for equipment costs.

[65]  Weighing all of the evidence, the board finds that the equipment rental rates used by the claimant are not reasonable and, in order to be used as the basis of this claim, would have to be reduced by 33%.

ii)  Equipment usage

[66]  Mr. Baur estimated the following amount of excavator time to carry out the clearing and grubbing and bulk earthworks work:

[67]  The claimant is seeking payment for the following excavator hours:

[68]  Mr. Baur was aware of the difference and had no explanation for it.

[69]  The claimant argued that Mr. Baur had underestimated the time required, and said golf course work was more time consuming than clearing and grubbing for a highway. The claimant also produced a November 23, 2005 letter from Al & Son’s Excavating and Trucking saying that golf course clearing is more expensive than highway clearing. However Mr. Baur, who has golf course experience, did not agree. Additionally, in his report, Mr. Baur demonstrated that the costs he developed were higher than those quoted by a contractor for similar work on the highway project.

[70]  The time listed by the claimant for other equipment is closer to the time estimated by Mr. Baur:

The 2500 dump truck hours estimated by Mr. Baur relate to bulk earthworks. We have determined for reasons set out later in this decision that approximately one half of this work would have been done before the taking and one half after the taking. The 5,113 dump truck hours listed by the claimant include 1,487 hours in 1994 which is reasonably close to 50% of Mr. Baur’s estimate of 2,500 hours. The balance of 3,626 dump truck hours listed by the claimant is greatly in excess of the balance of the hours estimated by Mr. Baur. However 2,539 of those hours were listed as 1996 and 1997 time and may not relate to the earthwork measured by Mr. Baur.

[71]  Excavator hours claimed include 112 hours in 1993 and 2,350 hours in 1994 for the JD Excavator 892 that was purchased in November 1993. There were no further equipment purchases until April 1994. The chronology of events provided by the claimant says that the work commenced on the new fairways in March 1994. If this is the case the usage of the JD Excavator prior to some date in March pertained to work unrelated to the golf course. This would explain part of the very large difference between the excavator time claimed and the time calculated by Mr. Baur. We do not know the monthly number of hours that the JD Excavator was used in 1994, however if it was equal throughout the year it would be 196 hours a month. This would give a total of 700 hours for the period November 1993 to March 31 1994, which the board finds to be unreasonable. The board disallows this portion of the claim.

iii)  Equipment charge for the period January to March 1995

[72]The claim for equipment charge for the period January to March 1995 is $100,452.

[73]  The final alignment of the highway was determined in November 1994 and the claimant signed a Section 3 Agreement on December 22 1994. The board would have expected that these two events would have resulted in the cessation of the building of the golf course even though they did not legally preclude its continuation.

[74]  The board questioned whether the 1995 time charges listed in the original claim as being for the three months ended March 31, 1995 were indeed for that period or for the whole of the calendar year. Mr. Brown responded to this question in a letter dated December 2, 2005 which said that the 1995 machine hours were for the whole year and not just for the first three months of the year. His response and the schedule attached thereto gives rise to further questions and issues which are discussed below.

[75]  Mr. Brown’s letter does not particularize the 1995 monthly machine time. This suggests that monthly records of machine time were not maintained and that the allocation set out in his December 2, 2005 letter is an estimate based on Mr. Brown’s recollection of events that occurred 11 years ago.

[76]  In his letter, Mr. Brown says machine time in 1995 should be weighted heavily to the period from January to March "as we were in full operation, because of the delay in the Ministry of Highways, signing the agreement, we felt that they may abandon the expropriation, so we were working toward the completion of the golf course". The claimant’s 2005 opening statement also says the golf course work was underway "as of the date of the taking in March of 1995."

[77]  These two statements conflict with the following excerpts from the claimant’s opening statement at the 2000 hearing:

By the end of 1994 work could not continue and alignment alternative 3 with perhaps the greatest impact since 1991 era interchanges had been abandoned, was chosen. ....

All development work stopped, and could not proceed until impact issues were finalized.

[78]  This statement is supported by evidence of the claimant’s agreement to cease work following on the receipt of the November 23, 1994 order by the provincial Ministry of Environment Lands and Parks ["MELP"] under the Water Act. An appeal dated December 22, 1994, prepared and filed on behalf of the claimant by Highland Engineering Services Ltd contains the following commitment:

"All Areas

1. All construction activity in the area shall cease except for the construction and maintenance of erosion and sediment control systems. [The exception to this recommendation is the privately owned lands not owned by the developer within D.L. 1390 and 1392.] If the developer wishes to continue to harvest timber and fill ravine 3 the following criteria must be met: ….. "

[79]  On January 18, 1995, the claimant received permission from MELP to upgrade an existing roadway to allow the removal of logs harvested within the right-of-way. The removal of timber and sand from the right-of-way was dealt with in paragraph 122 of the decision of the previous board:

[122] ... The board was not told what was done with the timber; presumably it was sold. The sand was largely used as a source of engineered fill for various areas of the remainder of the property, in preparation for housing and roads. These materials were clearly intended to benefit Sequoia Springs, and it therefore came as a surprise to see a claim for the costs of equipment used to cut and move the timber or remove the sand. One can only recover compensation for reasonable costs, expenses, and financial or business losses, and we have difficulty seeing these as a reasonable claim of any kind.

The Court of Appeal did not interfere with this portion of the decision of the previous board. We find that this machine time spent to upgrade an existing roadway does not amount to costs thrown away on the development, is not within the taking and, accordingly, is not within the mandate of this reconsideration.

[80]  Weighing all of the available evidence and testimony, the board has concluded that the claimant has failed to prove the claim for costs thrown away on the lands taken for equipment usage during the first three months of 1995. Accordingly, we disallow this portion of the claim.

iv)  Wages

[81]  This is the second largest category of expense and amounts to 32% of the total amount of the claimant’s listed costs for the period prior to the taking.

[82]  The $481,971 total relating to the period prior to the taking reflects reductions of $9,582 for ravine 3 wages and $10,000 previously awarded by the board for Jeff Wilson.

[83]  This wage cost listed by the claimant for the period before the taking, net of the $10,000 previously awarded with respect to Jeff Wilson, includes the following:

[84]  The amount claimed by Mr. Brown is based on a rate of $70 an hour plus benefits. Mr. Brown claimed 3,262 hours for the period prior to the taking which is identical to those of Tim Bartel. It seems reasonable to assume that Mr. Brown decided to use Tim Bartel’s hours as a measure of his own time.

[85]  Mr. Brown testified that he was involved in the operation of equipment. We note that a total of 8,230 hours is listed for Tim Bartel, Paul Gagnon, Krista Pearce, George Brown, Leigh Bartel and Ken Howard for the period 1993 to March 1995. All of them were described as being equipment operators. This compares with 7,360 hours of machine time listed for the period 1993 to December 31 1994, plus perhaps some portion of the 1995 machine time listed as 3,014 hours for the year. This seems to suggest that most of Mr. Brown’s time was spent in areas other than the operation of equipment.

[86]  In the previous decision, the board treated Mr. Brown’s time entirely as executive time, for which a loss had not been demonstrated, at paragraphs [126] – [128].

[126] The $253,000 claim made for Brown’s executive time is based on his evidence that during 1994 and 1995 he spent the vast majority of his time trying to make his dream of a residential golf course development on the subject property a reality. The amount claimed represents about 10% of the salary and management fees paid by Sequoia Springs to Brown in 1994 and 1995, and was said to have been based on an estimate that he spent some 3,262 hours in those two years working on this project.

[127] We accept that Brown likely spent considerable time with respect to the taking. Although Brown has framed his claim as time thrown away on golf course development, his claim is really one for executive time and the well-established principle is that there must be a financial loss to the claimant. See Pentecostal Assemblies of Canada v. British Columbia (1999), 66 L.C.R. 275 (B.C.E.C.B.). In this case there is no evidence of any loss to Sequoia Springs as a result of Brown’s time spent on golf course development. In any event, we note that there was no evidence of Brown's time spent in any development work that was thrown away.

[128] As a result we deny this claim for a portion of Brown's salary.

[88]  In this reconsideration hearing, the claimant adduced further evidence, mainly in the testimony of Mr. Brown, to demonstrate that Mr. Brown was involved in the physical labour of developing the property. We find that the claimant is entitled to compensation for that portion of Mr. Brown’s time that was spent in physical labour developing the property and that was wasted as a result of the taking. We find that this portion of Mr. Brown’s time should be treated as any other person hired to work on the project and should be reimbursed at reasonable industry rates.

[89]  We have not been provided with any allocation of Mr. Brown’s time between the various activities that he performed for the benefit of the claimant. The claimant shows a total of 7,360 machine hours for the period November 1993 to December 31, 1994. The equipment operators, excluding Mr. Brown, have a total of 8,230 hours from November 1993 to March 31, 1995. We do not know how many of these hours were for the three months to March 31, 1995 but think they would be small because of the Order under the Water Act. We believe the machine hours are fully accounted for by the time spent by machine operators other than Mr. Brown, however it is possible that they also did other work. We accept Mr. Brown’s testimony that he operated machinery but believe this would have occupied a minority of his time. We find that Mr. Brown spent considerable time at the site fulfilling functions that the claimant might otherwise have hired a foreman to perform. We also find that he spent time at the site fulfilling executive functions. In particular, we find that his time claimed after December 31, 1994 falls into the category of executive time. Weighing all of the evidence we believe it is reasonable to conclude that approximately one half of the time Mr. Brown has claimed was time he spent operating machinery and performing the functions of a foreman between November 1993 and December 31, 1994.

[90]  Mr. Brown’s time is claimed at $70.00 per hour. The board finds that is not a reasonable estimate of the rate the claimant would have paid for a foreman. The board finds that the foreman rate set out in Mr. Baur’s report, at $39.90 per hour, is a reasonable rate to apply. Applying this rate to 50% of his claimed time yields $65,076.90 (3,262 x 50% x $39.90).

[91]  The claim for time spent by Jeff Wilson was determined by the previous board who allowed $10,000 for time spent relating to the golf course. The board’s reasons and decision are in the following paragraphs:

[123] Sequoia Springs claims a total of $86,000 for Wilson's salary and benefits for his employment from March 1994 to March 1995. A claim for the statutory payments Sequoia Springs made on Wilson's behalf is also included.

[124] The board finds that Wilson was hired at a time when some golf course extension was still anticipated. Wilson said that he assisted Brown in discussing the layout of potential holes. However, there was no reference to any drawings or documents that Wilson reviewed or prepared. He had no involvement in the financial side of the development nor in the comprehensive planning process. Wilson spent much of his time promoting the sales of lots in the Fairway Village subdivision and he also assisted on the existing golf course. We have no basis to conclude that his entire salary for the year was wasted.

[125] After considering all of the evidence, we are prepared to conclude that Wilson would not have been offered the position unless there had been a genuine expectation of some golf expansion. We also accept that Wilson may have spent some modest amount of his time contributing to a design, despite the lack of any documents. In recognition of those factors the board awards $10,000, the equivalent of about two months of Wilson's salary.

The board finds that the claimant has not provided any additional evidence to substantiate this panel interfering with that finding. We disallow the claims for $76,016 included in wage costs prior to the taking and $5,250 after the taking.

[92]  We have deleted 700 hours of excavator time for the period 1993 to March 31, 1994. There should be a concurrent deduction of 700 hours of operator time, presumably that of Mr. Bartel because he was the only operator employed in 1993. Mr. Bartel’s hourly rate, including benefits, was $21.12 an hour yielding a reduction of $14,784. There should also be a reduction for wages relating to the post January 18, 1995 road upgrade referred to earlier. However we do not know when that work was done nor the number of hours involved, so we have made no adjustment. We find the amount would not be sufficient to materially affect our determination of the amount of the claim.

[93]  The claimant lists additional wages totalling $13,536. These are the wages of Craig Brown and B.J. Brown for flat monthly rates of either $300 or $1,000 a month during the period January to September 1994 and $636 for Doug Brown in October 1994. The claimant did not provide any explanation of the work performed by these family members. Given that the onus is on the claimant to prove each aspect of the claim and given the absence of any support for these wage claims, the board finds they are not substantiated and disallows them entirely.

v)  Environmental Compliance and Construction Costs

[94]  All of the amounts listed under the categories of "Environmental compliance" and "Construction costs" are supported by supplier’s invoices. However, many of these invoices are addressed to other companies in the Brown corporate group rather than the claimant. For example fuel, sewer material, culvert, seed, sandbags, plans, prints, posters, third party equipment rental, rebar and wire were billed to one or more of Sequoia Springs Golf Course, Barrie Brown or Barrie Brown Pontiac Buick. The board is unable to verify that these purchases were used for the DL 66 project as opposed to the company or person invoiced or some other entity within the Brown corporate group.

[95]  We accept Mr. Brown’s testimony that he or his companies already had existing accounts with many people who were suppliers to the project on DL 66 and that it was easier to use those accounts rather than applying for new accounts in the name of the claimant. Nonetheless we are concerned that many of the items claimed could have been used by other companies in the Brown group and that the failure to maintain separate accounts for the DL 66 project increased the possibility for error.

[96]  The claim of $6,130 for environmental compliance prior to the taking represents the cost of poly and other material used for environmental protection on the remnant land. This issue is covered by the earlier decision of the board which stated:

[121] ……. The board is only empowered to award "reasonable" costs and losses which are directly attributable to the highway or the taking, and it does not accept that it is reasonable to charge MoTH with the cost of remedial work to repair damage from work done in a manner that was in breach of statutory requirements.

The Court of Appeal did not interfere with this portion of the decision of the previous board. Given that this portion of the claim is in reference to costs thrown away on work on remnant lands, which is not part of our mandate in the reconsideration hearing, we disallow this portion of the claim.

[97]  The Construction costs claim comprises a wide variety of items the major ones being:

Fuel
Third party equipment rental
Sand and gravel
Engineering drawings
Material including sewer pipe and fittings, culvert, seed, rebar, wire, tape, saw, vest and boots, hose, sandbags, concrete blocks, osmocote, silva fibre, poly and geotextile.

[98]  Some of these costs were the subject of comment in the previous decision of the board including:

• Bills of Highland Engineering for $5,916.77 and $2,039.76 dated August and June 1994 are for overall site development and make no reference to the golf course. The previous board commented that there is no reference to Highland doing work on a golf course and that Mr. Stephens of that company confirmed that he was not retained for surveys of a golf course.

• Bills dated 1991 and 1992 totalling $6,187.00 from Kask Graphics for artwork, posters and folders which the previous board found had been used with no evidence that they had been rendered useless as a result of the highway.

• The 1993 and 1994 purchase of interlock blocks from Island Ready Mix for $5,221.60 for a vehicle compound which seemed to be unrelated to the highway. Mr. Brown testified in the current proceedings that concrete blocks were also used on hole 4.

The construction costs also include bills from C.R. Fuel totalling $7,650.00 for "hog fuel and sawdust deliveries to new subdivision" in the period March to May 1994. We find this is unrelated to the development.

[99]  The board has concluded that the construction costs for the period prior to the taking should be reduced from $142,943 to $118,538 by deleting the following:

[100]  It is clear that much of the work carried out by the claimant was not required solely for the proposed development. For example, a great deal of earthwork was carried out which had little or no relevance to the proposed development but has substantial value for the claimants present development plans. The claimant has provided no evidence of the costs incurred in these areas other than an estimate that the cost of filling ravine 3 was $96,947.74 which was incurred after the taking and was not included in its claim.

[101]  Mr. Baur estimated the cost of earthwork at $631,426 excluding any work done on the land taken. His estimate was based on comparing topographic maps at dates before and after the taking. Accordingly he was unable to determine the work done at the date of the taking or at any other point in time between the dates of the topographic maps. He was of the view that the majority of the earthwork was probably carried out during the claim period. He broke the earthwork into three distinct areas. Area 1, which Mr. Baur estimated had earthwork costing $372,136, was unrelated to the golf course and comprised primarily the filling of a ravine and the extension of Treelane Road.

[103]  The board has carefully reviewed all of the invoices submitted by the claimant. We find that the purchases of sand and gravel show that approximately one half was purchased before the taking and one half after the taking. Although Mr. Baur considered that most of the work was undertaken or completed prior to the taking, we have concluded that the sand and gravel purchases provide a proxy for earthwork activity and support a finding that approximately one half of the total earthwork was done prior to the taking and one half after.

[104]  Using Mr. Baur’s estimate of an Area 1 earthwork cost of $372,136, this would yield $186,068 relating to the period before the taking. We find this is a reasonable figure. We find it is supported by the claimant’s calculation that it spent $96,947 after the taking on Area 1 ravine fill alone. We also note that the claimant has already reduced the wage component of its claim by $9,582 for wages relating to the filling of the ravine. We find the net reduction for Area 1 earthwork before the taking is $176,486 which must be deleted from the total costs since it is unrelated to the golf course.

[105]  We have not made any deduction for the earthwork in Areas 2 and 3 which are approximately adjacent to each other on opposite sides of the highway taking. A review of the map suggests that these two areas may have been a single large area before the taking. Mr. Reid testified that he thought earthwork would have been done on the highway right of way between Areas 2 and 3. Any earthwork in this combined area would be included in the claimant’s costs and would include any earthwork within the taking, the amount of which could not be calculated by Mr. Baur. The inclusion of these costs ensures that earthwork costs carried out within the taking are included in the calculation of the costs thrown away.

[106]  The following are the board’s revisions to the claimant’s determination of costs prior to the taking:

[107]  Applying the 15.7% as the best estimate of the portion of costs thrown away on the land taken yields the following:

6.3.4  Board’s Findings on the Respondent’s Calculations

[108]  The board has determined that its mandate does not extend to costs thrown away on the remnant lands. Accordingly we make no order with respect to those costs on the remnant land which Mr. Baur calculates at $87,452.

[109]  Mr. Baur acknowledged that he did not include any specific provision for environmental expenses, engineering, surveying, golf course design or contingencies in his calculation of golf course costs. However he said he had allowed for contingencies in the rate of production used to estimate costs.

[110]  The board notes that no formal golf course design was prepared prior to the commencement of the work and that Mr. Brown testified that the determination of the precise location and configuration of the course was made as work progressed based on the natural features of the land. The golf course location was determined by Mr. Brown with the assistance of Mr. Wilson. The previous board made an award for the time of Mr. Wilson and also commented that Mr. Stevens of Highland Engineering Services Ltd, the claimant’s consulting engineers, said he was not retained for surveys for a golf course. We have found no bills for golf course surveys or engineering in the costs for which the claimant seeks reimbursement for costs thrown away. Accordingly we have determined that it is not necessary to consider increasing the costs estimated by Mr. Baur to allow for engineering, surveying or golf course design.

[111]  Mr. Baur acknowledged that he did not assess environmental costs and these could increase his cost estimates. Weighing all of the evidence and testimony we have determined that Mr. Baur’s cost estimates should be increased by 10% to provide for environmental costs and contingencies.

[112]  Mr. Baur estimated a total cost of $249,290 for Area 2 and 3 earthworks. They covered a total area of 6.13 hectares on opposite sides of the taking for an average cost of $40,667 a hectare. An examination of the map of D.L.66 shows that the area of the taking lying between Area 2 and Area 3 amounts to approximately 1 hectare. If the earthworks in Areas 2 and 3 extended across the highway right of way and were completed prior to the taking, it would be reasonable to assume that the cost of the earthworks in the 1 hectare area of the taking would be $40,667. However we do not know how much of the total earthwork in Area 2 and 3 was done at the time of the taking. As we discussed earlier, the board has found the dates of purchases of sand and gravel to be a proxy for the timing of earthworks and we find it is reasonable to estimate that one half of the earthwork would have been done at the date of the taking. This would indicate an earthwork expenditure of $20,333 by the claimant on the land taken.

[113]  Based on the evidence, and making the best we can of such information as we have where there is no direct evidence, the board has determined that a claim for costs thrown away on the land taken, using the costs developed by Mr. Baur, is as follows:

6.4  Board Conclusion

[114]  Our calculations of reasonable costs thrown away amount to $102,000 using the claimant’s methodology, and $114,000 using the methodology employed by Mr. Baur. As indicated above the board considers the methodology used by Mr. Baur to be preferable to that of the claimant.

[115]  The board awards the claimant $114,000 for costs or expenses incurred or expended on the land taken.

7.  INTEREST

7.1  Regular Interest

[116]  An award of interest is governed by s. 46 of the Act. Section 46(1) provides:

[117]  For the purposes of this decision, an advance payment was made to the claimant on November 18, 2005, in the total amount of $156,625.70, allocated as follows:

[118]  The claimant submits an entitlement to interest from March 31, 1995 until payment. The board agrees that March 31, 1995 is the appropriate date. The claimant is entitled to interest on that part of the award that is in excess of that part of the advance payment that is allocated to compensation for disturbance damages and business losses. The board awards interest on $27,548under section 46(1) from March 31, 1995 until paid.

7.2  Additional Interest

[119]  Section 46(4) provides:

(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.

[120]  That part of the advance payment allocated to compensation for disturbance damages and business losses was 76% of the amount awarded. Since this is less than 90% the claimant is entitled to additional interest at 5% on the $27,548 difference between the amount awarded and the amount of the advance payment, from November 19, 2005 until the date of this decision.

[121]  This board in Richland Farms Ltd. v. British Columbia (Ministry of Transportation and Highways) (1991), 46 L.C.R. 66 established that interest under section 46(1) compounds annually, while additional interest under section 46(4) provides for simple interest only.

8.  COSTS

[122]  The parties settled the issues of costs up to and including the Court of Appeal proceeding. Accordingly, the only costs to be determined are those incurred on this reconsideration hearing.

[123]  Section 45 of the Act governs entitlement to costs, with the Tariff of Costs Regulation B.C. Reg. 189/99, which governs legal and real estate appraisal costs . The pertinent sections for this decision are sections 45(3), (4), and (7).

[124]  The compensation awarded of $114,000 is greater than 115% of that part of the advance payment allocated to compensation for disturbance damages and business losses.Pursuant to s. 45(3) of the Act the claimant is entitled to "costs necessarily incurred ... for the purpose of asserting his or her claim for compensation." Section 45(7) provides that costs are the "actual reasonable legal, appraisal and other costs, or … the amounts prescribed in the Tariff…"

[125]  Section 3 of the Tariff provides for the board to assess costs on a Scale of 1 to 3. 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. Section 4 provides that, when fixing the scale, the board may take into account, among other things, whether difficult issues of law, fact or construction are involved.

[126]  The claimant submits that this is case of significant complexity beyond ordinary difficulty and should be assessed at Scale 3.

[127]  The respondent submits that Scale 2 is appropriate for this case noting that there are not many legal issues in this claim and that the only complexity was the difficulty of determining what work the claimant was doing on the land prior to the taking.

[128]  The board finds that the evidence does not establish that this case is beyond the range of ordinary complexity andsees no reason to depart from the presumption found in section 4(3) of the Tariff in favour of Scale 2. Therefore legal costs will be at Scale 2.

THEREFORE IT IS ORDERED THAT the respondent shall pay to Sequoia Springs West Development:

1. Compensation under sections 34 and 40 of the Act for disturbance damages and business losses in the sum of $114,000.

2. Interest under section 46(1) of the Act on $27,548 f rom March 31 , 1995 until paid. Pursuant to section 46(2) and (3) of the Act, interest shall be calculated annually at the rates set out in Appendix A.

3. Additional interest under section 46(4) of the Act at 5%, on $27,548 from November 19, 2005 until the date of this decision;

4. Its costs necessarily incurred for the purpose of asserting its claim for compensation pursuant to section 45(3) and (4) of the Act. The legal costs s hall be those prescribed in the Tariff pursuant to section 45(7)(b) of the Act fixed at Scale 2. Other costs payable shall be the actual reasonable costs pursuant to section 45(7)(a) of the Act. The costs shall be in such amount as may be agreed upon, and failing such agreement in such amount as may, upon application, subsequently be determined and allowed.

APPENDIX A

• Eight per cent (8.00%) from January 1, 1995 to June 30, 1995
• Eight and three-quarters per cent (8.75%) from July 1, 1995 to December 31, 1995
• Seven and one-half per cent (7.50%) from January 1, 1996 to June 30, 1996
• Six and one-half per cent (6.50%) from July 1, 1996 to December 31, 1996
• Four and three-quarters per cent (4.75%) from January 1, 1997 to June 30, 1997
• Four and three-quarters per cent (4.75%) from July 1, 1997 to December 31, 1997
• Six per cent (6.00%) from January 1, 1998 to June 30, 1998
• Six and one-half per cent (6.5%) from July 1, 1998 to December 31, 1998
• Six and three-quarters per cent (6.75%) from January 1, 1999 to June 30, 1999
• Six and one-quarter per cent (6.25%) from July 1, 1999 to December 31, 1999
• Six and one-half per cent (6.5%) from January 1, 2000 to June 30, 2000
• Seven and one-half per cent (7.5%) from July 1, 2000 to December 31, 2000
• Seven and one-half per cent (7.5%) from January 1, 2001 to June 30, 2001
• Six and one-quarter per cent (6.25%) from July 1, 2001 to December 31, 2001
• Four per cent (4.00%) from January 1, 2002 to June 30, 2002
• Four and one quarter per cent (4.25%) from July 1, 2002 to December 31, 2002
• Four and one half per cent (4.5%) from January 1, 2003 to June 30, 2003
• Five per cent (5.00%) from July 1, 2003 to December 31, 2003
• Four and one half per cent (4.5%) from January 1, 2004 to June 30, 2004
• Three and three-quarters per cent (3.75%) from July 1, 2004 to December 31, 2004
• Four and one quarter per cent (4.25%) from January 3, 2005 to June 30th, 2005
• Four and one quarter per cent (4.25%) from July 1, 2005 to December 31, 2005