Nova Scotia (Attorney General) v. Parker's Country Market Inc.

Nova Scotia (Attorney General) v. Parker's Country Market Inc. Court Court of Appeal Date 1996-05-21 Citation 1996 NSCA 123 Docket CA 121937 Judge/Registrar/Adjudicator Bateman, Nancy J. (Honourable Justice) (CA); Chipman, David (Honourable Justice); Pugsley, Ronald N. (Honourable Justice) Document Type Decision Decision Content C.A. No. 121937 NOVA SCOTIA COURT OF APPEAL Cite as: Nova Scotia (Attorney General) v. Parker's Country Market Inc., 1996 NSCA 123 Chipman, Pugsley, and Bateman, JJ.A. BETWEEN: THE ATTORNEY GENERAL ) Ronald J. Campbell OF NOVA SCOTIA ) for the Appellant Appellant ) ) - and - ) ) ) PARKER'S COUNTRY ) D. A. Caldwell, Q.C. MARKET INC. ) for the Respondent Respondent ) ) ) ) Appeal Heard: ) April 15, 1996 ) ) ) Judgment Delivered: ) May 21, 1996 ) ) ) ) ) ) ) ) THE COURT: Appeal allowed per reasons for judgment of Pugsley, J.A.; Chipman and Bateman, JJ.A., concurring. Pugsley, J.A. The Attorney General of Nova Scotia (the Crown) appeals from an award of $66,000 for "non‑commercial goodwill" made by the Nova Scotia Utility and Review Board (the Board) on October 4, 1995, in favour of Parker's Country Market Inc. (the Claimant), being part of the compensation awarded to the Claimant respecting actions taken by the Crown effectively expropriating a business carried on by the Claimant from lands and buildings it owned in Alma, Pictou County. The award was made pursuant to s.29(2) of the Expropriation Act, R.S.N.S., (1989), c. 156 (the Act) which reads as follows: 29 (2) Where it is not feasible for the owner of a business to relocate, there shall be included in the compensation payable an amount for the loss of the business where the compensation for the land taken is based on the existing value of the land. The Crown submits that the Board erred in law in interpreting s. 29(2) of the Act, in awarding compensation for "non‑commercial goodwill", when the expert evidence adduced by both parties affirmed that the business did not have any "commercial goodwill". Alternatively, the Crown submits that the Board erred in law: - in failing to deduct an amount for management expense before determining the maintainable earnings of the business in the calculation of non‑commercial goodwill; - in selecting an inappropriate base upon which to project the normalized level of earnings/cash flow, that could be expected from the continuing operations of the business. In my opinion, the Crown's appeal should be allowed as the Claimant has not established its business had any market value. The Claimant, accordingly, has not suffered any loss for which it is entitled to be compensated under s. 29(2) of the Act. Viva voce evidence was heard over five days in March and May 1995, before Richard Weldon, sole member of the Board assigned to the matter. He awarded $245,000 compensation for loss of buildings and lands. In addition to the award for non‑commercial goodwill of $66,000, presently under appeal, he awarded approximately $65,000, for net loss on inventory and equipment, out of pocket costs, and lost gross profit resulting from inventory wind down. BACKGROUND The Claimant was incorporated in March 1988 to purchase the assets of Parker's Country Market, a garden market operation conducted by two brothers, Robert and David Parker. The business operated ten months of the year from a six acre site, partly in, and partly adjacent to, the town of Westville, accessible by a number of roadways, and in close proximity to the Trans Canada Highway. The Claimant carried on a retail business from the site selling fresh produce, baked goods, bedding plants and shrubs, as well as other garden merchandise. The Claimant's shares were held by Charles Parker, Sr., his wife, and three of their sons, James, David and Robert and their spouses. The operation opened in mid-March every year, with sales peaking in July and August. The workforce normally rose to a dozen in the warm months with some family members being employed on a casual basis. Business tapered off in the fall. The operation would generally close on Christmas Eve. In the fall of 1990, James Parker, the general manager and only full-time employee, had discussions with employees of the Provincial Department of Transportation who advised that the Claimant's property was needed for an enlargement of the provincial highway system. In September 1992, Mr. Parker was notified that the Claimant's property would be required in April 1993. Accordingly, he decided to sell off inventory and close the operations in the fall of 1992. At that time, James Parker continued to be responsible for the day to day operations of the business and his wife, Brenda who was employed in the business prior to their marriage, carried out general accounting and cashier duties. James' brother, Charles Jr., was second in command and produce manager. On March 1, 1993, the Claimant conveyed all interest in the property to the Crown. Gross sales and income figures for the five years the Claimant carried on its operations are as follows: Year Gross Sales Net Income (Loss) 1988 $444, 514 (10 months) $3, 024 (10 months) 1989 $524, 047 ($1, 150) 1990 $455, 587 ($37, 643) 1991 $480, 756 $9, 777 1992 $469, 245 ($36, 612) Brian Keough, a partner in the firm of Doane Raymond, was called, and qualified, as an expert witness on behalf of the Claimant to give evidence in all aspects of business evaluation. Mr. Keough has been a chartered accountant since 1980, a member of the Canadian Institute of Chartered Business Evaluators since 1986, and carried out "virtually all" of the business evaluations assignments in Atlantic Canada for his firm. Mr. Keough acknowledged the Claimant's business did not have any commercial goodwill, but nevertheless, he was of the opinion that the Claimant was entitled to be compensated under s. 29(2) of the Act for loss of "status, independence and self-employment". He quantified this loss as lying between a range of $45,000 to $66,000. He based his calculations on the "excess earnings method". His report states: By accounting definitions, there is no "commercial goodwill" inherent in the County Market business. However, the Market does provide a measure of economic independence and security of employment for its owners. For many small businesses, particularly in areas where good jobs are difficult to get, this is their raison dêtre. And often in sales of small business, a purchaser will pay for goodwill, despite the fact that an accountant's analysis does not justify it. The Expropriation Act of Nova Scotia provides for compensation to the owner for the loss of the business. Expropriation jurisprudence provides a basis for compensation concerning the loss of status, independence and self-employment enjoyed by small business owners. To calculate this aspect of compensation, we use the excess earnings method applied to cash flows earned by the Parker family from the Country Market business, as our primary valuation technique. As a first step, the excess earnings method determines a normalized level of earnings/cash flow an owner can expect from continued operations of the subject business. From normalized cash flow, we deduct a return for the employment of the tangible assets of the business (at their fair market values). The residual or "excess" earnings are then capitalized at a rate of return which considers the business risk of the continuation of the excess earning stream. Mr. Keough considered the claimants' performance in 1991 to be the most relevant "because if you take a business to market, it is the most current year's profits that the buyer is actually buying, that's what he gets". He did not consider the financial results from 1992 relevant as the figures were distorted because of additional costs incurred resulting from a closing down of the business in anticipation of the Crown's proposed expropriation. In the course of determining a "normalized level of earnings/cash flow" for the excess earnings method, Mr. Keough deducted salaries to all employees including certain family members, but did not take into account remuneration paid to James, Brenda, or Charles Parker, . . . following what the valuation authorities said for compensation, for goodwill status and self-employment, it said not to include a provision for family salaries. . . . Mr. Keough acknowledged in cross-examination that he "specifically assume(d)" that the family members were paid "fair market value for their efforts at the market" in 1991. Apart from some inconclusive data he obtained on salaries in Pictou County, Mr. Keough made no investigation to determine the fair market value of the salaries of the three family members. Michael Casey, a chartered accountant since 1978, a chartered business evaluator since 1985, and a partner in Coopers and Lybrand, was called by the Crown, and qualified as an expert in business valuation. Mr. Casey's position, in essence, was that: - there was no provision under the Act to compensate the Claimant for non-commercial goodwill; - the Claimant's business did not possess any commercial goodwill; - in order to determine commercial goodwill, it is necessary to take into account not just the actual salaries paid to employees, but the fair market value of services rendered by them; - Mr. Keough only assumed that the wages paid to James, Brenda and Charles, represented fair market value for services rendered; - without any evidence respecting the fair market value of services rendered by non-arm's length parties, it was not possible to place any value on the Claimant's business. Evidence adduced later in the hearing disclosed that in 1991, James Parker earned approximately $9.50 an hour for 2000 hours work, aggregating $18, 316 as general manager; Charles averaged $9.90 an hour for 960 hours, aggregating $9, 516; and Brenda was paid at the rate of approximately $5.94 an hour for 682 hours, aggregating $4, 051. RELEVANT LEGISLATION Compensation under the Act has been determined since June 30, 1992, pursuant to the provisions of the Utility and Review Board Act, S.N.S., c. 11, 1992. The following provisions of the Utility and Review Board Act are relevant: Jurisdiction 22 (1) The Board has exclusive jurisdiction in all cases and in respect of all matters in which jurisdiction is conferred on it. Questions of law and fact (2) The Board, as to all matters within its jurisdiction pursuant to this Act, may hear and determine all questions of law and of fact. Effect of finding 26 The finding or determination of the Board upon a question of fact within its jurisdiction is binding and conclusive. Appeal 30(1) An appeal lies to the Court of Appeal from an order of the Board upon any question as to its jurisdiction or upon any question of law, upon filing with the Court a notice of appeal within thirty days after the issuance of the order. Section 29 of the Nova Scotia Expropriation Act provides: Business loss from relocating 29 (1) Where a business is located on the land expropriated, the statutory authority shall pay compensation for business loss resulting from the relocation of the business made necessary by the expropriation and, unless the owner and the statutory authority otherwise agree, the business losses shall not be determined until the business has moved and been in operation for nine months or until a two year period has elapsed, whichever occurs first. If relocation is not feasible (2) Where it is not feasible for the owner of a business to relocate, there shall be included in the compensation payable an amount for the loss of the business where the compensation for the land taken is based on the existing value of the land. Section 19(2) of the Expropriation Act of Ontario, R.S.O., 1990, c. 26 provides: The Board may, in determining compensation on the application of the expropriating authority or an owner, include an amount not exceeding the value of the goodwill of the business where the land is valued on the basis of its existing use and, in the opinion of the Board, it is not feasible for the owner to relocate. DECISION OF THE BOARD After reviewing Mr. Keough's evidence, the Board stated: . . . Mr. Keough believed he had properly identified a compensable head of damages under the Act and quantified "GOODWILL/STATUS" and properly estimated the values nearly as could be, depending on which cash flow determinant he used, to be $45, 000 at the low end and $66, 000 at the high end. He favoured the high estimate as the more likely correct one. . . . Left with the duties to try to estimate the correct value for something which his experience, study and judgment told him existed, caused Mr. Keough to find an economic device also having professional recognition that would fit the problem. He found the "excess earnings method" and applied it to the problem at hand. He came up with a wide range of values. . . . Mr. Casey was faced with the identical problem that Mr.Keough resolved in the manner above. He came quickly to the opinion that there was no value to the matter under discussion because the selection and application of proper accounting principles led to that inevitable view that there was no "commercial net worth". Mr. Casey did not put himself in the shoes of the vendor or purchaser of this business and try to make a judgment call as to whether there was value in this business above its conventional balance sheet value. In so doing he gave too little weight to the valuation appropriate for a viable and ongoing small business as opposed to a closed down business in which the goodwill had been destroyed by the pressures of economics or some other source outside the control of the business. Parkers did not wish to close. The expropriation scheme forced its closure. Mr. Casey failed properly to take that into consideration. The Board referred to s. 19 of the Ontario Expropriation Act, as well as the case of Plouffe v. City of Ottawa (1973), 4 L.C.R. 37, a decision of the Land Compensation Board of Ontario, and commented: Mr. Keough at the end of the day noted that small businesses and larger businesses can be in different positions in respect to the determination of goodwill and that "goodwill" was compensable under the Act and the principles found in the Plouffe case should be applied to determine what losses the owner suffered on account of the expropriation and the forced closing of his business. . . . Mr. Casey says that a higher wage cost attributable to the services performed for Parker's by senior Parker family members should have been considered. The Respondent called evidence to support this position. Mr. Keough advocated that much of this cost will, under the Plouffe line of cases, be disregarded in whole or in part as a total cost to be charged against the excess earning cash flow. The Board was not satisfied that the evidence tendered supported the factual position the Respondent advocated. Even if it did, the owner in a Plouffe situation would have little regard for discounting for the value of the efforts of family members at any high scale of management remuneration. SCOPE OF REVIEW Section 30 of the Utility and Review Board Act, as noted, limits the appeal to this Court, from the decision of the Board to "any question as to its jurisdiction or upon any question of law". An excess of jurisdiction will, of course, occur where an award is made without supporting evidence (Ramage v. Vancouver (City) (1955), 60 L.R. (2d) 231 (B.C.C.A.)). While questions as to the competency, credibility and weight to be given to expert testimony are matters for the tribunal (Todd, The Law of Expropriation and Compensation in Canada (2nd ed.) 1992, page 543), this Court may interfere if the Board has applied incorrect principles in choosing a method upon which compensation should be determined (C.A. Spencer Ltd. v. City of Lavelle (1987), 38 L.C.R. 203 (Que. C.A.)). ANALYSIS Professor Todd in his text, The Law of Expropriation and Compensation in Canada, 2nd ed. (1992), writes at page 322: The onus of proof lies with the owner "first, to establish the amount claimed (for disturbance) is a compensable item arising as a natural and reasonable consequence of the expropriation and secondly, to establish, by evidence, the amount or amounts of costs or loss which he has incurred". (See cases cited) The Act does not provide any assistance in determining the manner in which the "loss of the business" under s. 29(2) is to be calculated. There are, in addition, no reported cases in Nova Scotia dealing with the interpretation of this section. Counsel have advised us, as well, that there are no reported cases in New Brunswick, which is the only province having a similar provision. Counsel for the Crown has directed our attention to Reardon and Atlantic Purification Systems Ltd. v. City of Dartmouth (1982) 55 N.S.R. 579, where the Expropriation Compensation Board of Nova Scotia commented on the method of determining business losses in a case where the claimant was required to relocate. The Board held, at page 586: As mentioned earlier, the claim for business losses is based on the loss in gross profit on a short fall in retail sales. It is a requirement of the Board that claims for business losses should be determined on net losses after deducting all operating, general, and administrative expenses. See two decisions of this Board, O'Hearn v. City of Dartmouth (1980), 4 L.C.R. 20, and also Ben's Limited v. City of Dartmouth (1978), 25 N.S.R. (2d) 476. It is evident from a reading of the report in the O'Hearn case, that the claim for business loss, arose consequent upon a relocation, and was, like Reardon, governed by s. 29(1) of the Act. The Board, which consisted of the same members who subsequently sat on Reardon, took the view, in O'Hearn, that "claims for business losses must be net, not gross". In Ben's Limited, the Claimant was required to close its retail outlet for sale of bakery products as a consequence of street widening operation carried out by the City of Dartmouth. The Board awarded the claimant approximately $8,600 being 20% of the loss in gross sales. In Ben's, however, the award was made pursuant to s. 3(1)(i)(B) of the Act being an award for injurious affection for "business damages, resulting from the construction or use, or both, of the works. . . ." I do not find these decisions of the Board, as they deal with different sections of the Act, to be of assistance in attempting to determine the compensation that should be payable under s. 29(2). The two business evaluators, Messrs Keough and Casey, as noted, considered s. 29(2) in the light of loss of goodwill. Since the Claimant possessed no "commercial goodwill, Mr. Casey concluded there was no loss for which it could be compensated. Mr. Keough relied on . . . expropriation jurisprudence to provide a basis for compensation concerning the loss of status, independence and self-employment enjoyed by small business owners. In order to calculate this loss, Mr. Keough employed, as his primary evaluation technique, the excess earnings method. The expropriation jurisprudence which assisted Mr. Keough to form his opinion was primarily Todd's text, and in particular, the section dealing with "disturbance damages and termination allowances". After he completed his report, Mr. Keough's testified that his opinion was fortified by reading Plouffe, and other cases, decided pursuant to the Ontario Expropriation Act. It is relevant that Professor Todd's comments on the determination of goodwill of a small business emanate from Plouffe. It is not unreasonable to conclude, therefore, that Mr. Keough's opinion respecting the loss of goodwill of the Claimant, which was accepted by the Board, derives its validity in large part from Plouffe. Before examining Plouffe, the first thing to note is that the wording of s. 29(2) of the Act, and s. 19(2) of the Ontario Act are not similar. The Nova Scotia statute does not, of course, make reference to "goodwill". The decision of the Ontario Court of Appeal in Fifield v. Minister of Transportation and Communication for Ontario (1975), 8 L.C.R. 5 highlights the difference. Estey, J.A., (as he then was) on behalf of the Court, held at page 9: The draftsman appears to have taken great care to provide for the inclusion in the determination of compensation of "an amount" which is measured against "the value of the goodwill of a business". It follows logically that such an amount is not itself goodwill but is a quantity which may not exceed the value of goodwill. . . . In my view, giving this subsection its plain meaning and relating it to the over-all scheme of expropriation as described and established by the statute, s. 19(2) authorizes the Board to include in the over-all quantity of compensation an extra or additional amount which may not exceed the goodwill of a business carried on on the expropriated land but which is not otherwise related to the goodwill of a business, whatever that undefined term might mean in the section. (emphasis added) In Fifield, the claimant was awarded an amount for loss of goodwill, as well as an additional amount under s. 19(2). Both Ontario and Nova Scotia, like most jurisdictions in Canada, following the English statutory changes of 1919, altered the manner in which compensation should be determined, from "value to the owner" to "market value plus". Section 19(2) of the Ontario Act confers a broad discretion on the Board to award compensation, within certain limits, not available in the other sections of the Ontario Act. I interpret s. 19(2) as an attempt by the Ontario legislature to grant relief from the strictness of the "market value" approach, to allow an "extra or additional amount" in cases where land is valued on the basis of its existing use and it is not feasible for the owner to relocate. The Land Compensation Board of Ontario has relied on this discretionary power under s. 19(2) of the Ontario Act, to award compensation "notwithstanding the absence of any goodwill in the economic sense of the term". (Campbell, (1977) Canadian Evaluation Service, p. 12-14) No comparable discretion is granted to the Nova Scotia Board pursuant to the Act. The absence of such a provision in the Nova Scotia Act limits the freedom of movement of the Nova Scotia Board to awarding compensation under s. 29(2) to those cases where a claimant has established its business had a market value. Macdonald, J.A., on behalf of this Court, made it clear in Portland Estates Ltd. et al. v. Province of Nova Scotia et al. (1978), 22 N.S.R. (2d) 568 at 592 that: Compensation is now to be determined in accordance with the statutory criteria set out in ss. 24 to 33 and not by attempting to determine the value of the constituent elements which have in the past been judicially held in the aggregate to amount to value to the owner. . . . The compensation is to be determined by the "market value plus" approach as set out in ss. 24 to 33 of the Act. Has the Claimant, in this case, established that its business had a market value? Professor Todd writes at page 293: In determining the profitability of the small family business it may be justifiable to ignore the standard accountancy practice of including management salary in the operating expense of the business because otherwise the business would probably technically be operating at a loss. This conclusion would negate any claim to compensation for business loss despite the fact that the business had provided a living for the owner and his or her family. The former Ontario Land Compensation Board ignored the salary in Plouffe relying on similar decisions of the English Lands Tribunal. The first issue to be considered is whether the Plouffe exception is applicable to the Claimant's operation. Plouffe involved a typical neighbourhood grocery store catering essentially to a local market, together with a small post office operation. The annual net income, disregarding an item of $15, 300 for "economic salaries and wages" paid to Mr. Plouffe and his family, in the four years prior to the expropriation in October 1969, ranged between $6500 and $10, 000. Taking the salaries into account, the business operated at a loss, and consequently, had no commercial goodwill. The Board awarded an amount of $10, 000 which is justified under the provisions of both s. 13(2)(v) as well as s. 19(2) of the Ontario Act. In so doing, the Board relied on a "line of decisions of the Lands Tribunal of England", in concluding that a deduction for management and clerical salaries should not be made in estimating net profits. None of the cases on which the Board relied are cited, but those which are generally considered to be the ones contemplated, are three decisions involving the City of Bristol, and one, the City of Westminister. In Pearce v. Bristol Corporation (1950), 1 P.C.R. 367, the Tribunal refused to deduct the notional wages of the claimant, a farmer, respecting his work in running a cattle operation, as that would relieve the expropriating authority "of responsibility for any compensation for change of status and loss of independence", as both these factors had, in the view of the Board, a "considerable monetary value". In Matthews v. Bristol Corporation (1954), 4 P.C.R. 401, the claimant carried on a cake and confectionary over-the-counter trade, together with a snack bar and cafeteria, from the premises expropriated. In determining the "loss of goodwill value due to the business being disturbed", the Tribunal deducted an amount for Mr. Matthews' own services, in addition, apparently to the salaries paid to a manager and staff, in a year when Mr. Matthews was following other business pursuits. In Perezic v. Bristol Corporation (1955), 5 P.C.R. 237, the property expropriated consisted of a grocery shop with living accommodations above. The Tribunal refused to deduct the "personal remuneration of the owner - occupier of a one-man business" because no evidence was tendered that it was customary to do so and the grocer would have to subsist on a "nil or reduced" income until the "trading figures had been worked up to their present level". Finally, in Speyer v. Westminister Corporation (1958), 9 P.C.R. 478, Mrs. Speyer operated 12-14 furnished apartments from a property leased by her on long-term. She and her husband occupied two of the apartments, managed the property, and provided linen and breakfast to the tenants. A cleaner was employed to assist a few hours a week and the wages were deducted. The Tribunal, in addition, made some deductions for the value of the Speyers' wages. The Tribunal's decision, respecting the inclusion or exclusion of management salaries, was based, in each case, on the size of the claimant's operation. The Board in Plouffe fully appreciated this point, and referred to an extract from a text entitled, Compulsory Purchase and Compensation, 5th ed. (1972) by Lawrance and Moore. The extract provides in part: (Goodwill) is usually found in practice by multiplying the average net profits of a concern, over say the last three years, by a certain number of years' purchase, varying according to the nature of the trade. In estimating net profits, deductions may have to be made for interest on capital invested in the business and also for the rental value of the premises if owner-occupied, or for any profit rent in a case of a lessee. Whether a further deduction should be made for the value of the claimant's own personal services in the business must depend on the facts of the case. The Lands Tribunal have ordered such a deduction where the claimant carried on business with the aid of a manager and staff. But they refused to do so in the case of a one man grocery business. (emphasis added) I do not consider that the Claimant's enterprise is at all comparable to the small operation referred to in Pearce, Perezic, or in Plouffe. The Claimant employed up to fifteen persons during the peak months, working out of a main building of approximately 4600 square feet, a greenhouse of approximately 1800 square feet, as well as a roofed, outdoor produce storage structure in excess of 1000 square feet, on a site occupying approximately six acres of land. The Claimant's business operation is much larger in every sense than that referred to in Plouffe. The artificiality of Mr. Keough's analysis, in attempting to shelter the Claimant's operations under the Plouffe umbrella, is exposed when one considers that in order to create a value for goodwill, he was required to include the salaries of three people (James, Brenda and Charles Parker) as "management salaries" of a "small family business". Brenda acted as a cashier, pay person and accountant, functions which could hardly be described as managerial. She worked for the Claimant in the same capacity prior to her marriage in 1990 to James. Should her salary be included to reduce cash flow from operations prior to her marriage, but be excluded after her marriage? What is the justification for including Charles, in the class of family members, whose salaries are disregarded? Charles graduated from University in 1972, was married and had a family. The fact that he happened to be a brother of James Parker, in my opinion, is entirely irrelevant when attempting to determine the loss of business pursuant to s. 29(2) of the Act. Charles in fact, did not work for the claimant during the 1990 calendar year. If Mr. Keough's analysis was conducted in 1990, rather than 1991, this would significantly affect his bottom line respecting the amount of the loss of non-commercial goodwill. I conclude that the Plouffe line of cases, which essentially relate to a "mom and pop" operation, are not relevant when assessing the substantial operation conducted by the Claimant in this case. Coates and Waqué, in their two volume work New Law of Expropriation (1986), write at page 10-129, respecting the Ontario Act: One of the most extensive discussions of the calculations of goodwill for an award under subsection 19(2) is found in Klopp v. London (1978), 15 L.C.R. 347. In the line of cases dealing with self-employed individuals, the Board looks to whether the business is saleable in the market place to someone willing to pay for the opportunity to purchase a "one-man business", not as an investment but as a self-employed job. Counsel acknowledged in the hearing before us that a similar test should be employed in this case when viewing non-commercial goodwill. Mr. Keough's conclusion that a value should be attributed to "goodwill/status and self-employment" is dependent upon the exclusion of salaries paid to James, Brenda and Charles Parker. He acknowledged in cross-examination that he assumed that the family members were paid "a fair market value" for the efforts, yet he did not quantify the number of hours they were working. This, in my opinion, was a critical omission. Any prospective purchaser of the Claimant's business, would require information respecting the qualifications required to perform the work carried out by James, Brenda and Charles Parker, the number of hours required to perform the work, the rate per hour at which they were compensated, and the fair market value of the work performed. Mr. Keough's failure to inquire into these critical areas, rendered his conclusion, in my opinion, completely unreliable. The Board was critical of Mr. Casey because he "did not put himself in the shoes of the vendor or purchaser of this business and try to make a judgment call as to whether there was value in this business above its conventional balance sheet value". This finding ignores Mr. Casey's response to a similar question asked in cross-examination: No one could do it because we don't have the fair market value of the services provided by the Parker family. This lack of evidence prevented the Claimant from proving its business had any market value for which it should be compensated under s.29(2) of the Act. CONCLUSION The Board erred in law when it awarded compensation for loss of goodwill to the Claimant in these circumstances. The evidence considered as supporting the award was fundamentally flawed as Mr. Keough made no investigation to determine that the wages paid to the three family members were based on a fair market value for services performed. In my opinion, there was no evidence on which the Board could rely to support the award. I further conclude that the Board applied incorrect principles when it concluded that the Plouffe exception was available to assist the Claimant. I would, in the result, allow the appeal by eliminating the compensation awarded by the Board for goodwill in the amount of Sixty-Six Thousand Dollars ($66, 000). I would also award costs to the Crown in the amount of Fifteen Hundred Dollars together with disbursements. PUGSLEY, J.A. Concurred in: CHIPMAN, J.A. BATEMAN, J.A. C.A. No. 121937 NOVA SCOTIA COURT OF APPEAL BETWEEN: THE ATTORNEY GENERAL ) OF NOVA SCOTIA ) Appellant ) ) - and - ) ) REASONS FOR ) JUDGMENT BY: PARKER'S COUNTRY ) MARKET INC. ) PUGSLEY, J.A. Respondent ) ) ) ) ) ) )