Rogers' Chocolates will receive $598,000 from the City of Victoria in compensation for the designation of the interior of their Government Street store.  The arbitration finding has also ordered the City to cover 85 per cent of Rogers’ legal costs.

City Council designated the interior of the chocolate maker’s historic retail store early in 2009 to prevent a planned expansion that would, in the City’s view, have resulted in unacceptable alterations.  The remarkable interior has been commemorated by the Government of Canada as a National Historic Site.

When Rogers’ rejected an alternative expansion design proposed by the City, Council enacted a designation bylaw to protect the interior, without the owner’s approval, as a last resort.  Rogers’ said at the time they would seek compensation.

The power to protect heritage property through designation is provided by the Local Government Act.  The Act also provides that the owner of such a property can seek compensation if there has been a loss of market value as a direct result of the designation.  If the owner and the designating authority cannot come to terms on the compensation issue, the matter is referred to arbitration under the Commercial Arbitration Act.

A single arbitrator, a Vancouver lawyer, was appointed in the Rogers’ case and five days of hearings were held in January.  Both sides presented expert testimony about the estimated financial impacts that could result as a consequence of the restrictions imposed by the designation.  The decision, handed down by the arbitrator two weeks later, is final and cannot be appealed.

The Rogers’ case is a first in British Columbia, and possibly Canada.  The compensation provisions of the Local Government Act, established in 1994, have never been tested in this way before.  In addition to the immediate financial cost to the City, there may be other impacts for Victoria’s heritage program down the road as the impact of the settlement sinks in.  The case is also very likely to be cited as a precedent in other communities, possibly putting a damper on the use of designation to protect heritage resources.