District of North Vancouver must pay developer $1.5M more for land it expropriated for highway project: court

The Ironworkers Memorial Bridge -- officially the Ironworkers Memorial Second Narrows Crossing -- is seen in this file photo. (Shutterstock.com)

The District of North Vancouver has been ordered to pay more than $1.5 million to a developer for land it expropriated for highway expansion in 2018.

The district paid Spera (Lynn Creek) Holdings Ltd. $6,653,000 for a substantial portion of a land-assembly property it owned northwest of the Ironworkers Memorial Bridge on St. Denis and Forsman avenues and East Keith Road.

The expropriation was part of a project to improve the Upper Levels Highway and covered more than 34,000 square feet – or roughly 42 per cent – of Spera's land.

The developer sued the district, arguing that it had been underpaid for the expropriated land, and that the fair market value of the property should have been roughly $4.7 million higher than the amount it received.

In a decision issued last week, B.C. Supreme Court Justice Shelley C. Fitzpatrick declined to increase the district's purchase price by that much, but did order the district to pay roughly $1.5 million more than its initial purchase price. 

The 'Spera comparable'

In many ways, Spera's case mirrored that of Juanna Hanlon, who initially refused to vacate her home on Forsman Avenue to make way for the project.

In May 2019, the district won an injunction requiring Hanlon to vacate the property by May 31 of that year to allow construction to proceed. 

Hanlon left the property, but took the district to court, seeking additional compensation beyond the $2 million it claimed was a fair market value for her home.

A 2022 B.C. Supreme Court decision found in Hanlon's favour, ordering the district to pay her an additional $900,000 for her property. The B.C. Court of Appeal upheld the lower court's ruling last year. 

A key consideration in the B.C. Supreme Court's initial decision on the value of Hanlon's home was the so-called "Spera comparable" – Spera's 2016 acquisition of the land assembly property from its previous buyer in an assignment sale.

The previous buyer of the land assembly was RSV Ventures Inc., which agreed in 2015 to purchase the nine adjacent residential lots for a combined total of $10,679,891. The following year, RSV assigned its purchase agreements to Spera for $15,189,053.

The appraiser hired by the district to determine the fair market value of Hanlon's home opted not to include the Spera comparable in her appraisal, reasoning that she had insufficient evidence to show it was an arm's-length transaction and that, in any case, it was an "excessively high outlier."

The judge in Hanlon's case disagreed that the Spera comparable should be excluded, and adjusted the fair market value of the woman's home upwards as a result.

In Spera's own case, the high price the company paid to acquire the land assembly once again influenced the court's thinking.

Price per buildable square foot

Spera argued that the court should be bound by the judge's reasoning in the Hanlon case, and that allowing the district to litigate the fair market value of its land-assembly property would constitute an "abuse of process."

Fitzpatrick disagreed, noting that Spera was not a party to the previous case and, in any event, the Hanlon decision did not make findings of fact regarding the fair market value of the Spera property.

The judge still considered the Spera comparable when determining the fair market value, just without being bound by the reasoning from the court's previous decision.

Fitzpatrick laid out the various available estimates of value for the property, including appraisals from both the district and the company, organizing them by the price per buildable square foot.

At the low end was the price RSV agreed to pay in 2015, which worked out to $163 per buildable square foot.

The high end of the scale was an opinion submitted by Hanlon during her litigation and placed before the court again in this case, which valued Spera's property at $430 per buildable square foot.

Spera's own appraisal came in slightly lower, at $415, while the district's appraisal – conducted by the same appraiser who did the appraisal that excluded the Spera comparable in the Hanlon case – was $225 per buildable square foot.

The roughly $6.6 million the district actually paid for the expropriated land worked out to $243 per buildable square foot.

The most persuasive of the potential values, according to Fitzpatrick, was the one based on the district's appraisal, but with the Spera comparable included, for a total of $300 per buildable square foot.

"I acknowledge (the district appraiser's) position that one sale does not make the market and that she concluded, based on her analysis, that the price was 'high,'" Fitzpatrick's decision reads, before adding that the Spera comparable was "a relevant sale that had to be considered" in the appraisers' analyses.

The judge determined that the fair market value of the expropriated property in 2018 was $8,200,320, or $1,547,320 more than the district paid when it seized the land.

In addition to the difference between the two prices, the developer is entitled to interest and court costs, Fitzpatrick ruled.

CTV News contacted the district Tuesday to ask whether it plans to appeal this case as it did the Hanlon case. In response, the municipality provided the following brief statement:

"We have been informed of the decision and are considering our options."