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A far-reaching BC decision could cast a pall on infrastructure development across Canada, just as federal stimulus money is pushing it into high gear.

In Heyes v. City of Vancouver, a small maternity clothing business sued all three levels of government and three transit agencies for loss of income, suffered during three painful years of subway construction in front of her store.  Susan Heyes signed a five-year lease, on the basis of government promises that the Canada Line subway would be installed by tunneling, which would have had relatively little impact on her customers. When cost estimates ballooned, as they so often do, the government decided to save $400 million by switching to cut and cover, instead of tunneling.  The cut and cover method was approved after an environmental assessment, on the basis of a prediction that disruption to local businesses would last only three months.  Unfortunately,  the actual  disruption lasted three years. The impact on Ms. Heyes’ business was catastrophic — she lost $600,000. She sued for misrepresentation, negligence, and nuisance.

Ms. Heyes lost her claims for misrepresentation and negligence. Justice Pitfield ruled that the earlier predictions (of tunneling and of a short disruption) were reasonable when they were made; the construction difficulties that caused so much delay were genuinely unforeseen. Nevertheless, she was successful in her claim for nuisance against 3 defendants:

  • TransLink, previously known as the Greater Vancouver Transportation Authority;
  • Canada Line Rapid Transit Inc., a TransLink subsidiary incorporated to develop a rapid transit line connecting downtown Vancouver, the City of Richmond, and the Vancouver International Airport; and
    InTransit BC, a limited public-private partnership which assumed responsibility for the final design, construction, operation, and maintenance of the Canada Line.

In broad terms, the Canada Line was developed by means of a public-private partnership, commonly referred to as a “P3”.  Under the arrangement, CLRT managed and coordinated the project and acquired ownership of the assets and infrastructure comprising the Canada Line.  Canada and British Columbia provided public funding.  InTransit BC provided private equity of approximately $750 million, and committed to design and construct the Canada Line and to operate and maintain it for a term of 35 years.

The defendants naturally claimed that they built the Canada Line exactly as they were directed and approved to do, that they could only spend the money that the senior government gave them, and that the “cut and cover” method had been specifically approved in an environmental assessment. They also defended on the basis of statutory authority and the public interest. However, Justice Pitfield ruled that these defences had no application; the P3 partners had chosen to save money for themselves, knowing this would impose losses on local businesses. The three transit bodies were therefore ordered to pay her damages of $600,000, plus interest and legal costs. There is no word on how the award of damages will affect the transit bodies’ budget, or whether they are similar claims in the wings.

Similar facts could easily arise on many other infrastructure projects across Canada; there is almost always a more expensive alternative that would reduce disruption for nearby residents and businesses. And government rarely selects that alternative.

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