Gamble Municipal Drain

In the matter of the Drainage Act R.S.0. 1990, Chapter D.17, as amended.

And in the matter of:

An appeal to the Agriculture, Food and Rural Affairs Appeal Tribunal by Philon Energy Inc., in Langton, Ontario, under Section 54 of the Drainage Act from a decision of the Court of Revision and under Subsections 48(1)(b) and 48(1)(c) of the Drainage Act from the engineer's report on the Gamble Municipal Drain in Norfolk County.

Before:

John O'Kane, Vice Chair; Cor Kapteyn, Vice Chair; Jane Sadler Richards, Member

Appearances:

William Dietrich, P.Eng., on behalf of Norfolk County, the respondent
Paul Courey, counsel for the respondent
Andrew Wright, counsel for Philon Energy Inc., the appellant
John D. Vallee, witness for the appellant
Ed Dries, witness for the appellant
Mark Gamble, assessed landowner

Decision of the Tribunal

Overview

The Gamble Municipal Drain (the "Drain") in the Town of Port Dover (the "Town") arose from a December 29th, 2006 petition for drainage. The petition was from Mark, Harry, Mary Jane and Jeff Gamble ("Gamble") and by John Hamilton the Drainage Superintendent for the County of Norfolk ("Norfolk") under section 4 of the Drainage Act, R.S.O. 1990, c.D.17 (the "Act").

The County appointed W. J. Dietrich, a professional engineer with Dietrich Engineering Limited (the "Engineer") under section 8 of the Act to examine the area needing drainage and prepare a report.

On July 10th, 2007 the Engineer delivered (the "Report"), with recommendations for drainage works in response to the petition for drainage. The Report included an assessment of who would bear the costs of the drainage works.

An appeal from the Report under section 48 of the Act came before the Tribunal. The appellant is Philon Energy Inc. ("Philon"). The essence of that part of Philon's appeal was that the Engineer had not produced an acceptable Report.

Philon also appealed to the Tribunal under section 54 of the Act from the October 5th, 2007 decision of the Court of Revision. The Court of Revision decision changed the costs assessment in the Report by transferring $3,000.00 of benefit costs off Philon's property on to the Roads. The essence of Philon's appeal from the Court of Revision was that the allowances provided were inadequate, the cost-benefit split was wrong and the cost and maintenance assessment was too high.

The appeals went together on February 7th, 2008 and April 30th, 2008 and May 1st, 2008 in Simcoe, Ontario. Ms. Jill Ostrowercha, Drainage Clerk of Norfolk performed the duties of Clerk of the Tribunal.

Before the hearing took place the Tribunal issued an Order making all landowners assessed or compensated in the Report parties to the appeal. Ms. Ostrowercha filed an Affidavit of Service at the start of the hearing proving the notice of the hearing was served on all parties.

Mr. Paul Courey appeared as counsel for the County. Mr. Andrew Wright appeared as counsel for Philon. Mr. Mark Gamble represented himself.

Preliminary Matters

As part of the Tribunal's standard opening explanation of the rules for the hearing the Tribunal asks if anyone wants standing at the hearing.

Mr. Mark Gamble asked for standing as a party.

Mr. Gamble was one of the original signatories to the petition for drainage.

Both Mr. Wright and Mr. Courey had no objections to Mr. Gamble's request and the Tribunal granted Mr. Mark Gamble party status.

At Mr. Courey's request the Tribunal made an Order excluding witnesses. Mr. Gamble, Mr. Vallee, Mr. Dries and Mr. Dietrich were exempted from that Order.

Background

The proposed Gamble Drain is in an urban area of Port Dover, Ontario. Gamble owns about 1.6 ha (4 ac) of land on the north-east side of Grand Street. Philon owns about 0.8 ha (2 ac) of land on the south-west side of Grand Street. The Philon lands are downhill from the Gamble lands. The Philon lands are on the Black Creek Canal.

Both the Gamble and Philon lands are awaiting approvals for development into a higher use. For Gamble's development to advance they need a secure drainage outlet. Historically, water from the Gamble land and Grand Street drained into an existing manhole catchbasin near the south limit of Gamble's property. From that point water drained under Grand Street through a 600 mm pipe that also crossed under the Philon land and into the Black Creek Canal. There was no dispute that the historical drain existed although there was some conflicting evidence about how long it had existed. There was also no dispute the drain was a private drain not covered under the Act. The historical drain location was altered around November 2004 when Philon was filling in part of the Black Creek Canal in preparation for developing its land. Regardless of the true legal status of the historical drain, Philon "re-routed" the storm sewer during that construction process. The drain continued although in a location that was closer to the northerly limit of Philon's property line. As part of that drain "re-routing" Philon installed about 42 m of drainpipe and three manholes. The total cost to Philon, including engineering and taxes, was $15,139.76.

Gamble and the County joined to petition for drainage of their respective lands by drainage works that would have municipal drain status under the Act.

Once completed, the proposed Gamble Drain would include a "Main Drain" and a "Branch A".

The Main Drain would incorporate about 36 m of the existing historical drain but not all the manholes installed by Philon. There would be a new location of the drain as it crosses Grand Street requiring the road to be cut to install the new road crossing as well as a new manhole catchbasin located upstream of the new road crossing. The proposed Main Branch would be 54 m long, 36 m of which exists in the ground already. The estimated costs for the Main Drain are $47,000.00.

Branch A arose because the County asked to disconnect existing storm sewers that drain into the road drains and to reconnect to the proposed Gamble Drain. All the proposed Branch A work will take place in the Grand Street road allowance. It will involve about 16 m of new pipe running under Grand Street and connecting by a manhole at the head of the Gamble Drain. The estimated costs for Branch A are $20,300.00. Branch A is not under appeal.

Although identified from the Engineer's field observations as within the watershed, a residential area with several dozen properties to the north-east of the Gamble property does not drain to the south-west. That area is drained through existing underground sewers that run under Oak Ridge Court to John Street and eventually along Scott Street draining to the north of the watershed. The Report did not assess any of those properties for any costs of the proposed drain. The Gamble property however, drains to the south-west of the watershed into the Black Creek Canal.

At the beginning of the hearing during his overview, the Engineer conceded the plan in the Report outlining the watershed location mistakenly stopped on Grand Street next to property 30-352. The Engineer agreed to amend that part of the Report by completing the watershed line along Grand Street to the proposed Gamble Drain.

The Engineer also conceded the Report contained an error over the proposed working area where it suggested a width of 20 m centred on the drain. The engineer corrected the working area to 15 m.

During the hearing the Tribunal granted motions to qualify the following witnesses as experts to provide opinion evidence in the following disciplines:

Mr. William Dietrich, Profession Engineer - municipal drainage
Mr. Ed Dries, Professional Engineer - municipal drainage
Mr. John Vallee, Professional Engineer - land development, policy and approvals
Mr. Rae Buchan, Land Appraiser - land values

The Tribunal also heard evidence from Mr. Mark Gamble, a petitioner and Mr. Steven Brickman, an engineering student and former summer employee of Mr. Dietrich's firm.

The Issues

The following issues developed during this appeal:

1. Text changes to the Report
2. Assessments
   1. The benefit-outlet split
   2. Report status of the upstream property owners
   3. Separating the Main Drain and Branch A assessments
3. Allowances
   1. Section 29 allowance for right of way on Philon's property
   2. Allowance to Philon for drain already built
4. Working area (right of way)
   1. Width of area
   2. Potential increased maintenance costs
5. Costs of any Report rewrite
   

Discussion and Findings

1. Text changes to report

Mr. Dries was a witness for Philon. He testified about several criticisms he had with the Report. However, during cross-examination he conceded that several of those Report issues had no impact on Philon but would make the Report better. The Tribunal heard no evidence to satisfy it there is some bright line standard for drainage reports. Engineering professionals prepare such reports under a statutory duty. Reasonable professionals often differ in their professional opinions and writing styles. Those differences do not necessarily make one wrong and another right.

The Tribunal's role in an appeal is not to strive to ensure production of the best Report according to some gold standard but rather to decide the rights, interests and issues under appeal.
owever, in the future the Engineer must proof-read the Report more carefully before publication. Doing so will avoid errors such as the incomplete outline of the watershed and the conflict in the width of the working area. Errors like that arise from lack of proper attention.

With these comments in mind, The Tribunal will, as part of its Order, direct some text changes in the Report. The text changes arose because;

1. the parties agreed to change some of the text;
2. Philon proposed some other changes that the Engineer was not opposed to; and,
3. the Tribunal needed clarification about future maintenance costs given the upstream properties are not assessed on the drain and the risks associated with using working area for utility services.

2. Assessments

a. The benefit-outlet split

The Tribunal heard evidence that Gamble needed an outlet for water draining from their land. They also heard evidence that providing a legal outlet will be a benefit to developing the Gamble property. The benefit is that the Act's terms will address any future drainage issues. The County had a similar interest in having drainage related to its roadworks covered under the Act. Philon conceded that under the Act it had to allow the Drain on their land but that it provided no outlet or benefit to their property. The Tribunal agrees with Philon that because of the property's location beside the Black Creek Canal it would not need the Drain for outlet. However, Philon did not persuade the Tribunal that it would get no benefit from the Drain. By putting the Drain parallel to and close beside Philon's northerly property line, it will maximize the area available for development. That is a benefit that translates into increased property value. Therefore, the Tribunal overturns the Court of Revision. The Tribunal agrees with the Engineer's division of 83% of the costs to benefit and 17% of the costs to outlet.

b. Report status of the upstream property owners

The Tribunal heard argument that the Report should include the upstream properties north-west of the Gamble property. Since they are located within the natural boundaries of the watershed Philon argued including them in the Report would provide legal status on the Drain. However, section 79 of the Act gives those properties status if affected by the condition of a drainage works. That status exists regardless if the properties are assessed in the Report or not. Also, the Engineer satisfied the Tribunal these properties have satisfactory drainage outlet through a system of storm sewers that drain outside the Drain watershed. Despite these assurances, should these properties need outlet at some point in the future, the owners may petition for outlet under the Act. Therefore, while unusual, the Tribunal determined in this case it is acceptable to leave those properties out of the Report's Schedule of Assessments.

c. Separating the Main Drain and Branch A assessments

Since the Branch A assessments were not appealed the Tribunal refuses to separate the assessments in the Report.

3. Allowances

Philon contested as too low both the section 29 and 31 allowances made by the Engineer. Much of a drainage engineer's work to develop assessments and allowances under the Act is based on the engineer's judgment, skills and experience.

a. Section 29 allowance for right of way on Philon's property

Section 29(a) of the Act frames the issue about how much compensation Philon should receive for the Drain's use of its land. The essence of that subsection is that the engineer must estimate the value of land or the damages to the land that it is necessary to use for constructing the drain. That estimate then forms part of the overall cost of the drain the Engineer apportions among the assessed properties.

In the Report the Engineer allowed Philon $1,100 for the value of that land. In argument Mr. Wright sought $38,860.00 for the value for that land. The theory advanced by Philon was the land needed for the drain was sterilized from productive use.

The Engineer's evidence about how he developed the $1,100 allowance was that he spoke with the Gamble's about their views on the value of their land. He learned from the Gamble's that they had an appraisal done a few years earlier that suggested a value of $200,000 an acre. He considered that since the Philon lands were at a lower elevation than Gamble's land and within a flood plain area, the Philon lands would be worth about $130,000 an acre. Based on his experience, the Engineer then considered that since the drain would not restrict Philon's uses of the property, it was proper to use 10% of that $130,000 an acre value. The Engineer's calculation of the section 29 allowance was as follows:

8 m wide x 43 m long = 344 m² or 0.0850 acres
$130,000/acre x 10% = $13,000/acre
0.0850 acres x $13,000/acre = $1,105

The Philon evidence about the value of the land was based in part on the planning evidence of Mr. John Vallee. His evidence was that the proposed redevelopment of the lands would include a compact townhouse condominium with about 40 units.

Mr. Rae Buchan testified about how he developed an appraisal of the Philon lands using the "Development Approach" to value. Although Mr. Buchan explained the Development Approach in much greater technical detail in both his oral evidence and in his written report, the essence is as follows:

Establish the local market sale price of townhouse condominiums.

Add a premium for the location near the riverfront and near a possible future commercial development on the riverfront.

Subtract the building costs and servicing costs

= Value of the land

Mr. Buchan's opinion was that using this approach the Philon land value was $569,591/acre as of December 4, 2007. However, Mr. Buchan admitted he had no experience valuing less than the fee simple interest in land. The fee simple interest is sometimes described as the whole bundle of ownership rights. A property sale is an exchange or trade on that interest.

However, this is not a sale of land and Philon will not lose their entire bundle of rights to the right of way.

Within the context of the section 29 allowance issue, Counsel traded arguments over the nature of the historical drain across the Philon lands. Those arguments focused on whether the historical drain was a prescriptive easement. The Tribunal does not have to decide the true legal status of that historical drain. It is immaterial because the Act is clear that Philon is entitled to an allowance for the use of its land, regardless of the status of the historical drain.

The Tribunal recognizes the responsibilities imposed on a drainage engineer under the Act might, in some circumstances, take the engineer outside the area of their expertise. Deciding land values in an urban area where development is happening as was the case here, is just one such example.

To arrive at a suitable value Mr. Buchan testified about the market research he did to understand what townhouse units would sell for in Port Dover as well as the cost to build such units in Port Dover. When the Tribunal contrasts that approach with the Engineer's approach to deciding value, the Engineer's approach is found wanting. When confronted with a complicated valuation issue it is the engineer's responsibility to get the professional support needed to carry out the section 29 duty. The Engineer failed to do that in this case.

As noted elsewhere in this decision the width of the right of way has resolved from 15 m to 8 m and finally 6 m.

The Tribunal received no relevant expert opinion evidence on how to value less than the fee simple interest.

The proposed drain will run along the northerly property limit of Philon's land. The evidence was that 3 m of the 6 m needed for the drain is a municipal zoning by-law set back. The Tribunal finds that since that municipal set back exists, ½ of the proposed drain width is already "sterilized" from productive use. That must be considered to reduce any section 29 allowance. The Tribunal considers that a 50% discount in value is reasonable and equitable to reflect the municipal zoning set back.

In addition, the evidence from both Mr. Dries and Mr. Dietrich satisfied the Tribunal that the drain right of way corridor is available for use by Philon to route other services needed for the development on the land. Therefore the Tribunal concludes that, subject to section 82 of the Act, the right of way strip for the drain will not be sterilized. That must also be considered to reduce any section 29 allowance. The Tribunal finds that a further 50% discount in value will account for Philon's continued rights of use for other purposes.

Therefore the Tribunal finds that a reasonable and equitable approach to deciding the value of the section 29 allowance is to use Mr. Buchan's value of $569,591/acre applied as follows:

6 m x 43 m = 258 m² or 0.0638 acres

$569,591/acre x 0.0638 acres = $36,339.91

$36,339.91 x 50% (set back discount) = $18,169.96

$18,169.96 x 50% (multiple use discount) = $9,084.98 allowance under section 29

b. Allowance to Philon for drain already built

Under section 31 of the Act, the Engineer can incorporate existing drainage works into a petition drain. He proposes to do that in this drainage works by incorporating parts of the works built previously by Philon. When that happens the Engineer must estimate the value of the parts incorporated and include that allowance in the cost of the drainage works.

The Engineer allowed Philon $9,900 to incorporate parts of the existing drain. The Engineer arrived at the $9,900 using Philon's cost evidence provided by Mr. John Vallee.

The Engineer allowed Philon $5,713 for 30.6 m of pipe and $1,683 for one manhole. That was Philon's costs for that pipe and that manhole. The Engineer also allowed Philon the costs to excavate, lay and backfill the pipe and manhole. The Engineer testified he allowed Philon 65% of the original engineering and mobilization costs. Once he added GST the Engineer rounded up to the $9,900 allowance.

The Engineer's unequivocal evidence was that only the 30.6 m of pipe and the one manhole would be incorporated into the proposed drainage works. Given that, the Tribunal finds that the Engineer's allowance of $9,900 is in accordance with the requirements of section 31 of the Act.

4. Working area (right of way)

a. Width of area:

The Tribunal heard evidence that the 15 m wide right of way could be reduced to 8 m. Further evidence was presented that a right of way of 6 m, although narrow, was acceptable for construction and future maintenance. Therefore the Tribunal finds that a 6 m working area (right of way) meets the requirements of the Act while facilitating as much of the developable lands as possible.

b. Potential increased maintenance costs:

The Tribunal is satisfied that the 6 m wide working area (right of way) could also incorporate other underground services needed for the development. However, the Tribunal accepts the County's argument that such a narrow working area (right of way) might necessitate extra maintenance costs due to its width. Therefore, any increased maintenance costs associated with a 6 m rather than an 8 m working area (right of way) on Philon's land will be the responsibility of the owner of Philon's land.

5. Costs of any Report re-write

Mr. Wright argued that the Engineer's original inclusion of a 20 m wide right of way in one part of the Report was a deficiency in the Report that caused the appeal. He also argued as a result the Engineer fell below the expected standard. The result, he suggested, was the cost of any Report rewrite should not be charged to the Drain. Of course that would mean either the Engineer or the County would be charged with the cost of any required rewrite of the Report. In support of his argument Mr. Wright referred to a passage from the Ontario Drainage Tribunal decision in the Mud Creek and Sutherland Drain.

The Ontario Drainage Tribunal is the predecessor of this Tribunal and a body of coordinate jurisdiction. There is no principle of stare decisis working between Tribunals of coordinate jurisdiction. Therefore this Tribunal is not bound by the decisions of the Ontario Drainage Tribunal.

The Tribunal might, in a proper case, make an Order that the engineer's costs not be assessed against the drain, however this is not such a case. The Tribunal is not persuaded this appeal was caused by the Engineer mistakenly referring to a 20 m right of way in part of the Report. The Tribunal concludes the primary motivator behind this appeal was the land value allowance issue and the cost-benefit split.

Order of the Tribunal

After consideration of the evidence filed and the submission made the Tribunal orders:

1. The Engineer amend the Report as follows:
   1. The working area description will be revised throughout the Report to 6 m.
   2. The outline of the watershed on the Plan and Profile drawing will be completed to intersect with the Gamble Drain.
   3. The paragraph immediately after the title "Working Area" on page 2 of the Report will be replaced with:

      The working area for construction and maintenance purposes shall be as follows:

      Sta. 0+00 to Sta. 0+043 on Roll No. 30-323 (Philon Energy Inc.) having a maximum width of six (6 m) metres measured southerly from the northerly boundary of this property in the location of this part of the drain. Sta. 0+043 to Sta. 0+053 - the road allowance referenced as Grand Street. Sta. 0+053 to Sta. 0+139 - the entire width of the road allowance referenced as Grand Street including a corridor having a maximum width six (6 m) metres measured easterly from the east limit of Grand Street.

      The owner of the roll number 30-323 lands shall not be entitled to use the working area for the construction of any residential building. The working area shall not preclude the ability of the owner of the roll number 30-323 lands to use the working area for underground servicing infrastructure, such as water services, sanitary sewer services, natural gas service lines, electrical, telephone, internet and cable TV lines, in order to service the lands to the extent that such underground servicing would otherwise be part of the Planning Act site plan approval process for the development of such lands. As well the working area shall not preclude the ability of the owner of the roll number 30-323 lands to use the surface of the working area for fencing, for landscaping and for paved parking and driveway surfaces to the extent that such would otherwise be part of the Planning Act site plan approval process for the development of such lands.

      The working area over the Grand Street road allowance shall not preclude the municipality's use of the road allowance for above and below ground municipal and utilities' infrastructure, such as paved roadway; curbs; gutters; sidewalks; driveway entrances; watermains, including service laterals; sanitary sewers, including service laterals; storm sewers; natural gas lines, electrical, telephone, internet and cable TV lines, including service connections to or through abutting properties.

      The owners of the properties on which the drain is to be constructed shall designate access to and from the working area.

      The above italicized wording will be cross-referenced in the following parts of the Report:

      • the first paragraph of Item A. 5, Division A: "General Conditions"; and
      • item 3 of Division H: "Special Provisions".
   4. The above wording changes to the Report in no way derogate from the provisions of the Drainage Act, and in particular sections 80 and 82.
   5. The last paragraph on page 5 of the Report will be replaced with:
      

      After completion, this drain shall be maintained by Norfolk County at the expense of all the lands and roads assessed upstream of the point of the maintenance works in the same relative proportions as are set out in the attached Schedule of Assessment for Maintenance until such time as the assessment is changed under the Drainage Act.

   6. Add notes to drawing 'Detail N.T.S.' indicating the following items:
      • Installing a tee joint at station 0 + 010 of Branch A;
      • At the section of the historical drain located just west of the intersection with Branch A, add a notation indicating the status of the historical drain e.g., 'active private drain';
      • Show the portion of Black Creek Canal that was filled in and the location of the sea wall.
   7. Add a paragraph to the Report confirming Gamble agreed to assume costs that might otherwise be assessed to upstream properties within the watershed.
   8. Add a note to the maintenance assessment schedule that any increased maintenance costs of the drain due to a 6 m rather than 8 m width of the working area (right of way) across Philon's land will be the landowner's responsibility.
2. The Engineer will revise the Report to reflect $9,084.98 as the section 29 allowance to Philon. No other adjustments are required to the allowances. As a result of this allowance increasing the overall cost of the Drain, the assessments will be adjusted proportionately.
3. The appeals are otherwise dismissed.
4. The non-administrative costs of the Town for these appeals shall form part of the drainage works and it is ordered there be no other order of costs and all parties are responsible for their own costs. Attention is drawn to Section 73 of the Drainage Act.
   

Dated at: Brampton, Ontario, this 18th day of June, 2008.