






Citation:


Prince 
          George (City) v.

Rahn 
          Bros. Logging Ltd.



Date:  20030117




Docket:  CA028952







2003 
          BCCA 31









COURT 
          OF APPEAL FOR BRITISH COLUMBIA






BETWEEN:






CITY OF PRINCE GEORGE






RESPONDENT

(PLAINTIFF)






AND:






RAHN BROS. LOGGING LTD.






APPELLANT

(DEFENDANT)












Before:


The 
          Honourable Madam Justice Rowles







The 
          Honourable Madam Justice Prowse







The 
          Honourable Mr. Justice Thackray










C. 
          G. Fletcher and

D. 
          M. Marcotte


Counsel 
          for the Appellant




R. 
          J. Stewart, Q.C.


Counsel 
          for the Respondent




Place 
          and Date of Hearing:


Vancouver, 
          British Columbia




November 7, 2002




Place 
          and Date of Judgment:


Vancouver, 
          British Columbia




January 17, 2003








Written 
    Reasons by:

The 
    Honourable Madam Justice Rowles



Concurred 
    in by:

The 
    Honourable Madam Justice Prowse

The 
    Honourable Mr. Justice Thackray


Reasons for Judgment of the Honourable 
    Madam Justice Rowles:




I.  Overview

[1]

The measure of damages for the tort of negligent misrepresentation 
    is that the plaintiff is to be put in the position it would have been in had 
    the misrepresentation not been made:
BG Checo International Ltd. v. 
    British Columbia Hydro and Power Authority
, [1993] 1 S.C.R. 12 at 
    37.  This appeal raises issues concerning the application of that principle 
    in a case in which the respondent's negligence in the issuance of building 
    permits in 1985 and 1993 allowed the construction of a building and facilities 
    used in the appellant's business as a logging contractor and forestry road 
    builder on lands (the "property") not zoned for the purpose.

[2]

The adverse consequences of the respondent's negligent misrepresentations 
    as to the allowable use of the property were not felt by the appellant until 
    2000, when the respondent brought an action seeking a declaration that the 
    appellant and its tenant were in violation of the zoning bylaw and an injunction 
    restraining them from operating a business of parking or storing logging equipment 
    or other businesses contrary to the provisions of the zoning bylaw.  Reasons 
    for judgment granting the interim injunction restricting the use of the property 
    were issued 29 August 200.  (See 13 M.P.L.R. (3d) 308, 2000 BCSC 1295.)

[3]

The trial judge concluded, in reasons for judgment dated 16 August 
    2001, that but for the respondent's negligence in issuing the permits, the 
    appellant would have constructed the building and facilities it used in its 
    business on other lands zoned for the purpose.  The appellant sought damages 
    based on the unchallenged evidence of the estimated cost to replace its building 
    and other facilities but the trial judge rejected that approach.  In doing 
    so, the trial judge stated that he was not satisfied, "on the balance 
    of probabilities", that the appellant had need of a similar facility 
    for the future and that "it would be unreasonable to assess damages as 
    the present cost of providing a similar structure on some other piece of land 
    properly zoned for the purpose."  (See para. 53, 203 D.L.R. (4th) 499, 
    2001 BCSC 1200.)

[4]

There was evidence that in 1997, during a downturn in the logging industry, 
    the appellant had sold a valuable replaceable volume logging contract and 
    about two-thirds of the equipment it used in its business, but it continued 
    to operate its business on a reduced scale and rented out part of it facilities 
    on the property to T.H.R. Trucking Ltd.

[5]

The trial judge awarded damages of $125,541.87 plus $7,097.07 for the 
    cost of the appellant's attempt to obtain a favourable rezoning of its property.  
    To arrive at his damage award the trial judge took figures from a statement 
    of assets prepared by the appellant's accountants to determine the original 
    cost of construction of the building and the 1993 addition, adjusted those 
    figures for inflation using the Consumer Price Index, and then made a deduction 
    to reflect the portion of the building's useful life that would already have 
    been expended.

[6]

The appellant's position is that the trial judge's award does not give 
    effect to the
restitutio in integrum
principle and must be set aside.  
    The appellant submits that regardless of whether its business was operating 
    on a reduced scale after the downturn in the logging industry in 1997, it 
    continued to make use of its building and facilities and would have continued 
    to do so in the future.  The appellant contends that if it is to be placed 
    in the position it would have been in had the negligent misrepresentations 
    not been made as to the use it could make of the property, it is entitled 
    to a damage award that would enable it to have replacement facilities built 
    on other lands with appropriate zoning.

[7]

A second ground of appeal is that the trial judge erred in not awarding 
    damages for the appellant's loss of rental income from the property from the 
    date the interim injunction was granted restraining the appellant from permitting 
    its tenant from using the property for the storage or parking of logging equipment 
    to the date a new facility could be constructed on other property.  No reference 
    is made to the appellant's loss of rental income in the reasons of the trial 
    judge.

[8]

The third ground of appeal concerns the terms of a permanent injunction 
    the trial judge granted.  While the appellant agreed at trial that a permanent 
    injunction should issue, it now argues that the terms imposed by the trial 
    judge are more restrictive of the use of its property than would be permissible 
    even under strictly residential zoning.  The respondent agrees the wording 
    may be too restrictive but points out that the terms imposed by the trial 
    judge were not those the respondent had sought.  The parties' disagreement 
    about the proper terms of the injunction carries over into their submissions 
    on the issue of whether the trial judge erred in his approach to the assessment 
    of damages.

[9]

In my opinion, the trial judge failed to give effect to the
restitutio 
    in integrum
principle, and he did so, at least in part, by requiring the 
    appellant to prove, on a balance of probabilities, that in future it will 
    build replacement facilities on other lands, rather than assessing the chances 
    of that event occurring.

[10]

I 
    would allow the appeal of the damage award, not including the claim for income 
    loss, and would substitute an award based on the unchallenged evidence of 
    the cost of replacement of the building and related facilities, subject to 
    a reduction for deterioration and obsolescence over time and some discounting 
    for contingencies.  I would also allow the appeal as it relates to the terms 
    of the permanent injunction and would substitute an order that enjoins usage 
    that is not permitted under the applicable zoning bylaw.

II.  Background

[11]

The 
    appellant, Rahn Bros. Logging Ltd., was incorporated in 1964 with two brothers 
    as the shareholders.  The appellant has carried on the business of log harvesting 
    and construction of forestry roads since the early 1970's.  The present share­holders 
    are Gordon Rahn and his wife Catherine.  Gordon Rahn is the son of Eric Rahn, 
    one of the original shareholders.  Eric Rahn died before the action was commenced.  
    Gordon Rahn has worked in the business since he was 17.  He was 43 at the 
    time of trial.

[12]

In 
    1979, Eric Rahn, then the principal of the appellant company, purchased the 
    property which was located on Zilkie Road on the outskirts of the City of 
    Prince George near the airport.  The property was a 6.9 acre parcel and had 
    a house on it.  A small garage in which to repair equipment and store parts 
    was built on the property later that year.  Initially, Eric Rahn and his wife 
    lived there.

[13]

At 
    the time of its purchase and prior to 1980, the property was subject to Community 
    Planning Area #7 Zoning Bylaw No. 23-1 and was included in the Rural Residential 
    zone.  In 1980, the respondent's Zoning Bylaw 3482 repealed and replaced that 
    bylaw.  Under the new bylaw, the applicable zoning district designation for 
    the property became AFO-2.  That designation permitted agricultural and forestry 
    use.

[14]

By 
    1984 one aspect of the appellant's business that had begun to increase was 
    the operation of a repair, maintenance and storage facility for logging trucks 
    and equipment.  As a result of the company's need for such facilities, Mr. 
    Eric Rahn sought out a contractor to put up a suitable building.  Mr. Ross 
    Russell, the contractor Mr. Rahn selected, took responsibility for obtaining 
    the required building permit.

[15]

Mr. 
    Russell applied for the permit for the construction of a 3600 square foot 
    building in August 1984. In the course of reviewing the application, the respondent 
    advised Mr. Russell that the Rahn property was zoned AFO-2 and that the proposed 
    storage, maintenance and repair facility was not a permitted use.  Mr. Russell 
    was also told that should the desired building be constructed and used for 
    its intended purpose, authorization would have to be obtained under the Special 
    Home Occupation ("SHO") Overlay Zoning District provisions of the 
    bylaw.

[16]

The 
    zoning bylaw defined "Home Occupation, Special" to mean any occupation 
    or business carried on for gain by a resident of a dwelling unit within such 
    dwelling unit or an accessory building.  The floor area of any accessory building 
    could not exceed the floor area of the primary building on the site, in this 
    case a residential dwelling of approximately 2,880 square feet.  The bylaw 
    specified that the SHO overlay provisions were designed to accommodate small-scale, 
    family-operated, home-craft industry or equipment storage, maintenance or 
    repair services in an AFO area subject to limitations on scale, performance 
    characteristics, commercial or industrial character, and visibility from bounding 
    roads or adjoining property.

[17]

Mr. 
    Russell and the appellant were advised by the respondent to proceed under 
    the SHO provisions and to file a voluntary development permit application 
    with the object of varying the size restriction in order to obtain approval 
    for the construction of the 3,600 square foot structure.  As the trial judge 
    noted, the respondent seemed not to have been concerned that the logging operator 
    that would use the building was a limited company and was neither the owner 
    nor occupant of the dwelling unit on the lands.

[18]

After 
    the appellant had filed a development permit application, the respondent's 
    Technical Planning Committee reviewed the application and obtained a legal 
    opinion stating that the development permit process could not be used to vary 
    the SHO restriction on permitted building size.  The legal opinion stated 
    that a variance of the desired kind would require an amendment to the zoning 
    bylaw.

[19]

In 
    October 1984 the respondent's planning technician, Ms. Kerry Pateman, wrote 
    to Mr. Russell, in part, as follows:

As 
    the zoning of the property is AFO1 (Forestry and Agriculture) and the site 
    area is 6.9 acres, the Planning Department has no objections to the project.  
    The proposed building, together with other buildings on the land, would not 
    exceed 3% site coverage.

In 
    view of the decision that a voluntary development permit cannot be used to 
    permit the construction of this building, the Planning Department is reviewing 
    the existing size regulations for accessory buildings with a view to having 
    only site coverage govern the size.  We are currently initiating a rezoning 
    application to amend the Special Home Occupation Overlay District.  The amendment 
    would permit the shop as proposed by Rahn Brothers Logging Ltd.

[20]

In 
    fact, the Planning Department did not initiate any process with a view to 
    amending the SHO size restriction in the manner suggested in Ms. Pateman's 
    letter.  Nevertheless, on 4 March 1985, Ms. Pateman signed a document called 
    a Zoning Confirmation required by the Permit Department as a pre-condition 
    to the issuance of a building permit.  The Zoning Confirmation was intended 
    to assure the Permit Department that the proposed structure conformed to zoning 
    requirements but, as Ms. Pateman was aware, it did not.

[21]

The 
    building permit was issued on 5 March 1985 allowing construction of the facility 
    to proceed.  Construction was completed in early 1986.

[22]

In regard to the 
    respondent's liability for damages in connection with the issuance of the 
    1985 permit, the trial judge found as follows:

[38]  
    The City admits it was negligent when it issued the building permit in 1985. 
     The admission is justified.  Ms. Pateman was aware that the bylaw did not 
    permit the construction of a repair and maintenance shop of the size that 
    was approved.  She admits she did not discharge her duty with reason­able 
    care when she anticipated that the bylaw would be amended and signed the zoning 
    confirmation that resulted in the issue of the permit.  She admits she was 
    aware of the risk of harm to RBL and the Rahns from doing so.  The City is 
    liable for damages as a result.

[23]

The 
    appellant's storage, repair and maintenance needs continued to increase after 
    1986.  By the early 1990's the appellant owned about 30 pieces of logging 
    equipment.  In 1993, Mr. Gordon Rahn decided that a 2,000 square foot addition 
    to the 1985 building was needed.  Mr. Russell was again retained by the appellant 
    for the construction of the addition and he applied for the necessary permit.

[24]

On 25 May 1993, 
    Mr. Bloodoff, the respondent's director of development services wrote to the 
    appellant, in part, as follows:

My 
    recent discussion with Mr. Russell has clarified that the building in actual 
    fact does not house a business, rather, it is utilized as part of a forestry 
    use which is located on the parcel.  It is our understanding that the machinery 
    repaired on the site belongs primarily to your company and therefore the use 
    is not a home occupation.

Based 
    on the above, it is my interpretation that the shop can be expanded by the 
    2000 square feet as you requested....

[25]

Mr. 
    Bloodoff could not be called as a witness for he had died prior to trial.  
    However, the respondent argued that Mr. Bloodoff's letter plainly communicated 
    his belief that the appellant was engaged in logging on the site and that 
    the appellant had misrepresented the use to which the structure would be put 
    by not correcting Mr. Bloodoff's erroneous impression.

[26]

The 
    trial judge found as a fact that neither Mr. Russell nor the appellant misrepresented 
    the usage of the property to the respondent.  As the trial judge's reasons 
    are readily available and his findings of negligence in regard to the issuance 
    of the 1993 permit are not challenged on appeal, I need not make further reference 
    to the evidence or the trial judge's reasons for arriving at the conclusion 
    he did in respect of that permit.

[27]

The 
    application for a building permit for the 2000 square foot addition was filed 
    on 25 August 1993 and the zoning confirmation that erroneously assured the 
    Permit Department that the proposed use conformed to the zoning bylaw was 
    sent on the same date.  The building permit was issued to the appellant on 
    2 September 1993 and the construction was completed in 1993.

[28]

In 
    1996, the property was transferred into the name of the appellant.  Gordon 
    Rahn and his wife, who were then living on the property, moved away and an 
    employee of the company took up residence on the site.

[29]

During 
    an economic downturn in 1997, the appellant sold its replaceable volume logging 
    contract, commonly called an "evergreen" contract, and approximately 
    two-thirds of its logging equipment.  Gordon Rahn testified that the company 
    had received net about $1.5-$2.0 million from the sale of the equipment.

[30]

After 
    1997, the appellant engaged in intermittent freelance logging and forestry-related 
    road building work using the equipment it retained after the sale.  It also 
    rented out part of the property and building to T.H.R. Trucking Ltd. for $2500 
    per month.

[31]

The 
    respondent brought its action against the appellant and its tenant, T.H.R. 
    Trucking Ltd., in February 2000.  In its Statement of Claim, the respondent 
    sought an order:

... 
    restraining the defendants and either of them or their employees or agents 
    from storing or parking logging equipment on the Lands or operating a business 
    of parking or storing logging equipment on the Lands or such other businesses 
    as are carried on on the Lands contrary to the provisions of the Business 
    Licence Bylaw or the Zoning Bylaw.

An 
    interim injunction was granted on 29 August 2000.

[32]

The 
    appellant filed a defence and counterclaim to the respondent's action, seeking 
    damages for negligent misrepresentation in the issuance of the building permits 
    which contemplated the use to which the appellant subsequently put the building 
    and related facilities on the property.  In its pleadings, the appellant alleged 
    that representations made by the respondent with respect to the applicable 
    zoning were made in circumstances in which the respondent owed a duty of care 
    to the appellant, and that the representations were made negligently and with 
    the knowledge that the appellant would rely on them.  The appellant sought 
    damages based on estimates of the current replacement cost of the building 
    and related facilities.

[33]

The 
    respondent did not file a defence to the counterclaim until immediately before 
    the trial was to begin.  As noted earlier, the respondent conceded that it 
    had been negligent in the issuance of the 1985 permit but not the 1993 permit.

[34]

When 
    the trial began, counsel for the appellant agreed that the respondent was 
    entitled to a permanent injunction but the parties were not in agreement as 
    to its terms.

[35]

Three 
    witnesses gave evidence for the appellant:  Gordon Rahn, Kenneth Kruger and 
    Ross Russell.  Ms. Kerry Pateman was the only witness called by the respondent 
    and her testimony was directed to the issuance of the building permits.

[36]

Gordon 
    Rahn testified that the building constructed in 1985 is a freestanding structure 
    engineered to accommodate an overhead crane system.  He described the additional 
    facilities used in the business, including the 1993 addition, a large parking 
    lot with an equipment washing area, and a security fence.

[37]

Mr. 
    Rahn testified that he no longer had records from the construction that had 
    taken place some 17 years earlier but he produced a document prepared by the 
    appellant's accountants headed "Assets Description Report".  The 
    document purports to set out the costs of the land and buildings, computer 
    equipment, office equipment, fencing (under shop and miscellaneous), logging 
    equipment and automotive.  Columns across the top of the document are headed 
    gross cost, net cost, accumulated depreciation and net book value.  From the 
    trial judge's reasons, it is plain that he relied on this document as the 
    starting point in arriving at his assessment of the appellant's loss.

[38]

Mr. 
    Rahn obtained estimates for the cost of replacement of the building from two 
    construction companies:  Heartland Steel Structures Ltd. and Denny's Woodwork 
    & Construction Ltd.  Heartland's estimate was for $671,273.00; Denny's 
    for $660,720.00.  Two estimates were obtained for the cost of replacing the 
    equipment storage area: one for $160,500.00 and the other for $171,782.94.  
    Two estimates were obtained for the

cost of putting up the security 
    fence of the kind the appellant had installed on the property to safeguard 
    the equipment.  One of the estimates for supplying and installing a chain 
    link fence was for $19,100.00 and the other for $12,000.00.  All of the estimates 
    Mr. Rahn obtained were entered as exhibits.

[39]

Mr. 
    Kruger, one of the principals of Heartland Steel Structures Limited, testified 
    that he had been asked by Gordon Rahn to provide an estimate of the cost of 
    replacing the building.  The estimate, which was dated 28 February 2001, included 
    the cost of the framing required to accommodate a crane system of the kind 
    the appellant had installed in the existing building.  Mr. Kruger was not 
    cross-examined on his evidence.

[40]

Mr. 
    Ross Russell was the contractor for the construction of the 1985 building 
    and the 1993 addition.  Among other things, Mr. Russell testified about the 
    nature and course of the construction in 1985 and 1993, and the structural 
    measures required to withstand the weight of heavy equipment and the crane 
    system that was installed.  Mr. Russell was cross-examined on the cost figures 
    he had used on the building permit applications.  He said he had arrived at 
    the estimated cost on the permit applications by applying a standard square 
    foot rate for the construction costs.  Mr. Russell explained that for various 
    reasons, there were serious cost overruns and that the cost of construction 
    considerably exceeded the estimate he had given in each instance.

[41]

The 
    respondent presented no evidence on the replacement cost of the building and 
    other facilities or on the residual value of the building and facilities.

III.  The alleged errors in judgment


[42]

The 
    alleged errors in judgment, as set out in the appellant's factum, are that 
    the trial judge erred in law:

(1)  
    in failing to award the replacement cost of the facility, which was the proper 
    measure of damages for the appellant's loss in the circumstances of this particular 
    case;

(2)  
    in deciding that the appellant must prove a specific future need of the appellant 
    company to use the facility for its own repairs, maintenance and storage in 
    order to recover replacement cost;

(3)  
    in the alternative or in addition to the preceding paragraph, in failing to 
    draw the necessary inference, from the evidence and from the facts as he found 
    them, that the appellant on the balance of probabilities would have need for 
    functionally similar facilities in the future;

(4)  
    in having determined that the measure of damages for pure economic loss is 
    that which the appellant can establish to be the direct and foreseeable economic 
    loss flowing from a breach of duty, in failing to apply that test to the facts 
    which he had found and failing to find that the inability to use the facility 
    for the Use was a direct and foreseeable economic loss flowing from the negligence 
    of the respondent;

(5)  
    in failing to award to the appellant an amount to compensate the appellant 
    for the loss of the rental of the premises from the date of the interlocutory 
    injunction to the date when a new facility would be available;

(6)  
    in issuing an injunction which is more restrictive of the use of the Property 
    [than] would be expected under even a solely residential zoning.

IV.  The permanent injunction

[43]

As 
    noted above, the respondent brought the proceedings seeking an interim and 
    permanent injunction to enjoin certain activities and businesses on the property 
    that contravened the respondent's zoning bylaw.

[44]

An 
    interim injunction was granted by Mr. Justice Meiklem in August 2000 in these 
    terms:

THIS COURT ORDERS THAT

1.   
    On or after September 15, 2000, the Defendants, and each of them, shall cease 
    using as a truck compound or repair facility for logging trucks lands more 
    particularly known and described as:

....

2.   
    Provided that the Defendant, Rahn Bros. Logging Ltd., may continue to use 
    the Land for its repair and storage of their own equipment, at the level of 
    usage that has persisted since 1997.

[45]

In granting the 
    order he did, Meiklem J. expressed, in paragraph 14 of his reasons for judgment, 
    the view that "there would be no irreparable harm to Rahn Bros. if they 
    lost the benefit of the lease to T.H.R., because damages are easily calculated, 
    and the City is able to pay them."  He went on to say:

[15]  
    However, if Rahn Bros. is forced to dis­continue its own present use of the 
    property with its large shop for storage and repair of its remaining equipment, 
    a use which has been enjoyed by the corporate defendant and its principals 
    for at least an undisputed 17 years, the harm approaches the irreparable level.

[46]

Mr. 
    Justice Meiklem considered that what had been said by Cumming J.A., for the 
    majority, in
Maple Ridge (District) v. Thornhill Aggregates Ltd.
(1998), 162 D.L.R. (4th) 203, 54 B.C.L.R. (3d) 155, 47 M.P.L.R. (2d) 249 (B.C.C.A.) 
    commencing at paragraph 9, could be distinguished on the basis that the order 
    the respondent sought was interim, not permanent, and that the balance of 
    convenience was not necessarily excluded from consideration where there is 
    a triable issue.  The correctness of that decision is not before us.

[47]

In his concluding 
    submissions at trial, respondent's counsel submitted that a permanent injunction 
    should issue in these terms:

MR. 
    STEWART:  ...

And 
    the only relief we're seeking is that -- wording to this effect:  third party, 
    non-resident logging truck or trucking operations shall not use the land as 
    a base for their operations.  It's a recognition of the terms of the previous 
    Order, which directs itself to that and, if that is the order, it does not 
    put this Court or Rahn Brothers in the position of violating a Court Order 
    if they continue to carry on as they have without complaint and the City continues 
    in its efforts to deal with this subject by tolerating the situation.

[48]

The 
    reason for the respondent's proposed limitation is apparent from the following 
    exchange between the trial judge and counsel for the respondent:

THE 
    COURT:  Well, the question I have - Mr. Stewart, perhaps this should be directed 
    to you - is the buildings that are on there in contravention to the bylaw, 
    and it doesn't seem to me that it's appropriate for the Court to be involved 
    in condoning the continuing existence of those or to be seen as condoning 
    the continuing existence of those properties.

MR. 
    STEWART:  I think I can address that.

THE 
    COURT:  How do I - how does the Court get around that?

MR. 
    STEWART:  I think the Court has to look at its role in this - in this fashion.  
    The City, which is the administrator and policer of its bylaws, also decides 
    to initiate or not initiate proceedings to enforce them.  Or if in the course 
    of such proceedings it determines that the use of its budget, manpower and 
    resources would be ill-served or illogic in the course of that, it should 
    be at liberty to limit the direction or the scope of its efforts under the 
    bylaw.

My friend's damage evidence would put at its maximum, as I see it, eight hundred 
    and some odd thousand dollars as a risk to the City of seeking to stop them 
    from using, in terms of the 1984 building, 720 square feet, and in terms of 
    the '93 building, 2,400 square feet.  That seems, to any reasonable person, 
    I submit, an inordinate price to pay for the enforcement of a bylaw, and the 
    City's resources are limited and it has the ability to deal with other things 
    than to spend it in that fashion.

So I'm suggesting to Your Lordship that the Court, taking into account the 
    prudence and reasonableness that has to accompany the enforcement of bylaws, 
    doesn't have to in every instance in which an injunction is sought impose 
    the maximum penalty.  It can tailor the terms of the injunction to suit the 
    relief that would be adequate and reasonable in the circumstances and, consequently, 
    that -- in that role the Court can serve the interests of the community it 
    seeks -- that is the community seeks, and avoid inordinate effects from such 
    a matter.

[49]

The 
    effect of the position the respondent was taking was confirmed in the following 
    exchange between the trial judge and counsel for the respondent:

THE 
    COURT:  Well, as I understand the City's position, it really is that it's 
    not going to quarrel with the fact that the building is of an excessive size.

MR. 
    STEWART:  Right.

* 
    * *

THE 
    COURT:  So what you're saying is that you would be prepared to leave the buildings 
    on there, but they cannot be used -- or, at least, put it this way, what is 
    there is there.  What the City wants to do is to enjoin the company from carrying 
    on any activity not authorized by the bylaws?

MR. 
    STEWART:  No, My Lord.  In the wording I suggested --

THE 
    COURT:  And the wording you've suggested is that it should be third parties 
    only.

MR. 
    STEWART:  Yes, My Lord.

[50]

Although 
    we do not have before us a transcript of the closing submissions of counsel 
    on anything other than the injunction, it appears from the trial judge's reasons 
    that one of the arguments the respondent put forward was that the appellant 
    had suffered no compensable damage.  The respondent had argued that the appellant's 
    inability to use the property under the SHO provision of the zoning bylaw 
    resulted from the fact that Gordon Rahn had transferred the property to the 
    appellant in 1996 and a corporate landowner could not avail itself of the 
    SHO exception.  The respondent's position was that the appellant's loss was 
    therefore caused by the transfer of the property and not by any action on 
    the respondent's part.

[51]

In 
    rejecting that argument, the trial judge noted that the implication to be 
    taken from the respondent's submission was that if the property had not been 
    transferred to the appellant, the respondent would have permitted the continued 
    use of the building under the SHO overlay provisions of the bylaw even though 
    the building exceeded the size permitted for such a purpose.  However, the 
    trial judge found that the respondent knew from the outset in 1985 that the 
    appellant was the intended user of the property and, in the circumstances, 
    it was not open to the respondent to seek refuge in the fact that the property 
    was transferred from personal to corporate ownership.

[52]

The 
    trial judge granted the respondent's application for a permanent injunction 
    but not in the terms the respondent sought.  He said:

[65]  
    The City is entitled to a permanent injunction. I am not prepared to agree 
    that the terms should be those used in the temporary injunction.  It is not 
    for the court to condone what is arguably an unlawful use of the buildings 
    and property, namely the SHO use of lands by a company. Rather the court may 
    enjoin that which is contrary to law.

[66]  
    It follows that RBL shall be permanently enjoined from permitting the use 
    of its land or buildings by anyone other than RBL, whether or not for economic 
    gain, for the purpose of storing, repairing or maintaining motor vehicles 
    or equipment of every nature and kind.

[67]  
    The City can decide whether any other use to which the lands may actually 
    be put by RBL will be permitted.

[53]

In 
    the formal order, the permanent injunction is couched in these terms:

... 
    THIS COURT ORDERS THAT:

* * *

3.   
    The defendant Rahn Bros. Logging Ltd. be permanently enjoined from permitting 
    the use of its land or buildings by anyone other that Rahn Bros. Logging Ltd., 
    whether or not for economic gain, for the purpose of storing, repairing or 
    maintaining motor vehicles or equipment of every nature and kind;

[54]

In my respectful 
    view, the injunctive relief the respondent sought at trial does not comport 
    with the jurisprudence.  The proceedings seeking injunctive relief were brought 
    on the footing that both the appellant and its tenant were infringing the 
    zoning bylaw.  The foundation for the injunctive relief the respondent sought 
    was statutory rather than equitable.  As Cumming J.A. pointed out in
Maple 
    Ridge (District) v. Thornhill Aggregates Ltd.
,
supra
, at para. 
    7, "Factors that might be considered by a court in an application for 
    an equitable injunction will be of limited, if any, application to the grant 
    of a statutorily based injunction."  The court retains a discretion to 
    refuse to grant a statutory injunction but where a clear breach has been established, 
    the court should only refuse the application in exceptional circumstances:  
    see
Attorney-General v. Bastow
, [1957] 1 Q.B. 514, [1957] 2 
    W.L.R. 340, [1957] 1 All E.R. 497, and
Maple Ridge (District) v. Thornhill 
    Aggregates Ltd.
,
supra
.  As Mr. Justice Donald noted in
Coquitlam 
    (City) v. Aweryn
(2001), 18 M.P.L.R. (3d) 208, 2001 BCCA 373, at paragraph 
    4:

It 
    has been held by this court that a judge has a discretion to refuse enforcement, 
    but it is narrow in scope having regard to the public nature of the right 
    sought to be enforced:
Burnaby (City) v. Pocrnic
(1999), 6 
    M.P.L.R. (3d) 250 at 254-5 [1999 BCCA 652].

[55]

In 
    this case, the respondent brought its action seeking a declaration that its 
    zoning bylaw was being infringed and it sought to enforce its bylaw by injunction.  
    When the matter came to trial, the appellant conceded that the respondent 
    was entitled to a permanent injunction.  The contentious issues were whether 
    the respondent had been negligent in issuing the 1993 building permit, whether 
    the appellant was entitled to damages and, if so, in what amount, and the 
    wording of the permanent injunction.  The permanent injunction the respondent 
    sought at trial was not what had been pleaded.  Instead, the respondent sought 
    to enjoin only use of the property by third parties rather than restricting 
    any use not in compliance with the bylaw.  The purpose of doing so was to 
    limit the extent of the damages that might flow from the respondent's negligent 
    misrepresentations about the use of the property.

[56]

To 
    accept the respondent's submission that the activity to be enjoined was limited 
    to third parties would undermine the efficacy of the very bylaw the respondent 
    sought to enforce and would not respect the public nature of the right being 
    enforced.

[57]

On 
    the appeal, the following paragraph in the respondent's factum sets out its 
    present position on the wording of the injunction:

16.  
    It is conceded by the Respondent that the injunction wording was not what 
    was requested by the Respondent and may be too restrictive in view of the 
    by-law language.  However, it is apparent that the learned trial judge independently 
    determined what was all encompassing language for the activities the learned 
    trial judge considered would be contrary to the by-law.  The Respondent is 
    entitled at any time to decide whether other uses of the land by the Appellant 
    would be permitted under the applicable bylaws.  Therefore, if this Honourable 
    Court decides to substitute its own language for the injunction, the Respondent 
    will not object.

[58]

That 
    submission echoes the position the respondent took at trial, which was to 
    exclude the appellant's business activities on the property from the use to 
    be enjoined.  During oral argument, respondent's counsel again referred to 
    the SHO overlay provisions as being available for an operation such as that 
    conducted by the appellant after 1997.  With deference, that submission appears 
    to me to be untenable.  An application for an injunction has to be dealt with 
    on the basis of the zoning bylaw as it stands.  In her testimony, Ms. Pateman 
    confirmed that the section dealing with Special Home Occupation had not changed 
    since 1984.  The appellant's building far exceeds the size permitted under 
    the SHO provisions, and the use the appellant was making of it, both before 
    and after 1997, contravened the bylaw.  That was so quite apart from the fact 
    that the appellant had rented out part of its property and facilities to T.H.R. 
    Trucking Ltd.

[59]

On 
    the issue raised by the appellant of whether the injunction was couched in 
    language that was too restrictive, I agree the wording is too broad, for it 
    could catch activities in relation to motor vehicles and equipment that would 
    not be a prohibited use under the applicable zoning bylaw.  The words "equipment 
    of every nature and kind" would include, for example, lawnmowers and 
    power tools which are in common use in areas zoned for residential use.  As 
    the appellant has submitted, a residential owner or tenant may reasonably 
    be expected to permit others to store or repair or maintain motor vehicles 
    and equipment on their property so long as the activity does not fall within 
    some other prohibition, such as running a business that is not permitted under 
    the existing zoning.

[60]

I 
    would set aside the order made by the trial judge and substitute an order 
    that the appellant be permanently enjoined from using its property, or permitting 
    others to use its property, for any purpose contrary to the provisions of 
    the respondent's Zoning Bylaw 3482.

IV.  The assessment of damages

(a)  
    Trial judge's approach to the quantification of damages

[61]

The 
    trial judge referred to the nature of the loss claimed and the positions taken 
    by the parties in the following paragraphs of his reasons:

[48]  
    This is a case of pure economic loss. It is not a case of damage occasioned 
    by the destruction of, or damage to, property.  What, then, is the appropriate 
    measure of damages?

[49]  
    RBL claims that in accordance with the principle of reinstatement, the appropriate 
    measure of damages is the amount it would be required to spend at present 
    to construct comparable facilities on a site where the intended use is permitted. 
     RBL justifies the claim on the basis that if the City had not been negligent 
    and permits had been denied, the company would have constructed comparable 
    facilities elsewhere.

[50]  
    The City claims that the more appropriate measure of damages is the cost of 
    the building and addition in current dollars less a credit for the proportion 
    of their useful life that has been consumed to date.

[62]

The way in which 
    the trial judge went about determining the appellant's loss appears in the 
    following paragraphs of his reasons:

[53]  
    In this case, I am satisfied that RBL would have constructed a building and 
    addition suitable to its needs in 1985 and 1993 had the City declined to issue 
    the building permits.  For the reasons earlier stated, I am not satisfied, 
    on the balance of probabilities, that RBL has need of a similar facility for 
    the future.  As a result, it would be unreasonable to assess damages as the 
    present cost of providing a similar structure on some other piece of land 
    properly zoned for the purpose.

[54]  
    In my opinion, the appropriate measure of the loss suffered in this case is 
    the proportion of 1985 and 1993 building costs in current dollars at August 
    31, 2000 that remaining useful life is of total original estimated life.  
    There should be added to that amount the cost incurred in attempting to rezone 
    the property and the cost of the parking area in current dollars at August 
    31, 2000.  Some allowance would have to be made for the fact that the parking 
    area has been used by RBL for some portion of its useful life.  Finally, the 
    present value of the building and the parking lot should be deducted from 
    the total derived in the manner I have described.

[55]  
    On the evidence adduced by RBL, the estimated useful life of the building 
    was 41 years from 1985. It follows that the original facility was used for 
    its intended purpose for 16 years and the 1993 addition was so used for 7 
    years.  There is no evidence that the addition will have a useful life longer 
    than that of the original building. It follows that the remaining useful life 
    of the entire structure is 25 years.

[56]  
    The RBL books of account record the capital cost of 1985 improvements at $91,595.62 
    and the cost of the 1993 improvements at $68,372.83.  Using consumer price 
    index changes from year to year, the costs of the 1985 building and the 1993 
    addition in August 31, 2000 dollars are $129,516.21 and $76,372.45, respectively.

[57]  
    The proportion of the cost attributable to the remaining useful life of the 
    1985 improvements is $78,973.30 and that of the 1993 improvements is $46,568.57.  
    The total is $125,541.87.

[63]

The 
    trial judge assessed the appellant's damages at $125,541.87 with pre-judgment 
    interest from 31 August 2000, plus $7,097.07 for the cost incurred by the 
    appellant in its attempt to obtain a favourable rezoning of its property, 
    together with pre-judgment interest from the date those costs were incurred.

(b)  Submissions 
    of the parties on the issue of whether the trial judge erred in his approach 
    to the assessment of damages

[64]

The 
    appellant argues that the trial judge ought to have applied the reasoning 
    of Wood J.A. in
Nan v. Black Pine Manufacturing Ltd.
(1991), 
    80 D.L.R. (4th) 153, 55 B.C.L.R. (2d) 241 when applying the
restitutio 
    in integrum
principle to the evidence in this case.

[65]

The 
    appellant submits that while it is clear that the trial judge applied his 
    mind to the question of whether it was reasonably foreseeable to the respondent 
    that the appellant would lose the actual money expended by it for the facilities 
    it constructed, he failed to take the next step, which was to consider whether 
    it was reasonably foreseeable that the appellant would suffer the damage occasioned 
    by the loss of its use of the property.  The appellant contends that when 
    the respondent is the very statutory authority which commonly initiates court 
    actions to restrain usages of property which are contrary to zoning by-laws, 
    it was or ought to have been aware that its negligently made representations 
    would be likely to cause the appellant loss from not being able to use the 
    property to carry on its business.

[66]

The 
    appellant contends that its inability to use the building and facilities for 
    the storage, repair and maintenance of logging trucks and logging equipment 
    without contravening the zoning bylaw was a direct and foreseeable economic 
    loss which flowed from the respondent's negligently made representations about 
    the use to which the property could be put.  The appellant argues that regardless 
    of the trial judge's finding that the appellant would not resume its activities 
    to the extent it carried on those activities before, there can be no question 
    that in 2000, when the interim injunction was issued, the appellant had an 
    ongoing business which required the use of the building and facility to repair, 
    maintain and store logging trucks and equipment.

[67]

The 
    appellant argues that when the use for which the building and facilities was 
    intended is no longer possible, it is the equivalent of an actual destruction 
    or the tortious deprivation of them because, for commercial purposes, a structure 
    without a use has little or no value.  In that regard, the appellant points 
    out that it is the ability to use its buildings and facilities, not their 
    mere existence, that gives them commercial value.

[68]

The 
    respondent's position is that the trial judge was correct in not awarding 
    damages based on the alleged cost to replace the building as established by 
    estimates from contractors.  In the respondent's submission, to award damages 
    on a replacement basis would simply provide the appellant with a windfall 
    unless there were some requirement to rebuild.  The respondent contends that 
    it was reasonable for the trial judge to conclude that if the principal of 
    the company testified that he could retire and live comfortably on his assets 
    from the sale of the evergreen contract and about two-thirds of its equipment, 
    it is unlikely that the company would now acquire more costly capital assets 
    to resume operations in an industry widely acknowledged to be depressed at 
    the time of trial in July 2001.

(c)  
    Analysis

[69]

The 
    general requirements to establish the tort of negligent misrepresentation 
    are set out in
Queen v. Cognos Inc.
, [1993] 1 S.C.R. 87.  That 
    the respondent in this case had a duty of care to the appellant and that the 
    appellant relied on the representations made by the City as to the use to 
    which the property could be put are not in issue.

[70]

As 
    the trial judge found, Ms. Pateman was aware the bylaw did not permit the 
    construction of a repair and maintenance shop of the size approved; she admitted 
    she did not discharge her duty with reasonable care when she signed the zoning 
    confirmation, anticipating that the bylaw would be amended; and she was aware 
    of the risk of harm to the appellant and to the Rahns from doing so.  I agree 
    with the appellant that, in the circumstances, it was foreseeable that damages 
    could be occasioned if the bylaw were not amended because the appellant could 
    not then lawfully use the property as intended in its business.  While the 
    effect of his judgment is to limit the damages, I see nothing in the trial 
    judges reasons to suggest that he did so on the basis that the appellant's 
    loss was not reasonably foreseeable or was too remote.

[71]

The 
    trial judge concluded that if the misrepresentation had not been made in 1985, 
    other suitably zoned lands would have been acquired for the appellant's use, 
    but he limited the damage award based on his finding that the appellant would 
    not have need for such a property in the future.  In my respectful view, it 
    is the latter finding, along with the path the trial judge took to reach it, 
    that is manifestly in error.

[72]

The 
    trial judge applied a balance of probabilities test when considering what 
    the appellant would do in the future in relation to its business.  That a 
    balance of probabilities test was applied is apparent from the trial judge's 
    reasons for he stated, in paragraph 53, that he was not satisfied, "on 
    the balance of probabilities", that the appellant had need of a similar 
    facility for the future.  That the trial judge limited the damages on that 
    basis is also apparent from his reasons for he went on to hold that in view 
    of his finding that the appellant would not have need of a similar facility 
    in the future, "it would be unreasonable to assess damages as the present 
    cost of providing a similar structure on some other piece of land properly 
    zoned for the purpose."

[73]

In 
    assessing damages in a case such as this, a court must consider what the claimant 
    would have done had the misrepresentation not been made and also consider 
    what the claimant would likely do in the future.  In doing so, it is necessary 
    to make an estimate of the chances that certain things will happen.  That 
    point was made in
Mallet v. McMonagle
, [1970] A.C. 166 at p. 
    176 (H.L.), and referred to with approval in
Athey v. Leonati
, 
    [1996] 3 S.C.R. 458 at 471, para. 29:

The role of the court in making an assessment of damages which depends upon 
    its view as to what will be and what would have been is to be contrasted with 
    its ordinary function in civil actions of determining what was.  In determining 
    what did happen in the past a court decides on the balance of probabilities.  
    Anything that is more probable than not it treats as certain.  But in assessing 
    damages which depend upon its view as to what will happen in the future or 
    would have happened in the future if something had not happened in the past, 
    the court must make an estimate as to what are the chances that a particular 
    thing will or would have happened and reflect those chances, whether they 
    are more or less than even, in the amount of damages which it awards.

[74]

As 
    previously noted, the trial judge concluded that had the negligently made 
    representations not been made, the appellant would have put its building and 
    facilities on property that was zoned to accommodate its use.  Whether the 
    trial judge applied a "balance of probability test" with respect 
    to that question is of no moment because the evidence all points to the conclusion 
    that had the respondent not been negligent in the representation it made in 
    1985, the appellant would simply have located its buildings and facilities 
    on lands where the zoning would accommodate their intended use.

[75]

The 
    error of consequence is that when it came to the  assessment of damages, the 
    trial judge required proof on the balance of probabilities that the appellant 
    would take a specific action in the future, that is, replace its existing 
    building and facilities on other property, rather than by making, in the words 
    of Lord Diplock in
Mallett v. McMonagle
,
supra
, quoted 
    above, "an estimate as to what are the chances that a particular thing 
    ... would have happened and reflect those chances, whether they are more or 
    less than even, in the amount of damages which it awards".

[76]

In 
    applying a balance of probabilities test to the question of what the appellant 
    would do in the future, the trial judge used some credibility findings to 
    arrive at his conclusions.  Making credibility findings as to what someone 
    has done or not done in the past is obviously unobjectionable but making credibility 
    findings in relation to future events is problematic because it is not possible 
    to prove what someone will do in the future.

[77]

Using 
    evidence of what someone has done in the past as a guide to determine what 
    the person is likely to do in the future does fit with the kind of analysis 
    necessary when hypothetical or future events must be considered but that is 
    not what the trial judge did in this case.

[78]

Mr. 
    Rahn said he anticipated that when the economy in the logging industry picked 
    up again, the appellant would expand its activities and buy more equipment.  
    Mr. Rahn could not say when or whether the logging industry was going to improve.  
    What he could and did say was that the appellant company had been in business 
    many years, there had been ups and downs in the logging industry in the past, 
    and that he expected the downsizing of the company in 1997 to be temporary 
    in nature.

[79]

The trial judge did not consider the chances of the appellant continuing 
    to conduct its business in the fashion it had over the years, which included 
    buying and selling equipment as the economy in the logging industry demanded, 
    so that he could reflect those chances in his damage assessment.  Instead, 
    the trial judge proceeded on the basis that as the company had downsized in 
    1997 and no recovery in the logging industry was evident at the time of trial, 
    the appellant had failed to establish on the balance of probabilities that 
    it "has need of a similar facility for the future".

[80]

The 
    trial judge found, at paragraph 34, that "the business will continue 
    on the greatly reduced scale at which it has been carried on since the sale 
    in 1997".  Again, that "finding" was in relation to future 
    events and ought not to have been treated as a matter susceptible of proof 
    on the balance of probabilities.

[81]

I 
    note as well that in making the finding he did, the trial judge was obviously 
    referring to the appellant's own operations as a logging contractor and forest 
    road builder, for he ignored or overlooked the potential the facilities had 
    to produce rental revenue, assuming the facilities were located on property 
    that permitted it.

[82]

The 
    trial judge assessed damages based on the cost of construction of the building 
    in 1985 and the addition in 1993, adjusted for inflation, less a portion to 
    represent that part of the building's useful life already expended.  His out-of-pocket 
    approach to the assessment of damages was based on his finding that no other 
    facility would be built and on his finding that the appellant could continue 
    to operate on the property at its post-1997 level even though to do so would 
    be in violation of the zoning bylaw.  For the reasons I have endeavoured to 
    explain, that approach was in error.

[83]

Rather 
    than the parties being faced with the expense and delay of this matter being 
    referred back to the trial court for an assessment of damages on proper principles, 
    it appears to me that this Court is able to assess the damages based on the 
    evidence in the record.

[84]

I 
    appreciate the appellant's argument that regardless of the evidence of the 
    downsizing in 1997, there was evidence that it had an ongoing business and 
    that if that business is to continue at all, the company must replace its 
    existing facilities in order to accommodate the kind of heavy equipment it 
    uses in logging and road building.  As well, the appellant points out that 
    it had derived income from the rental of part of its facilities in the past 
    and there is no reason that it could not do so in the future during periods 
    of low business activity, if it has an equivalent building and facilities 
    on appropriately zoned property.

[85]

The 
    respondent placed some emphasis on Mr. Rahn's evidence that he could comfortably 
    retire on the proceeds of the sale of equipment in 1997 to support the trial 
    judge's conclusion that the appellant had no need for a similar facility in 
    future.  When that evidence is examined in the context in which it was given, 
    it provides little support for a conclusion that Mr. Rahn would retire or 
    would be disinclined to continue operating the business at anything other 
    than its post 1997 level.  Following his testimony that the sale of equipment 
    had resulted in net proceeds of between $1.5-$2.0 million, Mr. Rahn was asked 
    about the net value of the company.  The judge's interjection and the questions 
    and answers which follow put the reference to retirement in perspective:

Q    
    All right. Aside from the net from the equip­ment sales, did the company have 
    other assets?

A    
    Yes.

Q    
    What was the net value approximately of the company at that time?

A    
    It was in the --

THE 
    COURT:  You're into the opinion of evaluators now.  I'm not interested in 
    his opinion with respect to value because he's not an expert on value. He 
    can tell me what he paid, what they sold, and what they got and that and the 
    other, but the question of value is going to have to come from somebody else. 
    Net value particularly because it doesn't mean anything.

MR. 
    FLETCHER:  All right, My Lord.

THE 
    COURT:  Absent a definition of some kind.

MR. 
    FLETCHER: All right, my Lord, I'll approach it a different way.

Q    
    Sir, in your opinion at that time did you have enough money that you could 
    retire from business at that point and live comfortably?

A    
    Yes, I did.

Q    
    You were about 35?

A    
    No.  We're talking about 1997?

Q    
    Yeah.

A    
    I'm 43 now.

Q    
    So 39?

A    
    Yeah.

Q    
    All right.  Did you put Zilkie Road up for sale at the time sir?

A    
    No, I wasn't looking to sell Zilkie Road.

Q    
    Well, you had sold three-quarters of the equipment, why didn't you sell Zilkie 
    Road and get rid of it?

A    
    As I previously stated, these were just basically damage control measures 
    and measures to minimize exposure to endure tough times.  We had no -- we 
    weren't prepared to go out of business, that wasn't our plan.  We were thinking 
    that as it did in '83/'84 that it would come back and that we would go more 
    strongly back into the business and carry on.  It's a typical business tactic.

Q    
    Now, did the difficult times for the logging industry that you were aware 
    of appear to continue for some time after you made the sale in '97?

...

A    
    Yes, they did.

[86]

While 
    on the evidence the chances of the company continuing in the logging business 
    could not be regarded as certain, it appears to me that the history of the 
    company and Mr. Rahn's part in it would support the view that Mr. Rahn, at 
    the age of 43, would be likely to continue to operate the company business 
    as he had since 1997, but if the economy improved, he would expand the company's 
    operations and buy what further equipment was needed.  From the evidence, 
    the company apparently has the financial resources to do so.

[87]

If 
    the appellant is to carry on its business as a logging contractor and road 
    builder even on a reduced scale, however, it would have to do so on other 
    lands, for it cannot continue even its present use of the property without 
    contravening the existing zoning bylaw.

[88]

If 
    the appellant is to be placed in the position it would have been in had the 
    misrepresentations as to the use of the property not been made, the appellant 
    would have to replace its building and other facilities on other, appropriately 
    zoned, property.  The unchallenged evidence of the cost of replacing the existing 
    building and other facilities was between $833,220 and $862,155.  The respondent 
    offered no competing evidence as to the cost of replacement and did not challenge 
    the estimates that were presented.

[89]

The 
    decision in
Nan v. Black Pine Manufacturing Ltd.
,
supra
, 
    in which full replacement cost of a house was found to be appropriate in a 
    fire loss case is not of assistance here.  In
Nan
, there was no reduction made for depreciation, but this case, unlike
Nan
, involves 
    a building and facilities that were used for commercial purposes.

[90]

As 
    noted earlier, the trial judge made a deduction from the capital cost figures 
    he had arrived at to take into account a reduction in the useful life of the 
    facilities had they been built on other lands (see paras. 54 to 57 of his 
    reasons quoted in paragraph 62 of these reasons).  If a deduction is made 
    from the estimated replacement costs to take into account a portion their 
    useful life expended, the result would be an award of about $530,000.  In 
    my opinion, such a deduction must be made in this case or the result would 
    be that the appellant is placed in a better position than it would have been 
    in had the misrepresentations not been made at all.  This was a special use 
    building designed for the appellant's purposes but there is no reason to assume 
    that had it been built on other lands it would not have suffered from deterioration 
    and some obsolescence over a span of years.

[91]

I 
    am also of the view that some discounting is required to take into account 
    the possibility that the economy in the logging industry may not improve for 
    some time or at all and for the possibility that, even if the economy does 
    improve, the principal of the appellant will decide not to replace the building 
    and facilities or will replace them on a smaller scale.

[92]

As 
    the trial judge noted, no evidence was adduced by the respondent to show the 
    residual value of the facilities on Zilkie Road but that may not be surprising, 
    when the building and facilities cannot be used without contravening the bylaw.  
    I should add that the appellant makes no claim based on differences between 
    the value of property zoned for light industrial use and the property located 
    on Zilkie Road, and for that reason it is unnecessary to refer to the appraisal 
    evidence.

[93]

After 
    making a reduction in the estimated cost of replacement of the building and 
    facilities to take into account their useful life expended and applying a 
    discount to take into account the contingencies noted, I consider that an 
    award of $475,000.00 would be reasonable in the circumstances.

V.  Loss of Rental Revenue

[94]

I 
    turn now to the appellant's assertion that the trial judge erred in not awarding 
    an amount for loss of revenue from rental income in the period between the 
    granting of the interim injunction and the time when a new facility could 
    reasonably be expected to be completed.

[95]

There is no reference 
    to this claim in the trial judge's reasons and there are no pleadings in relation 
    to it.  In the Counterclaim, the appellant did include a claim for "loss 
    of profits" but there were no pleadings to support it and that claim 
    was not pursued at trial.  We do not have before us the closing submissions 
    of counsel so it is unclear on what foundation the claim for loss of rental 
    revenue was advanced.  The factums do not assist.  The appellant's factum 
    contains no submissions whatsoever concerning the loss of rental revenue but 
    under "Nature of Order Sought", the following appears:

(2)  
    An order that the assessed damages include an amount for rent lost from the 
    date of the interlocutory judgment to the date when the building ought to 
    have been replaced;

[96]

The 
    only reference to the rental loss claim in the respondent's factum is contained 
    in the following paragraph:

13.  
    In the same fashion, the trial judge's refusal to award any amount for rental 
    loss arising from the possibility of renting the building to a third party 
    must, in the absence of an explanation, be consistent with a conclusion that 
    the damages awarded to the Appellant would be appropriate in all the circumstances.

[97]

Whether 
    this issue is properly before us may be open to question but, in any event, 
    I am of the view that it cannot succeed.

[98]

In 
    contract, the plaintiff is to be put in the position it would have been in 
    had the misrepresentation been true and hence the term "expectation damages" 
    is appropriate to describe how the loss is to be measured.  In tort, a plaintiff 
    is to be put back in the position it would have been in had the misrepresentation 
    not been made, and the term "restoration damages" may be used to 
    describe how the loss is measured.

[99]

In 
    this case, the respondent's negligent misrepresenta­tions did not result in 
    a contract and there was no contractual relationship between the parties.  
    It is not a case of concurrent liability.  The claim was brought and could 
    only be brought in tort.

[100]

On the facts of this case, the economic loss resulting from the negligent 
    misrepresentation relates to the appellant's capital position, i.e. it is 
    not able to use the buildings and other facilities it built on the property 
    without contravening the zoning bylaw.  If it is to be restored to the position 
    it would have been in had the misrepresentations not been made, it is its 
    capital loss that must be compensated.

[101]

In this case, I think the only claim the appellant could make in tort 
    would be for capital, not income, losses.  Assuming, without deciding, that 
    a loss of revenue claim could properly be advanced, I doubt the evidence would 
    support it.  I could find nothing in the evidence to suggest that the respondent, 
    either directly or by implication, represented that the Zilkie Road property 
    could be used by the appellant for industrial rental purposes.  The building 
    permit applications, the City's correspondence and its approvals all show 
    that the negligent representations as to the use the appellant could make 
    of the property were made in the context of the AFO (agricultural and forestry) 
    zoning.  The City was negligent in issuing the permit in 1985 when the change 
    in the Special Home Occupation provisions were not as Ms. Pateman anticipated 
    they would become and negligent in issuing the 1993 permit allowing the addition 
    to be built under the "forestry use" provision when it did not apply.  
    There is no suggestion in the pleadings that the respondent ever represented 
    that the property was zoned for general light industrial use.  Damages must 
    be limited to what is foresee­able.  Whether the loss is foreseeable in pure 
    economic loss cases is a particularly important determination.  Use of the 
    property for light industrial rental purposes under the AFO zoning does not 
    appear to me to be a foreseeable consequence of the negligently made representations.

[102]

For the foregoing reasons, I would dismiss this ground of appeal.

VI.  Summary

[103]

I would allow the appeal, set aside the damage award of $125,541.87 
    and substitute an award of $475,000.00.  The award for the cost of attempting 
    to obtain a favourable rezoning is affirmed.  Prejudgement interest is to 
    run from the dates the trial judge stipulated.  I would dismiss the appeal 
    as it relates to the loss of rental income.  As to the injunctive relief, 
    I would substitute an order that the appellant be permanently enjoined from 
    using, or permitting its land or buildings to be used, for any purpose contrary 
    to the provisions of the zoning bylaw.







THE HONOURABLE MADAM JUSTICE ROWLES





I 
    AGREE:







THE 
    HONOURABLE MADAM JUSTICE PROWSE







I 
    AGREE:







THE 
    HONOURABLE MR. JUSTICE THACKRAY






