386 EXCHEQUER COURT REPORTS. [VOL. XVII. 1917 HIS MAJESTY THE KING, ON THE INFORMATION July 7. OF THE ATTORNEY-GENERAL OF CANADA, PLAINTIFF, AND THE QUEBEC GAS COMPANY, A BODY CORPORATE, AND THE CITY OF QUEBEC, DEFENDANTS, AND THE ROYAL TRUST COMPANY, A BODY CORPOR- ATE, AND THE QUEBEC RAILWAY, LIGHT, HEAT & POWER COMPANY, A BODY CORPORATE, ADDED DEFENDANTS. Expropriation—Conversion of rights — Compensation — Companies— Action--Parties—Market value Special adaptability—Railways. By virtue of sec. 8 of the Exchequer Court Act, the deposit of the plan and description of the land expropriated has the effect of vesting the property in the Crown, and from such time, under sec. 28 of the Act, the compensation money stands In lieu of the land, and any claim to thé land is converted into a claim for the compensation money. 2. A corporation holding the shares of a subsidiary company has no locus standi to prosecute a claim for compensation on behalf of the latter; the action of the subsidiary company must be brought in its own corporate name. 8. The special adaptability of land for railway purposes is but an element of the market value of the land. In assessing compensation for the taking of such land regard must be had of its value to the owner, not the value to the taker. The doctrine of reimbursement does not apply to the taking of lands not used as a going manufacturing concern. The best test of the market value is what other properties in the neighbourhood have brought when acquired for similar purposes.
VOL. XVII.] EXCHEQUER COURT: REPORTS. ;387 1917 I NFORMATION for the vesting of land and Own- TE R .E pensation therefor in an expropriation by the Crown. E E QUEBEC f . GAS Co. Tried before the Honourable Mr. Justice Audette, rongr at Quebec, May 11, 12, 14, 15, 16, 18,1917. G. F. Gibsone, K.C. Arthur Holden, K.C., and J. P. Gravel, for Crown: E. A: D. Morgan, K.C., for Quebec Gas. Co. A. Taschereau, K.C., for Royal Trust Co. L. G. Belley, for Quebec Ry., L., H. & Power Co. AUDETTE, J. (July 7, 1917) delivered judgment. This is an information exhibited by the Attorney-General of Canada, whereby certain lands, belonging to the defendants, were, taken and expropriated for the purposes ôf the National Transcontinental Railway, by depositing on April 24th, 1913, and on February 24th, 1915, plans and descriptions of 'the • samé with the Registrar of Deeds at the City of Quebec. These lands are situate in St. Peter's Ward, ,in the City of Quebec, and since the expropriation form part of the new C. P. R. Union Station, at•the Palais. The Crown by the information offers $144,400 and interest. The Quebec Gas Company by its state- ment in defence claims the sum of $822,704, and the Quebec" Railway, Light, Heat and Power .Company claims the sum of $860,176.90, inclusive of 10 .per cent. for coercion. It is admitted by all parties that the total area of land taken is of 62,558 1-3 square feet—that. is :
388 EXCHEQUER COURT REPORTS. [VOL. XVII. 1917 Square ft. THE D. ~aa Lot 1937 contains 16,098 1-3 TG AS .C o And the whole Lot 1937 A, contains 46,460 Bessons for Judgment. Making a total of 62,558 1-3 It is further admitted by all parties that the value of the buildings upon the lands in question, at the time of the expropriation, was of $32,000, therefore the evidence in respect of valuation will be limited to the land only,—the value of the buildings having thus been ascertained by consent. Mr. Morgan, K.C., counsel at bar for the Quebec Gas Company, at the opening of the trial, filed the following declaration of admission, which reads as follows, to wit : "The defendant, the Quebec Gas Company, by " way of amendment to the statement of defence "put in by them, declare that they now admit that "the filing of the plan and the taking of the lands "described in the information was actually made << and done on behalf of His Majesty the King, "and by reason thereof said lands are now, and "have been since the filing of the said plan, vested "in His Majesty the King." This declaration or admission speaks for itself, and removes one of the traversed allegations of the information. It was also admitted, in the course of the trial, that the indications on plan 3-a, made with arrows by Mr. Trembly, are correctly marked in accordance with the deeds, including the yellow portion; which is an exchange between the Harbour Commissioners and the Transcontinental. The deeds indicated on the plan were executed after the plans for expropriation for such land had been deposited.
VOL. XVII.] EXCHEQUER COURT REPORTS.. 389 In order to follow, the trend and. the development 1 9.17 of the different phases of this. case, it is thought ad- THE x'NG v . visable to mention here that on January 21st, 1915, T ac G e02 . Mr. Morgan, K.C., moved the court for an order .di- Reasons for Ju g ment . reefing that the question of title or ownership of the. property in question be disposed` of before going s into the question of compensation, alleging in his motion paper • that his clients claimed the sole ownership , of the land :in question. The application was then enlarged sine die. . - Then on February 9th, 1917, Mr. Morgan, K.C., alleging his application of January 21st, 1915, just referred to, and also a resolution of the City of Que-bec (at that time the only other defendant), by its Council, at a meeting of June 29th, 1916,. setting out that the city had no interest in'the properties herein, • prayed for an order; in view of the said resolution, declaring that the Quebec Gas Company was the sole and only, defendant in this case, and that it be declared that the other defendant .(the City of , Quebec)' is no longer' a defendant. *` * • * Mr. Chapleau, K.C., of counsel, for the City of Quebec, then showed .cause and declared he withdrew from the case. Under these circumstances an order' was made • d onnant acte of such disclaimer or withdrawal from the case_ by the City of Quebec, with, however, no • further pronouncement for the time being. Subsequently thereto, two other parties were added defendants to this suit, namely, The Royal Trust Company, which company did not file any written plea, but by its counsel, Alexandre Taschereau, K.C., at the opening of the trial, declared s'en rapporter a justice, that is, submitted itself to the judgment of the court,' and The Quebec Railway, Light, Heat and.
390 EXCHEQUER COURT REPORTS. [VOL. XVII. 1917 Power Company, which filed of record a set of THE KING V. pleadings. THE QUEBEC GAS Co. In the result there is now on the record a claim by Seasons for Judgment. the Quebec Gas Company for the land taken herein, and there is also a claim by the Quebec Railway, Light, Heat and Power Company (hereinafter called the Power Company) in respect of the land itself, and also in respect of the Montmorency and Charle-voix Railway. Before entering into the consideration of the compensation to be paid under the present expropriation, it becomes necessary in limine to establish the actual rights of both the Quebec Gas Company and the Power Company, respectively. THE QUEBEC POWER COMPANY. The manager of the Quebec Power Company, heard as a witness, testified that he was the manager of that company, which might be called the holding company, or the merger, as it is popularly called; that he was also manager of all the subsidiary branches or companies under the merger, that is to say : the Quebec Gas Company, the Frontenac Gas Company, the Quebec Jacques Cartier Electric Company, the Quebec Railway, Light and Power Corn-pany, the Quebec County Railway, the Canadian Electric Light Company, the Lotbiniere & Megantic Railway Company, and the Quebec and Saguenay Railway. He did not mention or include among these subsidiaries the company known as the Quebec, Montmorency & Charlevoix Railway, but it was always taken for granted at trial that it was one of the companies of which the Power Company held the stock.
VOL. XVII.] EXCIIEQUER COURT REPORTS. ' . 391 The merger deed so much spoken about and relied 19 " upon at trial has not been filed of record in this case, TEE KING although asked for by the tribunal. We are told T EC GA Q S COB by the manager that the merger took place in the Reasons for ancrent. early part of 1910, but it might be inferred from the trust deed to the Montreal Trust, Company, bearing date December 15th, 1909, that it-must havé been in existence in 1909. That fact, however, has no bear- ing upon the case. Now, it is important to bear in mind, that on " April 24th, 1913, the date of the expropriation, both the City of Quebec and the Quebec Gas Company appeared, on the Registry, to be the only. parties , having any real registered rights upon this prop- erty. As the partial result of an agreement entered into on September 11th, 1916 (long after the expropria- tion) between the City of Quebec and the Quebec Power Company,. it was among other things cove- nanted and agreed as follows, to wit : "Et en considération de tout ce que dessus, la, "dite cité (City .of Quebec) cede et abandonne a "la . dite Compagnie (the Quebec Railway, Light, "Heat & Power Company) toutes les prétentions "et tous les droits de propriété que la dite cité "peut avoir sur lé terrain précédemment occupé "par là `Quebec -Gas Works' et connu sous le "numéro (1937 A) dix neuf cent trente sept A du • "cadastre officiel pour le Quartier St. Pierre de la "Cité de Québec." ' Under the provisions of sec. 8 of the Expropriation Act, by the deposit of the plan and description of this property on April 24th, 1913, such property became vested in the Crown; and under sec. 22 of the same Act, alike provision is made, and it is fur-
392 EXCHEQUER COURT REPORTS. [VOL. XVII. 1917 they thereby enacted that from such time the com- THE KING N. pensation money shall stand in the stead of the land, .EC T GAS Co and that any claim thereto is converted into a claim Reasons for to such compensation money. The Queen v. McCur- Jndgmeat. dy;1 Partridge v. Great Western Railway Co.;' Dixon v. Baltimore & Potomac R. Co.; 3 Lamontagne v. The King; 4 Dawson v. G. N. & C. Railway; 5 Mer-cer v. Liverpool, St. Helen's & South Lancashire Ry. Co. and Halsbury.7 On September 11th, 1916, the lands in question had, since April 24th, 1913, the date of the expropriation, become under the statute, the property of the Crown, and all mutations of this property subsequent to the expropriation are null and void on their face,—the only effect such •mutations may have is between the parties to the deed itself, which at its best can be construed as a transfer to any right "to the said compensation money" which the City of Quebec may have had, and I hereby so find. Then follows in this chain of title the deed of May 12th, 1917,—a deed passed a long time after the expropriation and even pending the instruction of the trial,—between the Quebec Gas Company and the Quebec Railway, Light, Heat & Power Company, Limited,—to confirm the statement therein mentioned, to the effect that the Power Company had, before January 1st, 1912, "already acquired and "taken possession of a certain part or parcel of the ' 2 Can. Ex. 311. 2 8 U. C. C. P. 97. 81 Mackey 78. 4 16 Can. Ex. 203. 5  1 K. B. 260, 273. 6  A. C. 461. 7 Vol. 6, p. 33.
VOL. XVII.] EXCHEQUER COURT REPORTS: 393 "land in question with the approval 'and consent of . • 1917 "the Quebec Gas Company, and enjoyed .the same. T.}i E KING "as .its , own and absolute property, and has, always THE QUEBEC Ga s Co. "been considered, even by the Quebec Gas Co., as Reasons for Judgment. "sole and absolute owner of the same. Further- . "more, that no deed' or instrument, in writing was "executed at the time between the said parties to "state and establish the same, and that it is expe-"dient to then execute the deed." All of what has' just been said in respect of the deed of September 11th, 1916, may equally be said with respect to this deed of May 12th, 1917, and that in the result it is a transfer by the Quebec Gas Com - • pany to the Power Company of its rights to "the compensation money" herein, coming also within' the ambit of sec. 22 of thé Expropriation Act. However,, the contention of the 'Power Company goes beyond that. While it claims to have been the owner of the land in question before the expropriation, as the holding company, I should say they hold and own the shares of the Quebec Gas Compan'y,.and they ask that the compensation,to be paid should be ascertained as if the property did belong to them, and as the Power Company is also the holding or parent company of the Montmorency & Charlevoix Railway, also holding and owning the shares of thé latter, they conclude similarly. The Power Company is the owner of the shares of the Quebec Gas Company;'and of the Montmoren-' • cy & Charlevoix Railway Company; the Power Cora: pany represents and is effectively nothing but the shareholders Of these two companies. Dealing first with that part of the claim' made by. the Power Company, as owner of the lands in question and described in this deed of May .12th, 1917, ' fi
394 EXCHEQUER COURT REPORTS. [VOL. XVII.. 1917 executed during the trial, I must confess I cannot TH E K . ING • v accept, under the circumstances, the statement made T ÇI BE` in that deed, to the effect that the Quebec Gas Com- Reasons for pany had, as far back as January, 1912 (a carefully Judgment. selected date, which would take the transaction prior to the expropriation), sold their property to the Power Company, in view of the fact that the latter is only the holding or parent company. Moreover, the inherent rights of the City of Quebec in this property had not passed to the Power Company until September 11th, 1916, also a long time after the expropriation. It is obvious and conclusive that this statement is but the result of a misconception of the respective rights between a holding or parent company and a subsidiary company, and the seemly result of an afterthought which originated only at the trial. Therefore, it must be again found, taking into consideration all these surrounding circumstances, and the allegations in its pleadings, that this deed can but amount to an agreement between the Power Company and the Gas Company, whereby the Power Company are made entitled to receive the compensation money for the lands expropriated. In other words, it is a transfer by the Quebec Gas Company of its rights, not to the land, but to the compensation money, as the transfer is made after the expropriation,—the whole pursuant to the pro-visiôns of sec. 22 of the Expropriation Act. However, the Power Company makes a claim which, if it were allowed, would let in a very important element under the head of injurious affection to the Montmorency & Charlevoix Ry. Co., one of its subsidiary companies—the whole as more particularly set out in paragraph 13 of the Power Com-
k VOL. XVII.] EXCHEQUER COURT REPORTS. 395 pairiy's statement in defence, which reads As follows, 1917 to wit: • . TILE KING V. "13. .L'expropriation en cette cause et la prise THE QUEBEC GAS Co. "de possession de sa Majesté a occasionné à la dé- Reasons for Jaf nt. "fenderesse des dommages considérables dans l'ex- "ploitation de son chemin de fer Montmorency et "Charlevoix, en le privant des immeubles expr. o-. "priés, dont elle avait absolument besoin, pour son "terminal a Quebec." This is a claim made by the Power Company for damages alleged to be suffered by the Montrriorency & Charlevoix Railway, a subsidiary company, for which the Power Company is holding the shares. ~ What is therefore the position of the Power Company' in its relation to the Montmorency & 'Charle-voix Railway Company.? The relation is nothing more than that of a shareholder in a corporate body is ,to a company. The Power Company holds the shares of that company, and is•in the same position as a shareholder of 'the Montmorency & Charlevoix Railway Company, and as such can no more than an ordinary shareholder take an action for that company or defend an action against it. Any action on behalf of the Montmorency & Charlevoix Railway Company must be taken in its corporate name and. not by one or all of its shareholders individually. Therefore, that part of the claim set up by the Power Company for any damages which might result , to the Montmorency & Charlevoix Railway, Company, not having been taken by that company in its corporate name, must obviously be dismissed. Although ,the Montmorency & Charlevoix Railway Company is not -a party to this suit and cannot be bound by this judgment, yet, as the voluminous evidence adduced ' in respect of the rights of that corn- .
396 EXCHEQUER COURT REPORTS. [VOL. XVIL 1917 pany does not disclose any proprietary rights in THE KING v. the land in question, it was thought advisable under T G g B. EC the peculiar circumstances of the case, to offer a few Reasons for observations in this respect for the sake of argu- Judgment. went only, which really become exclusively academic, since the Montmorency & Charlevoix Railway Company did not set up a claim in its corporate name. For instance, what is the position of that company'? If the property expropriated herein did form part of, the terminal of the Montmorency & Charlevoix Railway Company, it has already passed to the Crown under the provisions of 6-7 Geo. V., ch. 22, the Order-in Council of August 4th, 1916, and the agreement of July 25th, 1916, made under the provisions of the said Act. This is too obvious. A summary perusal of the schedule to the Act and to the deed in question, and Schedule "C" thereof, will . establish that point beyond controversy. Both the Quebec & Saguenay Railway, and the Quebec, Mont-morency & Charlevoix Railway passed to the Crown under these instruments, "inclusive of its terminals in the City of Quebec." If, on the other hand, as the case is, notwithstanding contention to the contrary, the property in question did not and does not form part of the Terminal,—and even if part of it was used for the company's stone business, with or without the assent, consent or tolerance, of the Quebec Gas Company, or those controlling that company,—it does not make the land part of the Terminal. 1 It only shows, as will be hereafter referred to, that this property was a discarded gas property, where gas had not been manufactured for several years (since 1910), and that the property was not a gas proposi- 1 See Cripps on Compensation, 5th ed., p. 148.
• VOL. XVII.] EXCHEQUER COURT REPORTS.. 397 ' tion or a going concern' as such; ,but a property 1917. practically idle and which on the market would Tim K . 'NG sooner or later be taken by some of the railway com- T GAs Co. panies that had already property in the neighbour- Reasons for Tndgment. hood. It may also 'be said casually that these damages, in the nature of injurious affection to the Mont-morency & Charlevoix Railway, and the Quebec &' Saguenay Railway, are grossly exaggerated by some of the witnesses, when it is actually established that only a very small portion of the land expropriated of the Quebec Gas Co., property was used for this stone business, and that the property is entirely • separate and distinct from the railway company—a street lying between both properties. Moreover, it is difficult to conceive that the alleged congestion at the Quebec Terminal did . actually exist, in view of the fact which glaringly struck me on the'visit to the premises during the trial at the request and in the company of counsel for all parties,,that the company has almost right alongside' of its station, as shown on the plan, its workshops. If there were actual . '' -. congestion in the yard, at the Terminal, would not a company conducted 'as it is on a sound business basis, have transferred these shops to their Limou-lou yard to give them more space at the Terminus/ But it is unnecessary to elaborate upon this point, since I have found, for the reasons abové mentioned, that the Power Company has no locus standi when claiming damage to the Terminal of the Quebec, Montmorency'& Charlevoix Railway. There can be no compensation for injurious affection, if no legal right .is interfered with.' Cripps on Compensation, 5th' ed. 140.
398 EXCHEQUER COURT REPORTS. [VOL. XVII. 1917 Proceeding now to the examination of the evidence THE K . I NG v and the ascertainment of the compensation to be lay T côBE` paid for the land so taken, it will be seen that quite Bosoms for a few engineers were examined on behalf of the de- Judgment. fendants, and their evidence tends to show that the Quebec Gas Company's land could be added with advantage to the railway companies' property al- , ready owning land in the neighbourhood. Two of these engineers are of opinion that the Quebec Gas Company's property would be more valuable to the Canadian Pacific Railway Company, or the National Transcontinental, than to the Quebec Railway, because it is adjoining the C. P. R., and that for the Quebec Railway to use it effectively and economically it would be necessary to acquire some city property and some property from the Quebec Harbour Commissioners. In view of what has already been said it becomes unnecessary to go into this class of evidence, more than repeating here what I have already said, and that is that this property decidedly falls within the class of property which sooner or later would be taken by some of the railway companies that . have already property in this neighbourhood. On behalf of the defendants the following witnesses were heard upon the question of value: Henry G. Matthews, George W. Parent, Fitzjames E. Browne, George Beausoleil and Lucien Bernier. Henry G. Matthews, the general manager, testified that if an offer of $50 per square foot had been made on behalf of the holding company he would have advised not to accept it. But if $75 a square foot had been offered he would have advised to accept it,— that amount representing over $4,000,000,—which
1 VOL. XVII.]' EXCHEQUER COURT REPORTS. 399 would have "allowed us to sell the railway for' scrap . 1917 and the Montmorency Railway go out of business." TILEt i ING Yes, this property of 62,5581-3 feet at $75 a square T BE` HAQc foot would represent $4,681,875. Such â valuation Reasonsfo ae Judgm ent. calls for no comment, as it is of no help to a tribunal desirous to do justice in a conscientious manner. George W. Parent, a resident of Montreal, who, however, in 1906, 1907 and 1908, made some sub- divisions in Quebec, arrives at an average price of $14 a foot for the land in question. To establish - this value he reasons in the following manner. He considers that the Canadian Pacific Railway and the Quebec Railway are both cramped for space, and that therefore the situation is different from that of an expropriation visited upon a private individual ' who' could move his establishment to another place.. He.takes. it that the only available block to replace _the . property expropriated is between Place d'Orleans and St. Paul Street, containing about the same area .; and he concludes that the only price he could place upon the land taken would be what it would cost to replace it,—the price asked on the Ramsay-Hender- son block,—that is $8 to $20—or, as he says, an 'average of about $14. He further adds that if rom a real estate standpoint, the block between Place d'Or; leans and St. Paul Street is perhaps worth more, but . the advantage of the Quebec Gas Company being near the water is a set-off. Fitzjames E. Browne, a well-known real estate broker, of Montreal, prefaces his statement as to his valuation by stating lie bases, such valuation on common sense and on "what has been paid for extension of railroads in Montreal, and concluâes by saying , • the only way to arrive at the value of the property in question is what will have to be paid for adjoin-
400 EXCHEQUER COURT REPORTS. [VOL. XVII. 1917 ing property to replace it. The sum of $20 a foot is TILE KING asked for the corner of Henderson Street, and other TH G E e Q s U C E o B . EC owners ask $14. He fixes the value of the property Reasons for expropriated at the average price of $15 a square Judgment. foot. And on cross-examination he further states the prices asked on Henderson-Ramsay Street are of and in 1917, and he did not know •what they asked in 1913, the year of the expropriation. George Beausoleil, who has had experience as valuator both in Montreal and New York, states he visited the Quebec Gas property recently and seeing the advantage that' the Quebec Railway has to be in a position to replace in the proximity the land expropriated, and that for so doing the company would have