



COURT OF APPEAL FOR ONTARIO

CITATION: SEP Holdings Limited v. Cambridge (City), 2014 ONCA
    907

DATE: 20141218

DOCKET: C57263

Weiler, Feldman and Benotto JJ.A.

BETWEEN

SEP Holdings Limited

Appellant (Plaintiff)

and

The Corporation of the City of Cambridge

Respondent (Defendant)

Eric K. Gillespie and Graham Andrews, for the appellant

James H. Bennett and Ross Weber (student-at-law), for
    the respondent

Heard: December 11, 2014

On appeal from the judgment of Justice Patrick J. Flynn
    of the Superior Court of Justice, dated May 17, 2013.

ENDORSEMENT

[1]

The issues on this appeal are whether the trial judge erred in
    dismissing the appellants claim for damages and in awarding the amount of
    costs he did.

[2]

SEP Holdings owned a piece of land in Cambridge, Ontario on which it had
    a strip mall. In 2000, SEP applied to the City for approval to construct a
    further development on an unused portion of the land at the back. SEPs
    neighbour was a facility in which the City of Cambridge stored winter road
    salt. Testing of the groundwater under the proposed development revealed that
    the road salt had contaminated the groundwater. Construction was delayed
    because of the contamination. The City admitted liability for reasonable
    damages flowing from the contamination. The quantum of damages was the sole
    issue at the trial.

[3]

The Citys Site Specific Risk Assessment (SSRA) found no significant
    impacts were anticipated on account of the elevated levels of sodium chloride
    in the groundwater because the groundwater was not to be used for drinking
    purposes. The SSRA was accepted by the Ministry of the Environment in June of
    2003 and SEP could have gone ahead with the development it had proposed at that
    time. It did not do so. In 2004, SEP issued a statement of claim for damages.

[4]

At trial, SEP argued it intended to build a lucrative, four-storey
    medical office building on its land, complete with underground garage. It could
    not do so after June 2003 because the City would not give it a satisfactory
    indemnification in the event that the groundwater of downstream owners was
    contaminated by the digging necessary to build the underground garage.

[5]

In 2006, another developer built a medical office building nearby and
    the market for this development no longer existed. The evidence at trial was
    that it is not customary to build underground parking in the City of Cambridge.
    The newly built medical office building was no exception.

[6]

At trial, Mr. McCash, SEPs property manager, testified that SEP never
    intended to build the development originally proposed to the City and always
    wanted to build the medical office building with underground parking. He
    testified, however, that in 2009, SEP had made a decision not to proceed with
    developing the property as a medical office building and that it was now
    considering a mixed-use condominium development that was either eight stories or
    16 stories high. This proposed change in use had not been disclosed on
    discovery or prior to Mr. McCashs testimony at trial. The trial judge further
    found that Mr. McCashs evidence respecting the condominium project was
    contradicted by the evidence of another witness for the appellant, Mr. Tadros,
    who had prepared conceptual schematics only for a seven-storey condominium.

[7]

The trial judge totally rejected Mr. McCashs evidence with one
    exception, his evidence that SEP was no longer interested in developing the
    property as a medical office building. The appellant submitted in oral argument
    that the trial judge was not entitled to treat this aspect of Mr. McCashs
    evidence differently and that he ought to have rejected it as well. We
    disagree. A trial judge is entitled to accept some, all or none of the evidence
    of a witness. That is what the trial judge did here. The trial judges findings
    respecting Mr. McCashs credibility were open to him on the evidence.

[8]

The appellant also submits that the trial judge erred in excluding SEPs
    proposed expert evidence. The trial judge conducted a
voir dire
with
    respect to the evidence of one of the experts, Mr. Uba, whose credentials were
    unchallenged. He observed that Mr. Uba was not going to testify as to the
    highest and best use of the land nor as to its unimpaired fair market value as opposed
    to its impaired value. Mr. Ubas proposed evidence was with respect to the
    value of a four-storey medical office building with two levels of underground
    parking. His evidence, like that of the other experts SEP proposed to call, was
    based on information from Mr. McCash that SEP had actually intended to build
    such a building.

[9]

Since all of the expert opinion evidence of Mr. Uba was based on
    information provided by Mr. McCash, which the trial judge rejected, the trial
    judge was entitled to exercise his discretion not to hear the expert opinion
    evidence. Nor did he err in excluding the opinion evidence of Mr. Dybvig
    because it, too, had no accepted factual foundation. In these circumstances,
    the trial judges exercise of discretion to exclude the expert evidence
    discloses no error in principle.

[10]

The
    appellants entire theory of damages was based on its alleged actual loss of
    the opportunity to construct the four-storey medical office building with
    underground parking. The trial judge was entitled to conclude, as he did, that
    SEP did not prove on the balance of probabilities that it was ever going to
    build such a building or that there existed any real plan to build anything
    with underground parking that would penetrate the water table.

[11]

The
    trial judge observed that while it was reasonable to assume that SEP actually
    incurred some damages as a result of the salt contamination, SEP had chosen not
    to attempt to prove any conventional damages for environmental impairment.

[12]

Having
    rejected the theory as to damages put forward by the appellant, namely, that it
    was going to construct a development that would have penetrated the water
    table, the trial judge held he had no evidence before him on which he could
    award damages. He commented that it was open to SEP to call evidence to
    establish a loss due to the delay in being able to proceed with the development
    of the property. It could have also called evidence to show that the value of
    the excess lands had been reduced by the salt contamination or based on stigma.
    It chose not to do so and the trial judge was not prepared to speculate as to
    what such damages might have been.

[13]

In
    oral argument the appellant did not dispute the finding that no alternate
    theory of damages had been advanced. Instead, the appellant submitted that the
    trial judge should have assessed damages for the medical office building and
    heard the expert evidence as to what such damages amounted to. For the reasons
    given above, we have rejected the appellants submission. We also note that the
    trial judge further found that the plaintiff took no steps to mitigate its
    damages.

[14]

In
    the particular circumstances of this case, the trial judge did not err in
    coming to the conclusion he did and in dismissing the action.

[15]

Although
    the appellant also appealed the trial judges award respecting costs on the
    basis that the amount was unreasonable and that the trial judge did not take
    into consideration factors such as the fact that the City had served a notice
    of expropriation, we see no error in principle on the part of the trial judge.
    Before the trial judge, the appellant did not contest the hours claimed by the
    City nor the disbursements which totaled $231,000. The trial judge gave effect
    to the offers of settlement that were made by awarding partial indemnity costs
    to the date of the offer and substantial indemnity costs thereafter. We see no
    error in principle in his doing so. The appeal as to costs is dismissed.

[16]

The
    costs of the appeal are payable to the respondent. Counsel have agreed that
    those costs should be fixed at $18,000 inclusive of disbursements and all
    applicable taxes.

K.M.
    Weiler J.A.

K.
    Feldman J.A.

M.L.
    Benotto J.A.


