fbpx
jeff@goldsteinlawyers.ca 647-838-6740

Does a Property or Business Owner Subject to an Expropriation have to pay legal fees?

The short answer is on. What follows is a more in depth overview:

Costs in Expropriation A Primer On Expropriation Law

Expropriation is one of the ultimate exercises of government authority and the Expropriations Act, RSO 1990, c. E-26 (the “Expropriations Act”) is designed to make landowners whole when their property is taken without their consent.  The Supreme Court of Canada held that the “whole purpose” of the Act is to provide the private land owner, who has been subject to the expropriation of property, with “full and fair compensation.”

Costs (s.32)

In expropriation proceedings the risk of counsel for the claimant not being paid is substantially lower than the risk would be when representing clients in normal litigation. In all but unusual circumstances, the expropriating authority is responsible for the payment of the claimants solicitor.  Section 32 of the Act generally provides for the recovery of full indemnity costs by an expropriated landowner.

s.32(1):

Where the amount to which an owner is entitled upon an expropriation or claim for 

injurious affection is determined by the Tribunal and the amount awarded by the Tribunal is 85 per cent, or more, of the amount offered by the statutory authority, the Tribunal shall make an order directing the statutory authority to pay the reasonable legal, appraisal and other costs actually incurred by the owner for the purposes of determining the compensation payable, and may fix the costs in a lump sum or may order that the determination of the amount of such costs be referred to an assessment officer.

The section is clear – the Board “shall” make an order. A successful owner is one who is awarded 85% or more of the amount offered by the authorities. For example, if an owner is provided $100.00 as an initial payment for the market value of the lands taken and ultimately recovers a total award of $86.00 for all damages including market value, the owner’s entitlement to costs is triggered. 

s.32(2):

Where the amount to which an owner is entitled upon an expropriation or claim for injurious affection is determined by the Board and the amount awarded by the Board is less than 85 per cent of the amount offered by the statutory authority, the Board may make such order, if any, for the payment of costs as it considers appropriate, and may fix the costs in a lump sum or may order that the determination of the amount of such costs be referred to an assessment officer who shall assess and allow the costs in accordance with the order and the tariffs and rules prescribed under clause 44 (d).

The language “the Board may make such order, if any, for the payment of costs as it considers appropriate” provides discretion for the Tribunal to make a costs award against the landowner in the event the owner does not achieve 85 per cent or more of the amount offered by the statutory authority.  When the authority is successful and a claim is dismissed entirely, the “below 85% threshold” in s. 32(2) of the Expropriations Act is engaged because the award is less than any offer presented by the authority. This section empowers the Board, where a claim has been dismissed, to deny costs to the claimant or order that the respondent (expropriating authority’s) costs be paid by the claimant. 

Which “Amounted Offered”? 

Some decisions held that an owner could recover full indemnity legal and appraisal costs in accordance with section 32(1) as long as it achieved 85 per cent or more of the expropriating authority’s offer made pursuant to section 25 of the Act (“Section 25 Offer”).  

Other decisions held that an owner was required to achieve 85 per cent of subsequent higher offers made by the expropriating authority, including those made pursuant to Rule 49 of the Rules of Civil Procedure, RRO 1990, Reg 194 (“Rule 49 Offer”).

Shergar v. Windsor (City) 2020 ONCA

Costs can be awarded to the statutory authority under s.32 of the Expropriations Act for settlement offers that were unreasonably rejected.  Previously, costs awards under s.32 were based on the amount of the s.25 offer made by the authority; however, this case expands the Tribunal’s scope to award adverse costs for any subsequent offer made by the authority.

What Costs are “Reasonable”?

The Board’s Rules of Practice and Procedure provide that where a matter is not covered in those rules, the Board may follow the Rules of Civil Procedure. The factors enumerated in rule 57.01 of the Rules, are instructive: 

Reasonable Costs under the Rules of Civil Procedure 

58.06 (1) In assessing costs the assessment officer may consider, 

  1. the amount involved in the proceeding; 
  2. the complexity of the proceeding;
  3. the importance of the issues; 
  4. the duration of the hearing;
  5. the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding; 
  6. whether any step in the proceeding was, (i) improper, vexatious or unnecessary, or (ii) taken through negligence, mistake or excessive caution; 
  7. a party’s denial of or refusal to admit anything that should have been admitted; and 
  8. any other matter relevant to the assessment of costs

“Reasonableness” does not prevent costs from being in excess of total amount awarded as compensation.  In Johnson v. MTO LCR 296 1975, the compensation awarded was $60,000 and the costs $84,000. 

DIS-ALLOWING CLAIMANTS COSTS


Under the LPAT Rules of Practice and Procedure, the Tribunal may only order costs against a party if the conduct or course of conduct of a party has been unreasonable, frivolous or vexatious or if the party has acted in bad faith.

Costs – 23.09. Circumstances in Which Costs Order May be Made:


(a) failing to attend a hearing event or failing to send a representative when properly given notice, without contacting the Tribunal; 

(b) failing to give notice without adequate explanation, lack of co-operation with other parties during pre-hearing proceedings, changing a position without notice to the parties, or introducing an issue or evidence not previously mentioned or included in a procedural order; 

(c) failing to act in a timely manner or failing to comply with a procedural order or direction of the Tribunal where the result is undue prejudice or delay; 

(d) a course of conduct necessitating unnecessary adjournments or delays or failing to prepare adequately for hearing events; 

(e) failing to present evidence, continuing to deal with issues, asking questions or taking LPAT Rules of Practice and Procedure April 3, 2018 – 28 – steps that the Tribunal has determined to be improper; 

(f) failing to make reasonable efforts to combine submissions with parties of similar interest; 

(g) acting disrespectfully or maligning the character of another party; 

(h) knowingly presenting false or misleading evidence; or 

(i) breaching a confidentiality requirement of a mediation, settlement conference or of a decision of the Tribunal in the hearing of the merits. The Tribunal is not bound to order costs when any of these examples occur as the Tribunal will consider the seriousness of the misconduct. 

PERTINENT CASES

Given the more recent trend by the LPAT to awards costs to an expropriating authority, counsel for claimants are wise to inform their clients about the potential cost consequences of proceeding with an unmeritorious claim. 

Shergar Development Inc. v. Windsor (City) 2020 ONCA 490 – Offers subsequent to S.25 are relevant in fixing costs

Costs can be awarded to the statutory authority under s.32 of the Expropriations Act for settlement offers that were unreasonably rejected.  Previously, costs awards under s.32 were based on the amount of the s.25 offer made by the authority; however, this case expands the Tribunal’s scope to award adverse costs for any subsequent offer made by the authority. 

HELD: Shergar refused to accept an offer equivalent to $1,208,155 when their interest was limited to $266,832. Shergar also frustrated and delayed the determination of the issue of the appropriate compensation to be awarded to the subject lands. The Court ruled that this conduct is worthy of censure. Shergar’s actions resulted in significant delay and frustration, wasting the Board’s valuable time. Shergar’s interpretation would otherwise permit the prospect of an unreasonable claimant delaying proceedings, running up legal costs, and wasting the Board’s resources, safe in the knowledge that unreasonable refusals of subsequent offers cannot adversely affect its entitlement to legal costs.

Pitblado v. Oakville 2006, 90 LCR 156, 2006 CarswellOnt 2574 (O.M.B.)

An otherwise narrow interpretation of the Act would require the authorities to guess the market value of the subject property at the outset. That said, the Board has rejected the authorities attempt to rely on a subsequent offer of compensation to determine the claimants entitlements to costs; as in this case where the authority attempted to rely on an offer made two years before the expropriation. 

Willies Car & Van Wash Ltd. v. Simcoe County – Failure to Avoid Unnecessary Costs

Claim was for injurious affection no land taken, and the claimant failed in its claim for the following reasons: 

  • The claim was statute-barred by the one-year limitation period set out in s. 22 of the Expropriations Act
  • The Appellant failed to meet the legal threshold for establishing injurious affection where no land is taken
  • The Appellant did not demonstrate that the Respondent’s construction caused any reduction in its business.
  • The Appellant did not present sufficient evidence to demonstrate that it suffered compensable damage.

The Board found that unnecessary costs could have been avoided if the Appellant had accepted the Respondent’s offer that was made early in the proceeding.  The Board also found that the offer was bona fide and intended to achieve a settlement of the claim before substantial costs were incurred. The Board concluded that the Appellant “at its own peril, ignored the offer as well as the challenges with respect to the facts of the case and the applicable law and must now face the consequences of its actions”. The Appellant’s conduct in refusing the offer was “unreasonable”. As a result, the Board stated that it should be responsible for some of the Respondent’s costs incurred in defending a claim that had no merit.

The Board substantially reduced the Respondent’s costs as follows:

  • Legal Costs: $60,009.20 (This was a 50% discount of $120,018.40).
  • Experts Costs: It discounted the expert costs by 40%. The starting point was $44,888.15, discounted to $26,934.00.
  • Total costs allowed: $86,943.20.

Disposal Services Ltd. v. Toronto 5 LCR 91, 1973 CarswellOnt 1358 – Where “Nil” Offer

Where there is solely a claim for injurious affection or whether the authority has failed to make an offer on expropriation and the Board dismisses the claim altogether, both sides will likely be ordered to bear their own costs up to the date of an offer, and if rejected, costs agent the claimant after that date. 

Whitnall v. Sarnia (City), 68 LCR 291, 1991 CarswellOnt 5346 (OMB)

  • Claimants failed in claim for injurious affection were no land had been taken 
  • Claimant refused two separate offers to settle and ultimately received no award of compensation at the hearing
  • Rule 49 of the Rules of Civil Procedure was applied and awarded costs to the respondent 

To incorporate the cost consequences of Rule 49 of the Rules (which was designed to dissuade frivolous claims by creating cost risks for Plaintiff’s), the Expropriations Act is a remedial statue…

Davoodian v. Dufferin Wind Power 2019 CanLII 101734 

Electrical transmission line installed that abutted the land owned by the claimants.  Business damages as a result of injurious affection from the construction of the transmission line was sought. The Respondent was totally successfully at the Hearing; the Claimant rejected two offers to settle; and the issues were not particularly novel. The Tribunal made an award of partial indemnity costs to be paid by the Claimant.

Disbursements

Hamilton v. Lax (1972) 47 LCR 84
https://www.canlii.org/en/on/onsc/doc/1992/1992canlii7656/1992canlii7656.html?autocompleteStr=hamilton%20(city)%20v.%20lax%20&autocompletePos=1#document

Interest charges on money borrowed to fund expropriation expenses will be disallowed where the owner had funds available from the advance payment paid by the authority to provide for those expenses.

Assessment Officer Decisions 

  • Where a hearing was unduly length and repetitive, the Board recommended a reduction in the counsel fee for 171/2 to 8 days; 
  • Where a claim for business loss was dismissed and the Board found no credible evidence to support the claim, it disallowed the counsel fee for the time involved presenting the claim; 
  • Separately registered owners failed to give evidence to support there were any separate or conflicting issues requiring each to be represented by separate counsel. The Board directed to Assessment Officer to disallow the separate legal costs of one of the two counse

Scarborough Subway Extension Expropriations

Metrolinx is proceeding with a proposed subway extension to TTC’s Line 2 Subway service eight kilometres further into Scarborough. The proposed extension will extend from Kennedy Station to Sheppard Avenue and McCowan Road. 3 additional stops are being added, and the project is estimated to take almost 10 years to completion.

Metrolinx is in the process of notifying property owners of its intention to expropriate property for the subway extension. If you have received a Notice of Intention for Approval to Expropriate, this is the first formal document from the authorities notifying the owner of the pending expropriation, as required by s. 6 of the Expropriations Act.

Once a Plan of Expropriation is registered, in accordance with s.9 of the Expropriations Act, which will show the parcels that the authorities require to expropriate, ownership of the lands will vest in the authorities. Once the plan of expropriation is registered, the authorities are required to send out a Notice of Expropriation along with a Notice of Election, which permits the owner to select a valuation date to determine compensation.

Thereafter, and within 90 days of the Notice of Expropriation being served, the authorities must serve a Section 25 offer on the registered owner of the property on a without prejudice basis along with a supporting appraisal report. The authorities must offer all compensation set out in the appraisal report, and alternatively the authorities must advance an offer of immediate compensation for the market value of the land expropriated, if the owner wishes to take the immediate offer and continue to seek additional compensation (without fully releasing their rights to additional compensation, which is the election we always recommend to clients).

Additional steps in the expropriation process follow thereafter. If you have received a Notice of Intention for Approval to Expropriate, it is wise to contact an expropriation lawyer familiar with the processes and the types of compensation which you are entitled to. Goldstein Law has extensive experience working with property owner and business owners in the context of expropriations arising from infrastructure projects in Ontario. Contact us today for a consultation!

Section 22 Notice of Injurious Affection Under the Expropriations Act

Section 22 of the Expropriations Act imposes a critical limitation period – Claimants who have suffered losses as a result of a partial taking of their property or whom have suffered injurious affection to their property or business where no land has been taken, must provide the statutory authority with written notice of injurious affection (“IA”) within one year after the damage was sustained or after it became known. If not, compensation claims for injurious affection are “forever barred.”

A plain reading of s. 22 outlines three key points: (1) notice must be given in writing; (2) notice must be given one year after the damage was sustained; and (3) if notice was not given within one year after the damage was sustained, notice may also be provided after damages became “known” to the person.

On what date does a Claimant know, or ought to have known, they have a claim for IA? The case law has been generous to Claimants who have
valid and unvexatious compensation claims for IA, and this is appropriate. In Willies Car & Van Wash Ltd. v. Simcoe (County) 2015, L.C.R. 39, OMB (upheld on appeal), the OMB noted that it is not reasonable to delay giving notice until after the full amount of the loss is calculated. Instead,
the Board found that s. 22 notice was due one year after the Claimant knew that a road closure was the alleged cause of its income losses – the Board held that notice was due, at the latest, 12 months after a road closure was
finalized and losses began to mount. The Board also noted that “the Claimant is also required to act diligently to inform itself of any loss giving rise to a claim.”

Where construction works are ongoing (i.e., with the Eglinton Crosstown) or other large scale infrastructure projects, injurious affection can theoretically be happening on a daily basis to the business or property; accordingly, a rolling limitation period applies, whereby damages can be claimed for one-year prior to the date the notice was issued. Where the injurious affection ceases, the section 22 notice has to be issued no more than one-year following that date.

If your property has been expropriated in Ontario or you have suffered an unreasonable interference from government construction works, it is important to protect all of your interest (i.e., the market value of the property expropriated, any damages for injurious affection, personal and business losses, and disturbance damages). These categories of damages are expressly stipulated in the Expropriations Act and have specific interpretations that have been applied by the Courts in Ontario. A qualified expropriation lawyer will assist the claimant in understanding the totality of their claims for damages under the Act.

Initial Steps in the Expropriation Process

Pre-Expropriation Procedures

Prior to commencing the expropriation process, the authorities may approach the owner directly in an attempt to negotiate a settlement without initiating potentially time-consuming expropriation proceedings. In which case, the authorities will approach the property owner with an appraisal report in an attempt to negotiate a settlement. If the property owner and authorities cannot reach an amicable resolution, the next step is for the expropriating authority to publish a notice of application for approval to expropriate lands.

Notice of Application for Approval to Expropriate Lands

Upon commencing an application for approval to expropriate lands to an approving authority (i.e., local municipal council), the town or region must publish the Notice of Application for Approval to Expropriate Lands in a public domain (i.e., a newspaper with general circulation in the relevant region where the expropriation will be undertaken).

Any owner which is given notice of the expropriation has the right to request a Hearing of Necessity with an inquiry officer to conduct an assessment into whether the expropriation is fair and necessary in light of the objectives of the public work.  The request for a Hearing of Necessity must be made to the authorities directly in writing within 30 days of receipt of the notice of approval to expropriate lands.

If no Hearing of Necessity is requested, the local approving authority will determine if the expropriation can proceed.  If approval fo the application is granted by the “approving authority” (as defined by the Expropriations Act), the authorities have 90 days to register a Plan of Expropriation on the title to the lands it requires. Once the Plan of Expropriation is registered on title, ownership vests in the authorities (although possession of the lands will often remain with the property owner).  There are a number of technical additional steps that occur following the registration of the expropriation plan, which steps are governed by the provisions of the Expropriations Act in Ontario.

Given the breadth of infrastructure upgrading and improvements across the Province of Ontario, various regions are initiating the expropriation process; as such, we have provided examples of the published notices of approval to expropriate lands from various authorities, as listed below:

Region of Waterloo

Town of Oakville

Town of Collingwood

City of Kingston

Dealing with a Pending Expropriation

If you are a property or business owner that has been served a notice of application for approval to expropriate lands, an experience expropriation lawyer will help you navigate the technical complexities and timelines as prescribed by the Expropriations Act.  For more information on expropriations, visit our main page here or give us a call at 647-838-6740.

Expropriation in Ontario

As we have discussed in our expropriation law blog posts, we represent property owners and business owners in claims against government authorities when land is involuntarily purchased for a public purpose. The Municipal Act 2001 S.O. 2001, c. 25, in Ontario, provides that the power of a Municipality to acquire land under the Municipal Act, or any other Act, includes the power to expropriate land in accordance with the Expropriations Act.

In order to authorize an expropriation of land, the municipality must obtain the consent of the governing council to carry out the property acquisition. Once approval is obtained from municipal council to proceed with the purchase of land, a Notice of Application for Approval to Expropriate Land is delivered to the property owner, following which a series of steps is taken by the authorities, typically including but not limited to as follows:

a) a Plan of Expropriation be obtained and registered on title to the Lands;

b) the Notice of Expropriation, Notice of Possession and Notice of Election be served upon the owners of the Lands;

c) an appraisal report for expropriation purposes be obtained to establish the market value of the Lands;

d) the owners of the Lands be served with an offer in accordance with Section 25 of the Expropriations Act;

e) payment of compensation offered pursuant to Section 25 of the Expropriations Act, be made upon acceptance by the owners of the Lands;

f) all necessary steps required to be taken to obtain possession of the expropriated Lands.

If the property owner does not accept the section 25 offer of compensation in full and final satisfaction of their rights in the property, the owner may commence further legal action, engage their own property appraiser, and proceed with negotiation at the Board of Negotiation or an arbitration process through the Local Planning Appeals Tribunal (LPAT) for a determination of the proceeds of expropriation.

Offers of Compensation – Approving Expropriations

An expropriating authority is required to obtain the approval of the local council or “approving authority” in order to carry out an expropriation. An example of such approval is contained here

In the link, attached, permission is sought from the City of Toronto to expropriate and acquire temporary construction easements to facilitate the construction of the Toronto Spadina Subway Extension Project. As we have discussed here, temporary easements are strips of land contained in a property owners parcel, which is required by the authorities for an indicated period of time to carry out construction work. The authorities do not seek to acquire permanent interests in such property; as when the construction work is completed, access will no longer be required to such land, and full ownership reverts back to the property owner, with no easement or otherwise attached thereto.

The expropriating authority will always require that the property owner signs a Full and Final Release in exchange for the payment of compensation for the expropriation. It is imperative that the property owner carefully reviews the terms of the Release to ensure that future claims are not barred should they arise. For instance, in the above-referenced case related to a temporary construction easement, if the works take longer than initially anticipated, the authorities may need to extend the duration of the easement, which will result in additional compensation for the property owner. However, if the Release is drafted in a way that precludes the property owner from obtaining additional compensation for an easement extension, then substantial funds could be lost.

Accordingly, and given that expropriating authorities are required to reimburse reasonable legal and professional fees under the Expropriations Act, it is advisable to consult with an expropriation lawyer before signing any agreement for compensation.

What is Expropriation?

Government authorities such as municipalities, school boards, and provincial and federal governments undertake projects which require them to obtain land from private property owners. In many cases, the authorities only require a small portion of the private property owners’ land for an easement or for related purposes such as utilities, although, in certain instances, entire properties are required (i.e., full vs. partial expropriation).

The authorities will attempt to purchase the land required from a project through a negotiated process with the affected property owners. The first step in the negotiation process is a hearing with the Board of Negotiation at the Local Planning Appeals Tribunal (formerly Ontario Municipal Board). Absent successful negotiations, the authorities may use the expropriation process to ensure that the land is obtained in a specific timeline to suit their project needs. Simply, an expropriation is a transfer of lands or an easement to an authority for reasonable compensation, including payment for the fair market value of the transferred lands, without the property owners consent.

In Ontario, an expropriation by an authority must follow the process set out in the Ontario Expropriations Act to ensure that the rights of the property owners are protected.

Sometimes, authorities will seek a negotiated resolution while the expropriation process is underway. This approach is necessary to ensure that the lands are in the authorities possession in the necessary timeframe; however, it can also save costs of both sides. Expropriation proceedings can be discontinued and the land transferred to the authorities in exchange for the payment of the negotiated compensation.

If your land has been expropriated or the authorities require an easement on your property to accommodate a public work, call the expropriation lawyer at Goldstein Law Firm to ensure you maximize the compensation that you deserve in conjunction with an expropriation in Ontario.

Legal Fees in Expropriation Law Matters

The Expropriations Act in Ontario allows for claimants to be reimbursed for any legal fees incurred through the expropriation process, as long as they have been awarded 85.0% or more of the compensation that was originally offered by the expropriating authorities. The Expropriations Act will cover reasonable legal, appraisal, and professional fees that are associated with the expropriation.

In our expropriation law practice, clients can retain our expert expropriation law counsel without paying any fees out-of-pocket. We also have a team of advisors, including business valuators, land use planners, and appraisers, that may necessarily be engaged through the expropriation process, whose reasonable fees will be covered by the expropriating authorities. Accordingly, if your property is in the midst of an expropriation, it is best to consult with a qualifying expropriations lawyer as the Expropriations Act protects clients against the payment of substantial out-of-pocket legal and professional fees.