OMB dismisses claim for injurious affection where no taking - on merits and on basis of limitation period

The Ontario Municipal Board ("OMB") recently dismissed an injurious claim by a car wash business that saw a significant drop in business after a local road was realigned.  The claimant alleged that the realignment of County Road 10 led to a significant drop in traffic passing by the car wash, resulting in a reduction in the number of vehicles using the wash.  The claim was for injurious affection in a situation where the statutory authority, the County of Simcoe, did not actually expropriate any of the car wash lands.

In a case of injurious affection where there is no taking, the claim must meet the following requirements:

1)   The damage must result from the action taken under statutory authority (the statutory rule);

2)   The action would give rise to liability but for that statutory authority (the actionable rule); and

3)   The damage must result from the construction and not the use of the work (the construction and not the use rule).

Here, the car wash business was unable to establish that the losses it alleged it had incurred were the result of the construction of the realigned road.  As the OMB explained:

"The Claimant has not been able to prove on the balance of probabilities that the losses it alleges it incurred were the result of the re-routing of County Road 10 and the Board finds that the decline in the number of car washes was on the balance of probability, more likely caused by other factors such as general economic decline resulting in reduced consumer spending.  Furthermore, regular users of HW 89 who had been customers of the car wash prior to the re-routing of County Road 10 would have been required to travel only a short additional distance on HW 89 to continue to use the car wash according to the evidence."

and,

"The Claimant must establish on the balance of probabilities that the re-routing of County Road 10 was the cause of its alleged losses and it has not done so in this case.  Revenues were up in the year following the re-routing and the evidence suggested that the later downturn may have been caused by weather related factors as well as the downturn in the automobile industry including the elimination of the third shift at the Honda plant in the period 2007- 2008. The Claimant has failed to establish any causal connection between the Respondent’s works and any loss it has alleged."

In the end, the OMB ruled that the claim related to the use of the realigned road and not the construction of the realigned road.  On that basis, the injurious affection claim would fail.

However, the actual basis for the dismissal of the claim was the expiry of the applicable limitation period.  Injurious affection claims are subject to a one-year limitation period under Section 22(1) of the Expropriations Act:

Subject to subsection (2), a claim for compensation for injurious affection shall be made by the person suffering the damage or loss in writing with particulars of the claim within one year after the damage was sustained or after it became known to the person, and, if not so made, the right to compensation is forever barred.

The evidence before the OMB showed that the actual construction of the realigned road was completed on or about December 27, 2006 and made official on January 23, 2007.  The OMB agreed with the County that if the Claimant had suffered business losses from the construction, it knew or ought to have known of those losses occurring on a monthly basis from January, 2007 to February, 2008 (its fiscal year end).  The OMB concluded:

"The claim for compensation ought to have been initiated not later than January, 2009, to comply with the Act as it is required to serve its claim within one year of when the loss is sustained.  It is not reasonable to delay a claim until after the full amount of the loss is calculated as is being advanced by the Claimant.  The Claimant is also required to act diligently to inform itself of any loss giving rise to a claim.  In this case while the losses ought to have been known at the latest by February 28, 2008, the claim was not served until July 31, 2009, some 30 months after the road was stopped up and closed and the claim was not filed with the Board until September 30, 2009.  Furthermore, no previous notice of the claim was given to the Respondent."

Read the decision at: Willies Car & Van Wash Limited v County of Simcoe.