Public Works Project Yields Nuisance Damages

Bill Buholzer for The Lawyers Weekly

October 2, 2009

The B.C. Supreme Court recently ordered Translink, the operator of the Lower Mainland's transportation system, as well as related entities created to oversee the construction of the Canada Line, to pay one of the merchants impacted by the construction $600,000 in damages for nuisance.

In Heyes v. City of Vancouver, [2009] B.C.J. No. 1046, plaintiff Susan Heyes operated a clothing store that was heavily impacted by Canada Line construction. The Canada Line leaves the downtown Vancouver peninsula via a bored tunnel under False Creek and follows the alignment of Cambie Street in a tunnel heading south. After bridging the Fraser River, the line operates at grade or on an elevated guideway serving Richmond and the Vancouver International Airport (YVR). Cambie Street features several commercial nodes functioning as local shopping centres, including a stretch focused on the 16th Avenue intersection, comprising many dozens of merchants.

Early plans for the Canada Line called for the bored tunnel to continue south from False Creek well past 16th, despite the availability of cheaper "cut and cover" construction techniques. However, as the procurement process for the line neared its conclusion, the ultimately successful proponent, a consortium of SNC-Lavalin Inc. and Serco Group Inc., proposed a cut-and-cover construction technique that protected the sewer line and brought the project cost within hailing distance of the amount of public funding that had been identified. SNC-Lavalin began work on the project in late 2005, and the Canada Line opened for service in September.

For merchants on Cambie Street, including Heyes, the construction of the Canada Line was seriously disruptive. Street surfaces were removed from property line to property line, utilities relocated and a trench as much as six storeys deep dug in the street to allow placement of tunnels for the transit line. While both vehicular and pedestrian traffic were maintained along the street throughout, patrons of Cambie Street businesses were faced with lengthy traffic delays, parking problems, noise, dust and mud, and the possibility that the businesses they planned to visit had closed - some merchants either went out of business or relocated before the Canada Line was completed. (Heyes moved her clothing shop to Main Street this year.)

Justice Pitfield's treatment of the statutory authority defence in Heyes will be of particular interest for lawyers familiar with the B.C. Court of Appeal's decision in Sutherland v. Vancouver International Airport Authority, [2002] B.C.J. No. 1479. In Sutherland, the trial court awarded nuisance damages to homeowners impacted by the operation of a new runway at YVR.

On the airport authority's appeal, the appeal court agreed that the operation of the runway was a nuisance, but held that the nuisance was the inevitable consequence of the operation of a facility whose construction had been statutorily authorized. The government of Canada had entered into a lease agreement with the authority that required it to establish the third runway at the precise location at which it was ultimately constructed, and the airport lease had been authorized by federal order-in-council. Further, the airport operations manual on the basis of which YVR's airport certificate had been issued described in detail the operation of the runway in question, including its location and orientation.

The defendants in Heyes took the position that a certificate issued under B.C.'s Environmental Assessment Act authorizing the construction of the Canada Line similarly constituted statutory authority fully immunizing them from nuisance claims. (The enabling legislation for the regional transit authority was not specific enough in the location of transit lines, let alone transit line construction methods, to offer an arguable statutory authority defence.)

Justice Pitfield rejected the environmental assessment (EA) certificate defence. In the first place, the project sponsors had voluntarily subjected themselves to the provincial EA process, from which the project was actually exempt; the Canada Line was subject to federal EA requirements due to the use of federal funding and the fact that a federal facility (YVR) was involved, but the sponsors decided to use the provincial process instead of its federal counterpart, as was allowed under a federal-provincial agreement. The court did not consider that statutory authority to which the project sponsors had simply opted in could authorize a nuisance. Secondly, the EA certificate did not require the cut-and-cover construction method; a bored tunnel was planned at the time the certificate was issued, and a subsequent amendment to the certificate permitted cut-and-cover construction, but didn't require it.

The City of Vancouver escaped liability in Heyes. While a landowner who permits others to use its land in a manner that creates a nuisance may be liable for that nuisance, in this case the city as owner of Cambie Street had granted a licence for the construction and operation of the Canada Line without knowing that the construction of the line would cause a nuisance. At the time the licence was granted, the final proposals of SNC/Lavalin and a rival bidder were subject to confidentiality agreements, and the city didn't know that a cut-and-cover alternative to the bored tunnel was in play.

The damages awarded in Heyes represent the reduction in gross profits the plaintiff's retail clothing business experienced over the four years of Canada Line construction, based on previous profits but increased slightly on the basis of evidence that the profits would likely have increased over the relevant period. Numerous affected merchants have filed similar claims, and a class action against Translink is also underway.

Meanwhile, the defendants' appeal of Heyes to the B.C. Court of Appeal is expected to concentrate on the statutory authority defence. Local governments undertaking disruptive public works projects will be awaiting the outcome with great interest.

Bill Buholzer is a partner in the Vancouver law firm Young, Anderson. He is the author of British Columbia Planning Law and Practice and the "Planning and Zoning" title in Halsbury's Laws of Canada

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