In its recent decision in Antrim Truck Centre Ltd. v. Ontario (Transportation), 2013 SCC 13, the Supreme Court of Canada has clarified the legal test for determining whether a property owner is entitled to damages for injurious affection resulting from construction of a public project. The Court has ruled that the mere fact a public authority is acting in the public good when undertaking a building project will not, by itself, insulate the public authority from liability to nearby property owners for injurious affection.
Briefly put, the ability to claim damages for injurious affection is a statutory remedy that has arisen in response to a limitation of the law of nuisance. At common law, a property owner may take legal action against a neighbour, where that neighbour’s activities cause a substantial and unreasonable interference with the use and enjoyment of that property, i.e., a “nuisance”. However, public authorities are generally able to rely on the defence of statutory authority to avoid common law nuisance claims. As a result, many statutes provide a remedy for injurious affection.
Typically, injurious affection may be claimed where the value of a person’s real property has decreased because of the construction of a public project, even if none of the owner’s property has been expropriated for the project. It also can occur when a portion of the owner’s property has been expropriated and the project has negative effects on the value of the remaining property.
Antrim Truck Centre involved a truck stop located on a highway near Ottawa that was made obsolete when the Province opened a parallel highway nearby. Access to the truck stop became very difficult. The truck stop owner brought a claim for damages for injurious affection in front of the Ontario Municipal Board. The Board awarded it $58,000 for business loss and $335,000 for loss in market value of its land.
The Court of Appeal set aside the decision on the basis that the Board incorrectly applied the law of private nuisance, when determining if injurious affection had occurred. One of the necessary elements that a plaintiff must prove in a claim for injurious affection is that were it not for the defence of statutory authority, the conduct complained of would have been an actionable nuisance at common law. Essentially, the Court of Appeal found that because the Province was doing something reasonable with its property (i.e. building a new highway to increase public safety), it did not have to compensate the truck stop owner, even though the interference with the value of the truck stop property and the impact on the business were significant. It held that the Ontario Municipal Board had neglected to consider the utility of the project when making its determination.
The truck stop owner appealed to the Supreme Court of Canada and won. In its decision, the Court strongly emphasizes that the severity of the interference with the property owners’ rights and the public benefit of the project are not equal considerations. The Court held that if these two considerations were equally weighted, a property owner would never be entitled to damages in any case where the project in question was of significant public benefit. This would undermine the statutory purpose of providing a right of compensation for injurious affection.
When determining whether a person is entitled to damages for injurious affection, the Court has stated that the question is whether in all of the circumstances, the individual claimant has shouldered a greater share of the burden of construction than it would be reasonable to expect individuals to bear without compensation.
The activities complained of must interfere with a person’s land in a way that is both substantial and unreasonable. The threshold for determining whether an interference is “substantial” is low – the interference must be more than a slight annoyance or trifling interference.
Once a substantial interference has been established, the analysis shifts to a determination of whether it is unreasonable, taking into account both the public benefit of the project, and the degree of harm. The Court has endorsed several factors to consider when balancing the gravity of the harm against the utility of the public authority’s conduct. These include the severity of the interference, the character of the neighbourhood, and the sensitivity of the plaintiff, as well as the duration and frequency of the interference. As noted above, the severity of the interference and the public benefit of the activity are not equal considerations.
The Court referred to some examples of when the public benefit arising from a project will outweigh the loss suffered by the claimants. It cited a case where the only damage suffered by the claimants from the construction of a highway was the loss of their view and loss of privacy. In that case, the utility arising from the construction of the highway to the public in general outweighed the relatively minor loss suffered by the claimants. It also mentioned cases where the disruption was temporary, such as during a demotion and rebuilding. It held that generally speaking, damages for injurious affection will not result from such interferences.
The Court clarified that the reasonableness analysis must be applied in all cases, and that there is no presumption of unreasonableness in cases involving physical or material interference with property. This was a previously unresolved issue in the case law, with some cases, including BC cases, stating that compensation was automatic when the interference was material or physical, and that the reasonableness test only had to be applied in cases where the loss claimed was a loss of amenities.
In Antrim Truck Centre, the Court held that the construction of the new highway inflicted significant and permanent loss on the truck stop owner. In effect, the loss of easy access to the truck stop from the highway rendered the truck stop almost valueless. The loss was such that an individual should not be expected to bear for the greater public good without compensation.
This case is significant to local governments because it clarifies that they cannot rely on the fact that a project has significant public benefits to avoid paying damages for injurious affection. The Court’s reliance on a flexible standard of reasonableness means that predicting if a court would award damages for injurious affection may not always be easy. However, the effect of a project on nearby property owners must be carefully analyzed using the framework outlined in Antrim Truck Centre in order to approximate the project’s actual cost.
One question left unanswered by Antrim Truck Centre is whether the door is now open to claims for business losses in all injurious affection cases. The Court did not address it because the legislation in question specifically allowed for business losses to be claimed. Section 33 of the Community Charter is not as clear, but the existing line of cases leading up to Antrim Truck Centre, including the Supreme Court of Canada’s watershed judgment in Loiselle v. R.,  S.C.R. 624, has limited damages for injurious affection to loss in value of the land itself, not additional types of damage such as business losses. The Court in Antrim Truck Centre did not discuss this traditional limiting factor, perhaps because it wasn’t necessary to decide the case, but in declining to even mention it, the Court has cast some doubt on its continued validity. It remains to be seen how the law will be interpreted in future cases.