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Home > New Brunswick > Court of Queen's Bench of New Brunswick > 2007 NBQB 208 (CanLII)
Rankin v. PNB, 2007 NBQB 208 (CanLII)
| Date: | 2007-06-08 |
| Docket: | F/M/97/03 • F/M/115/00 |
| URL: | http://www.canlii.org/en/nb/nbqb/doc/2007/2007nbqb208/2007nbqb208.html |
Reflex Record (noteup and cited decisions)
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· Court of Queen's Bench of New Brunswick
Rankin/Rowan v. PNB, 2005 NBQB 106 (CanLII)
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Legislation cited (available on CanLII)
- Expropriation Act, R.S.N.B., 1973, c. E-14
IN THE COURT OF QUEEN’S BENCH OF
TRIAL DIVISION
JUDICIAL DISTRICT OF FREDERICTON
Citation: Rankin v. PNB - 2007 NBQB 208 Docket: F/M/97/03
F/M/115/00
Date: 20070608
IN THE MATTER OF an application for determination of the compensation payable in accordance with the Expropriation Act, chapter E-14, R.S.N.B. 1973, arising out of an expropriation carried out under the said Act.
B E T W E E N:
EDITH RANKIN,
Applicant;
- and -
Respondent;
A N D B E T W E E N:
WILLIAM and BARBARA ROWAN,
Applicants ;
- and -
Respondent.
Date of Hearing: February 21, 2006
Date of Decision: June 8, 2007
Before: Madam Justice Paulette C. Garnett
Appearances: Douglas A. Caldwell, Q.C. and Greg G. Byrne, Q.C. for the Applicants.
Richard Williams, Esq., for the Respondent.
D E C I S I O N
GARNETT, J.
[1] The issue before the Court is the amount of costs to which the Applicants are entitled for legal and appraisal fees as a result of application made by them under the Expropriation Act, R.S.N.B. 1973, c. E-14.
BACKGROUND
[2] In 1997, the Province expropriated land from the Applicants for the purpose of constructing a new portion of the
[3] Rankin claimed $146,300 made up as follows:
I Market value of land taken $ 12,180
($3,705 per ha. x. 3.286 ha.)
II Loss in value of remaining land
A. The “brook” parcel $ 20,661
B. The south parcel $ 65,680
III Other injurious affection claims:
A. Loss in wood sales $ 9,000
(3 truckloads x $3,000)
B. Floating equipment over 30 years $ 3,578
($18,000 discounted at 8 percent)
C. Owner’s time $ 30,400
D. Long distance phone charges $ 180
E. Mileage $ 612
F. Photocopying $ 9
G. Culverts $ 3,000
H. Loss in gravel sales at $1 per cubic yard ?????
I. Survey of property line $ 1,000
Total $146,300
[4] Initially, the Province offered:
I Market value of land taken $ 5,000
($1,518 per ha. x 3.286 ha.)
II Injurious affection $ 0
Total $ 5,000
[5] I awarded:
1. Market value of land taken $ 5,632
((1,714 per ha. x 3.286 ha)
2. Long distance phone charges $ 180
3. Mileage $ 612
4. Photocopying $ 9
5. Culverts $ 3,000
6. Survey of property line $ 1,000
Total $ 10,433
(minus $5000 already paid)
[6] Subsequent to the decision, the Court was informed that the Province had offered $20,000 (minus $5,000 which had already been paid) on March 9, 2004. Therefore, Rankin was awarded $9,567 less than she could have obtained had she accepted the Province’s Offer to Settle.
[7] The Rowans claimed:
I. Market value of the land taken $ 19,122.00
II. Loss in value to remaining land $ 67,465.00
III. Owner’s time $ 1,480.00
IV. Mileage $ 170.75
V. Telephone $ 9.95
VI. Interest Charges $ 100.00
Total $ 88,347.70
[8] Initially, the Province offered:
II Injurious affection $___ 0
Total $ 7,800
[9] I awarded:
I Market value of the land taken $ 8,843
($1,714 per ha. x 5.159 ha)
II Mileage $ 171
III Telephone $ 10
IV Interest Charges $ 100
V Culvert Repair $ 873
Total $ 11,497
(Minus $7,800 already paid)
[10] Again, subsequent to the decision, I have been informed that on December 3, 2003 the Province offered $18,000 (minus the $7,800 already paid). Therefore, the Rowans received $6,503 less than they would have received had they accepted the Province’s Offer to Settle.
[11] The same counsel appeared on behalf of both Mrs. Rankin and the Rowans. There is affidavit evidence that legal fees and disbursements outstanding as of July 25, 2005 were as follows:
Rankin $77,935.36
Rowan $68,087.42
The trial took five days.
ANALYSIS
[12] Section 52 of the Expropriation Act, supra, provides:
52(1) The Court shall award costs on the basis of the following rules, namely:
(a) where the compensation awarded by the Court exceeds the amount offered by the statutory authority, the statutory authority shall pay the legal, appraisal and other costs reasonably incurred by the owner in asserting his claim to compensation, and
(52) where the compensation awarded by the Court does not exceed the amount offered by the statutory authority, the costs shall be in the discretion of the Court on such basis as the Court considers just,
and the Court shall determine what are reasonable costs and shall fix the amount of costs to be paid by or to the statutory authority.
52(2) For the purposes of subsection (1), the Court shall have regard to the most recent offer of settlement of the compensation payable, if any, made by an expropriating authority or a statutory authority not less than ten days before the commencement of the hearing in respect of the notice of arbitration or, where the hearing is adjourned, not less than ten days before the hearing reconvenes.
[13] Section 52.1 states:
52.1(1) An expropriating authority or a statutory authority may at any time make an offer of settlement of the compensation payable in response to a notice of arbitration.
[14] The Applicants say that the question of costs in expropriation matters is different from that in other types of litigation. They say that in expropriation cases there is a “philosophy of full indemnity”.
[15] Because both Applicants were awarded less than the amount offered by the statutory authority, it is section 52(1)(b) which applies.
[16] Careful reading of section 52(1), quoted above, reveals that there is a difference between the direction contained in subparagraph (a) and that in (b). Under (a), the authority “shall pay the legal, appraisal and other costs reasonably incurred.” I agree that the section does reflect a “philosophy of full indemnity”. Under (b), however, “the costs shall be in the discretion of the Court on such basis as the Court considers just”. Under (a), it appears that the only question which the Court can address is whether the costs were “reasonably incurred”. Under (b), the Court has a much wider mandate.
[17] The Applicants refer to a report of the Ontario Law Reform Commission (1967) which was quoted by Justice Pugsley in Nova Scotia v. L. E. Powell Properties Ltd. (1995) 56 L.C.R. 306 (N.S.C.A.) at page 320:
Approaching the costs problem from the indemnity aspect, there is no reason why the claimant should not be fully compensated for his legal and appraisal expenses. It is not the same situation that exists where two private litigants are engaging in a contest before the courts and where costs, in all likelihood, will be paid by the loser to the winner. Here, the state has intervened and injured one of its subjects in the enjoyment of his property. Since the purpose of compensation is to make the xpropriate economically whole, he should be fully reimbursed for the legal and appraisal costs incurred …he should be entitled to these costs whether or not his claim went to arbitration. Merely because he settles is no reason why he should be out of pocket.
Certainly, in expropriation cases, claimants should not be placed in a position where they are afraid to consult the legal professional because they are apprehensive about the costs. The same applies to seeking the advice of an appraiser. People should be placed in a position which gives them freedom of action in seeking advice. In this way, they will be more likely to feel fairly treated and that the expropriating authority has not taken advantage of them.
[18] In Toronto Area Transit v. Dill Holdings (1997) 206 N.R. 321 (S.C.C.) Justice Cory said the following:
The expropriation of property is one of the ultimate exercises of governmental authority. To take all or part of a person’s property constitutes a severe loss and a very significant interference with a citizen’s private property rights. It follows that the power of an expropriating authority should be strictly construed in favour of those whose rights have been affected. This principle has been stressed by eminent writers and emphasized in decisions of this court.
[19] In McLeod v.
The court is left with the difficult task of balancing what is reasonable without creating a situation which makes it impossible for citizens to counter a valuation prepared by an expropriating authority. If the latter were to occur only the rich could fight the government. The intention of section 52 of the Expropriation Act is to fully compensate a citizen for reasonable costs and the court should err on the side of the person whose land was expropriated.
[20] In the McLeod case, Justice Rideout referred to Rule 59.02 in arriving at what was reasonable in the circumstances. I will do the same. Rule 59.02 reads:
59.02 Costs of a Proceeding
In fixing costs, the court may consider
(a) the amount claimed and the amount recovered,
(b) the apportionment of liability,
(c) the complexity of the proceeding,
(d) the importance of the issues,
(e) the conduct of any party which tended to shorten or unnecessarily lengthen the duration of the proceeding,
(f) the manner in which the proceeding was conducted,
(g) any step in the proceeding which was improper, vexatious, prolix or unnecessary,
(h) any step in the proceeding which was taken through over-caution, negligence or mistake,
(i) the neglect or refusal of any party to make an admission which should have been made,
(j) whether or not two or more defendants or respondents should be allowed more than one set of costs, where they have defended the proceeding by different solicitors, or where, although they defended by the same solicitor, they separated unnecessarily in their defence,
(k) whether two or more plaintiffs, represented by the same solicitor, initiate separate actions unnecessarily, and
(l) any other matter relevant to the question of costs.
(a) The amount claimed and the amount recovered
[21] Rankin claimed $146,300 plus an unspecified amount for loss of gravel sales. She recovered $10,433 (7.1% of claim). She was offered $20,000 before trial.
[22] The Rowans claimed $88,347.70. They recovered $11,497 (13% of claim). They were offered $18,000 before trial.
(b) The complexity of the proceedings
[23] In both cases, vacant land was taken and the Applicants’ remaining land was severed. There are numerous cases dealing with similar circumstances. The matter was not complex.
. . .
(e) The conduct of any party which tended to shorten or unnecessarily lengthen the duration of the proceedings
[24] Both Rankin and the Rowans made claims which were tenuous at best. For example, Rankin made a claim for “loss of gravel sales”. No attempt was made to quantify this claim and no evidence was called to support it. Rankin also claimed losses in wood sales and the cost of moving equipment. Again, there was little evidence in support. Both Rankin and the Rowans claimed for reimbursement for “owner’s time”. Mrs. Rankin and the Rowans are all retired and did not lose any time from any form of occupation. In the Rankin case, the claim was for $30,000 and was made on behalf of her sons. Even if her sons’ time were compensable, there was no evidence that either missed any time from their work in order to help their mother.
[25] In both cases, there was a claim for loss of value to the south parcel of land, that is, the parcel which was on the opposite side of the highway. These claims were based in part on the appraiser’s assertion that an access road built by the Province was not a public road. It was clear long before trial that the road was public and that the argument that the south parcel was less accessible than it had been before expropriation was not valid. Nevertheless, the appraiser persisted in his assertions based on the road being a private road. The Rankin claim for loss of value for this portion was $65,680 and the Rowan claim was $67,465. Neither was awarded any amount for loss in the value because there was evidence that the parcels were more accessible and the land was worth at least as much (and perhaps more) after expropriation.
[26] As stated at the beginning, these were tenuous claims which made settlement impossible.
[27] In addition, there was evidence that the appraiser who testified on behalf of both parties was persuaded to alter his expert report. In Rowan, he increased his estimate of the loss from $56,000 to $86,500, an increase of 54.46%. He was unable to offer an explanation for the dramatic increase. As a result of this, and other considerations, I did not accept his opinion.
[28] (I wish to emphasize that neither Mrs. Rankin nor the Rowans had any expertise in these matters. In asserting their claims, they were merely following the advice of the experts they had hired to advise them.)
. . .
(i) The neglect or refusal of any party to make an admission which should have been made
[29] As stated above, the appraiser for the parties would not accept that the road, constructed by the Province, was a public road. This fact was not debatable; it was clear, however, it was not a fact which supported his opinion on compensation so he ignored it. This led to the very inflated claims for loss in value and prevented settlement.
. . .
(l) Any other matter relevant to the question of costs
[30] In an affidavit submitted by the Province, John Raymond, who is Assistant Director of the Land Management Section, stated in part the following:
6. The Province is aware of the provisions of section 52(1) of the Expropriation Act which requires the statutory authority to pay to the landowner his legal appraisal and other costs reasonably incurred in the event that the Court awards the landowner more compensation than which was offered by the Province.
7. It has been the policy of the Province to pay such costs to the landowner even in the event the matter is settled without a Court decision, as the Province feels that the landowner should have the opportunity to reasonably retain, consult and instruct legal counsel and appraisal and other experts. To do otherwise, would put the landowner in an unequal bargaining position in resolving the issue of fair and reasonable compensation in the event of an expropriation.
8. The Province has noted, in the past few years, that some legal and appraisal experts appear to be taking advantage of section 52(1) of the Expropriation Act, and the position as expressed immediately above, to put forward what the Province considers to be excessive settlement proposals which leave no chance of resolution. This results in the issue of compensation being decided by the Courts and then, after trial and irrespective of the outcome, they seek Costs on a solicitor and client basis. It is for this reason that I instructed the Province’s solicitor to file the Offers to Settle as referred to in paragraphs 3 and 4 above.
. . .
11. Attached hereto as Exhibit “7” is a copy of the retainer agreement between Patterson Palmer Law and Gerard Levesque, dated February 2, 1999, in another expropriation action.
12. It is my understanding that the retainer agreement in Levesque is a standard form agreement which Patterson Palmer uses in expropriation cases in
13. I believe that Edith Rankin and the Rowans have similar arrangements with Patterson Palmer, as no legal accounts are contained in the Bill of Costs.
14. Attached hereto as Exhibit “8” is a copy of a letter from Patterson Palmer dated June 10, 2002 which relates to whether or not Edith Rankin or the Rowans have any liability for costs.
[31] The Province says that these and other expropriation cases were litigated by the law firm on the understanding that “the Provincial Government will be billed for all reasonable legal services …” They say that Mrs. Rankin and the Rowans have not been billed for the services provided and never will be.
[32] Counsel for the Applicants says that the fee arrangements between the firm and their clients is “irrelevant” and outside the jurisdiction of the Court. He says it is the Court’s task to simply determine what is reasonable in the circumstances and award that amount.
[33] In the case of Joyce v. City of Saint John (1979), 27 N.B.R. (2d) 45, Justice Richard recognized that expropriation sometimes fosters greed. He quoted with approval the following passage from Bellanger v. King (1920), 19 Ex. C.R. 423:
The policy of the Expropriation Act is to enable the court to compensate the owner; but not to penalize or oppress the expropriated (sic) party. The court must guard against fostering speculation in expropriation matters, and must not encourage the making of extravagant claims and more especially must guard against being carried away by the subtle arguments of real estate speculators or expert witnesses and thus render the execution of public works unfeasible or prohibitive. While the owner must be amply compensated in that he is no poorer after the expropriation, it is no reason to charge the public exchequer with exorbitant compensation built upon an imaginary or speculative basis.
[34] Agreements involving maintenance and champerty have been illegal since approximately the fourteenth century. In Halsbury’s Laws of England, Fourth Edition, at Volume 9(1), paragraph 850, these terms are defined as follows:
Maintenance may be defined as the giving of assistance or encouragement to one of the parties to litigation by a person who has neither an interest in the litigation nor any other motive recognized by the law as justifying his interference. Champerty is a particular kind of maintenance, namely maintenance of an action in consideration of a promise to give the maintainer a share in the proceeds or subject matter of the action.
Historically, all contingency fee agreements were champertous. Today such agreements are enforceable if they comply with certain statutory requirements.
[35] Courts have long treated contracts of this kind as being against public policy because they are “an abuse of process and an encouragement to unwarranted litigation”.
[36] In this case, the Province alleges that the firm which represented the Applicants agreed not to charge them any amount for legal fees. Instead, the firm would recover their fees from the Province under the provisions of the Act. Such an agreement could have a number of deleterious effects, such as:
1. The Applicants would have little reason to settle;
2. The lawyers would have little reason to encourage settlement;
3. The lawyers would not monitor their fees as they would in other litigation matters;
4. There would be a tendency to make extravagant, tenuous claims;
5. If the Applicants were advised that the claims had merit, they would be disappointed in the result;
6. Experts would be encouraged to inflate their valuations;
7. Court time and resources would be wasted;
8. The cost of public works would escalate.
[37] As stated above, counsel for the Applicants says that the Court does not have jurisdiction to consider the firm’s arrangement with the clients. I agree that the validity and the enforceability of those contracts are not before the Court; however, I do not agree that they are not relevant. At the very least, they may explain why these matters got so out of hand.
[38] In these cases, there were extravagant, tenuous claims made and little or no attempt was made to prove them. Recovery was far less than the amount claimed and the expert evidence offered was discredited. The Applicants received less than was offered by the Province. Against this background, lawyers for the Applicants have submitted time and disbursement records in the following amounts:
Rankin - $77,935.36 (The claim was for $146,300. The award was $10,433)
Rowan - $68,087.42 (The claim was for $88,347.70. The award was $11,497)
THE ACCOUNTS
[39] In Rankin, two offices of the law firm were involved. At the
[40] In light of all the factors discussed above, I find that the time spent was excessive and the bill is unreasonable. I therefore award the following costs:
1. Legal fees $20,000.00 plus HST
2. Disbursements (as agreed) $ 5,864.14
3. All disbursement paid directly by Mrs. Rankin contained at Tab B of Douglas Caldwell’s affidavit will be paid to Mrs. Rankin.
[41] In Rowan, again, two offices of the firm were involved and numerous individuals in each office billed time to the file. Lead counsel billed 114 hours and the two offices together billed 283.1 hours. From approximately February 2003, that is, almost two years before trial, the Parties intended to conduct the two trials together. In all, the two offices are claiming $52,226.50 in legal fees. Again, I find the time spent was excessive and the fees are unreasonable. I therefore award the following costs:
1. Legal fees $17,500.00 plus HST
2. Disbursements as agreed $ 5,590.69
3. All disbursements paid directly by the Rowans contained at Tab B of Douglas Caldwell’s affidavit will be paid to Mr. and Mrs. Rowan.
[42] The costs not approved herein shall not be recoverable from the Applicants.
[43] There will be no further costs on the Application for Costs.
____________________________________
Paulette C. Garnett, J.C.Q.B.
by
for the
Federation of Law Societies of Canada
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