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Peterson Stark Scott


Gas station operator awarded relocation costs
December 9, 2001
The recent Pay Less compensation decision continues to fascinate us here at The Expropriation Law Center if for no other reason than its length. The decision contains 480 paragraphs, more than any other expropriation decision that we can recall in recent times.

The decision is Pay Less Gas Co. (1972) Ltd. v. British Columbia (Minister of Transportation and Highways), recently released by the B.C. Expropriation Compensation Board. It has been published by the BCEA Decisions Services as [2001] EXLAW 331 (B.C.E.C.B.).

The case arose from the 1990 expropriation of a gas station in Mill Bay, on southern Vancouver Island, some 42 km north of Victoria. The property was required for a widening of the existing Trans Canada Highway.

The Board's decision delves into many of the details of the business of retailing petroleum products. There are relatively few such reported compensation cases. We are not certain why there aren't more such cases given that gas stations are probably the most common type of business to be affected by highway improvement projects. However, in order to pursue its claim, the claimant was obviously forced to disclose a great deal of business information, perhaps more than most gas station operators would care to make public.

The issue of relocation was central to the case. The claimant operated a chain of 50 gas stations. It was forced to shut down the Mill Bay station as a result of the taking. However, it opened another gas station at a nearby location in 1992, approximately two years later.

Under the B.C. Expropriation Act, where a business can no longer operate because of expropriation, the claimant is entitled to be compensated for the cost of relocation and any related business losses provided that it is feasible to relocate. If the Board determines that it is not feasible, a termination allowance will be awarded. The termination allowance is usually based on the value of goodwill in the business.

This provision can be a minefield for claimants. If the claimant decides that relocation is not feasible and winds up the business, the Authority may argue at the compensation hearing that relocation was feasible. If the Board so finds, the owner is not entitled to recover relocation expenses and business losses because no such expenses and losses were incurred. In addition, since relocation was feasible, the owner is not entitled to a termination allowance either.

On the other hand, if the claimant does relocate and the business does not flourish at the new location, the Authority will probably argue that relocation was not feasible and the relocation expenses and related business losses incurred should not be compensated because the claimant did not act reasonably. A termination allowance could be awarded but this award would likely be small by comparison to the relocation expenses and business losses that the Claimant would have incurred.

Pay Less did not fall exactly into either of those categories. Here the claimant did open a new location nearby which was flourishing at the time of the hearing. However, there was a delay of approximately two years before the new location opened. The Authority argued that the new business was not a relocated business but a brand new business instead and pointed to the greatly expanded scope and size of the new business. During the hearing, the Authority referred to the new location as the "Taj Mahal" of gas stations. This description was intended to support its argument that the new business was totally different in kind than the one which shut down. On this approach the Claimant would have been entitled only to a termination allowance that would have been much smaller than the claim for relocation costs that was advanced.

Fortunately for the Claimant, the Board found that it was feasible to relocate and the Claimant had done so. An award was made for relocation costs.

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