Indexed As: Gimbel et al. v. Alberta (Minister of Public Works, Supply and Services)

Transcription

1 Howard Vance Gimbel, Judith Anne Gimbel and Carl Management Ltd. (appellants/claimants) v. Her Majesty the Queen in Right of Alberta, as Represented by the Minister of Public Works, Supply & Services (Now Infrastructure) (respondent/respondent) ( AC; 2013 ABCA 290) Indexed As: Gimbel et al. v. Alberta (Minister of Public Works, Supply and Services) Alberta Court of Appeal Rowbotham, O'Ferrall and Veldhuis, JJ.A. September 10, Summary: After lengthy expropriation proceedings, the Land Compensation Board awarded interest at an investor's rate of a 90 day T-bill. The owners of the expropriated land appealed. The Alberta Court of Appeal, in a decision reported (2008), 437 A.R. 175; 433 W.A.C. 175, allowed the appeal and referred the question of interest to the board. The board issued a second decision dealing with interest. The owners appealed again. The Alberta Court of Appeal, O'Ferrall, J.A., dissenting, dismissed the appeal. Measure of compensation - Elements of compensation - Interest - Section 66(1)(a)(i) of the Expropriation Act provided that an expropriating authority had to pay interest at a rate that the Land Compensation Board (LCB) considered just - The Alberta Court of Appeal held that Mannix v. Alberta (Alta. C.A. 1984), set out the test for determining the just rate of interest - According to Mannix, interest should be awarded based on an investor's, rather than a borrower's, rate - The owner should be compensated for such income as he would have received had he followed the usual and prudent investment practices - The court stated that the phrase "usual and prudent" suggested that the just interest rate was established by reference to an objective test - The LCB had to assess what the reasonable and prudent person, in the same circumstance as the claimant before it, would have done with the money - To enable the LCB to undertake that analysis and to ultimately set the just rate of interest, the claimant had to bring evidence of return rates - See paragraphs 27 to 35. Measure of compensation - Elements of compensation - Interest - The Alberta Court of Appeal stated that "The aim of interest rate hearings is to provide the [Land Compensation] Board with sufficient evidence of the rate of return that the reasonable and prudent investor could have achieved during the relevant time period... Requiring claimants to adduce evidence of return rates may have the undesirable effect of lengthening interest proceedings. However, this is the legislative scheme currently in force in Alberta. Section 66(1) of the [Expropriation] Act makes the award of interest mandatory: 'an expropriating authority shall pay interest at a rate the Board considers just [...] '. The word 'just' used in this section is highly uncertain and has resulted in protracted

2 litigation, as the legislative scheme provides little guidance on how the Board ought to determine the justness of an interest award. A legislated framework for the calculation of interest, such as that provided in the Judgment Interest Act... and the Judgment Interest Regulation... would significantly streamline the process" - See paragraphs 34 and 35. Measure of compensation - Elements of compensation - Interest - The joint owners of expropriated land appealed a Land Compensation Board (LCB) interest award - In determining the interest rate, the LCB considered each owner's individual investment strategy separately - The Alberta Court of Appeal held that the joint owners divided the proceeds and invested their respective shares according to their own, separate and distinct investment strategies - One joint owner invested in land, spent money on his medical practice, invested in his companies, and put some money in an RBC Dominion securities account - The other joint owner invested primarily in her own RBC Dominion securities account and into the family businesses - Their separate investment strategies and different uses of the expropriation proceeds supported the LCB's conclusion that they ought to be treated as separate individuals for determining the just interest rate - The LCB's decision in that regard was reasonable - See paragraphs 22 to 25. Measure of compensation - Elements of compensation - Interest - The joint owners of expropriated land (Dr. Gimbel and Mrs. Gimbel) appealed a Land Compensation Board (LCB) interest award - The Gimbels claimed that the term "investment", in the context of determining a just interest rate, meant only money invested in assets capable of providing a clear rate of return - They contended that the LCB wrongly included money that Dr. Gimbel transferred to his companies when it determined his usual and prudent investment practice - The Alberta Court of Appeal held that the injections of capital into the companies were investments - The court rejected the argument that those investments could not be investments because it was impossible to determine the rate of return - It was the Gimbels who created that "impossibility" by not adducing the evidence necessary to make such a determination - See paragraphs 36 to 44. Measure of compensation - Elements of compensation - Interest - The joint owners of expropriated land appealed a Land Compensation Board (LCB) interest award, claiming that the interest rates of 3% and 4.5% were not reasonable - The Alberta Court of Appeal held that there was evidence to support the LCB's determination of a just rate of interest for each of the owners - The LCB's reasons for its conclusions were transparent and intelligible - The decision was not unreasonable - The appeal was dismissed - See paragraphs 45 to 59. Measure of compensation - Interest - Rate of interest - [See all Expropriation - Topic 1322]. Expropriation - Topic 2207

3 Practice and procedure - Appeals - Standard or scope of review by courts of decisions of boards - The owners of expropriated land appealed an award of interest by the Land Compensation Board - At issue was whether joint tenants should be treated as separate individuals for the purposes of an interest award (i.e., whether the court should consider their individual investment practices in determining what constituted a "usual and prudent" investment practice in determining the just rate of interest payable) - The Alberta Court of Appeal held that this issue was reviewable on a reasonableness standard - See paragraph 19. Expropriation - Topic 2207 Practice and procedure - Appeals - Standard or scope of review by courts of decisions of boards - The owners of expropriated land appealed an award of interest by the Land Compensation Board (LCB) - At issue was whether the LCB understood and considered what was meant by "usual and prudent" investment practice in determining the just rate of interest payable and as a result applied the wrong test in making that determination - The Alberta Court of Appeal noted that the phrase "usual and prudent investment" was derived from the case law - The LCB did not attract any special deference in determining the proper definition of that phrase because it was not within the scope of their expertise - However, that question also encompassed a number of findings of fact by the LCB that were subject to a standard of reasonableness - See paragraph 20. Expropriation - Topic 2207 Practice and procedure - Appeals - Standard or scope of review by courts of decisions of boards - The owners of expropriated land appealed an award of interest by the Land Compensation Board (LCB) - At issue was whether the interest rate awarded by the LCB was reasonable - The Alberta Court of Appeal stated that this issue engaged matters within the exercise of the LCB's discretion and was reviewable on a reasonableness standard - See paragraph 21. Cases Noticed: Mannix v. Alberta (1984), 56 A.R. 221; 31 L.C.R. 299 (C.A.), refd to. [paras. 20, 70]. Alberta v. Nilsson (2002), 320 A.R. 88; 288 W.A.C. 88; 220 D.L.R.(4th) 474; 2002 ABCA 283, refd to. [para. 27]. Calgary (City) v. Maitland (2010), 493 A.R. 272; 502 W.A.C. 272; 2010 ABCA 327, refd to. [para. 27]. Whatcott v. Human Rights Tribunal (Sask.) et al. (2013), 441 N.R. 1; 409 Sask.R. 75; 568 W.A.C. 75; 2013 SCC 11, refd to. [para. 30]. Pacific Coast Coin Exchange of Canada et al. v. Ontario Securities Commission, [1978] 2 S.C.R. 112; 18 N.R. 52; 80 D.L.R.(3d) 529, refd to. [para. 38]. Jeffery et al. v. London Life Insurance Co. et al., [2010] O.T.C. Uned. 4938; 2010 ONSC 4938, refd to. [para. 38]. Transcanada Pipelines Ltd. v. Ontario (Minister of Revenue) (1992), 62 O.A.C. 105 (C.A.), refd to. [para. 38]. Chenier v. Stephens et al., [2000] O.T.C. Uned. 722 (Sup. Ct.), refd to. [para. 55]. Cardinal et al. v. Canada (1998), 222 N.R. 218 (F.C.A.), refd to. [para. 55]. R. v. Enoch Band of the Stony Plain Indians - see Cardinal et al. v. Canada.

4 R. v. Lamothe, [2005] O.J. No (Sup. Ct.), refd to. [para. 55]. Baziuk v. Edmonton (City) (1978), 15 A.R. 361; 1978 CarswellAlta 492 (L.C.B.), refd to. [para. 86]. Statutes Noticed: Expropriation Act, R.S.A. 2000, c. E-13, sect. 66(1)(a)(i) [para. 16]. Authors and Works Noticed: Boyd, Kenneth J., Expropriation in Canada, A Practitioner's Guide (1988), generally [para. 83]; pp. 115 to 116 [para. 94]; 116 to 119 [para. 100]. Coates, John A., and Waqué, Stephen F., New Law of Expropriation (1986), generally [para. 83]. Todd, Eric C.E., The Law of Expropriation and Compensation in Canada (2nd Ed. 1992), generally [para. 83]; pp. 117, 127 [para. 80]. Counsel: R.J. Simpson, Q.C., for the appellants/claimants; T.C. Mavko, for the respondent. This appeal was heard on March 8, 2013, by Rowbotham, O'Ferrall and Veldhuis, JJ.A., of the Alberta Court of Appeal. The court filed a memorandum of judgment in Calgary, Alberta, on September 10, 2013, including the following opinions: Rowbotham and Veldhuis, JJ.A. - see paragraphs 1 to 59; O'Ferrall, J.A., dissenting - see paragraphs 60 to 106. Editor: Elizabeth M.A. Turgeon Appeal dismissed. Measure of compensation - Interest - Rate of interest - Section 66(1)(a)(i) of the Expropriation Act provided that an expropriating authority had to pay interest at a rate that the Land Compensation Board (LCB) considered just - The Alberta Court of Appeal held that Mannix v. Alberta (Alta. C.A. 1984), set out the test for determining the just rate of interest - According to Mannix, interest should be awarded based on an investor's, rather than a borrower's, rate - The owner should be compensated for such income as he would have received had he followed the usual and prudent investment practices - The court stated that the phrase "usual and prudent" suggested that the just interest rate was established by reference to an objective test - The LCB had to assess what the reasonable and prudent person, in the same circumstance as the claimant before it, would have done with the money - To enable the LCB to undertake that analysis and to ultimately set the just rate of interest, the claimant had to bring evidence of return rates - See paragraphs 27 to 35.

5 Measure of compensation - Interest - Rate of interest - The Alberta Court of Appeal stated that "The aim of interest rate hearings is to provide the [Land Compensation] Board with sufficient evidence of the rate of return that the reasonable and prudent investor could have achieved during the relevant time period... Requiring claimants to adduce evidence of return rates may have the undesirable effect of lengthening interest proceedings. However, this is the legislative scheme currently in force in Alberta. Section 66(1) of the [Expropriation] Act makes the award of interest mandatory: 'an expropriating authority shall pay interest at a rate the Board considers just [...] '. The word 'just' used in this section is highly uncertain and has resulted in protracted litigation, as the legislative scheme provides little guidance on how the Board ought to determine the justness of an interest award. A legislated framework for the calculation of interest, such as that provided in the Judgment Interest Act... and the Judgment Interest Regulation... would significantly streamline the process" - See paragraphs 34 and 35. Measure of compensation - Interest - Rate of interest - The joint owners of expropriated land appealed a Land Compensation Board (LCB) interest award - In determining the interest rate, the LCB considered each owner's individual investment strategy separately - The Alberta Court of Appeal held that the joint owners divided the proceeds and invested their respective shares according to their own, separate and distinct investment strategies - One joint owner invested in land, spent money on his medical practice, invested in his companies, and put some money in an RBC Dominion securities account - The other joint owner invested primarily in her own RBC Dominion securities account and into the family businesses - Their separate investment strategies and different uses of the expropriation proceeds supported the LCB's conclusion that they ought to be treated as separate individuals for determining the just interest rate - The LCB's decision in that regard was reasonable - See paragraphs 22 to 25. Measure of compensation - Interest - Rate of interest - The joint owners of expropriated land (Dr. Gimbel and Mrs. Gimbel) appealed a Land Compensation Board (LCB) interest award - The Gimbels claimed that the term "investment", in the context of determining a just interest rate, meant only money invested in assets capable of providing a clear rate of return - They contended that the LCB wrongly included money that Dr. Gimbel transferred to his companies when it determined his usual and prudent investment practice - The Alberta Court of Appeal held that the injections of capital into the companies were investments - The court rejected the argument that those investments could not be investments because it was impossible to determine the rate of return - It was the Gimbels who created that "impossibility" by not adducing the evidence necessary to make such a determination - See paragraphs 36 to 44. Measure of compensation - Interest - Rate of interest - - The joint owners of expropriated land appealed a Land Compensation Board (LCB) interest award, claiming that the

6 interest rates of 3% and 4.5% were not reasonable - The Alberta Court of Appeal held that there was evidence to support the LCB's determination of a just rate of interest for each of the owners - The LCB's reasons for its conclusions were transparent and intelligible - The decision was not unreasonable - The appeal was dismissed - See paragraphs 45 to 59.