When a government authority obtains approval to acquire private property from a property owner without their consent, this is referred to as an expropriation. In all cases, where the government takes land from an owner, whether it is a permanent taking or an expropriation for temporary use, whether the entire parcel of land is acquired (i.e., a fee simple taking) or only a limited interest in the land, the owner is entitled to compensation.
Typically, land expropriations occur to facilitate some form of construction work (i.e.., large scale transit projects, road widening, bike lane installation, hydro pole relocations, or other municipal works). In circumstances where a public construction project substantially and unreasonably impacts property owners or business owners that reside in close proximity to the work, such an impact can be deemed an expropriation though no land has been taken. The Expropriations Act refers to the interference with property as a claim for “injurious affection” where no land has been taken. In these cases, authorities will not typically offer any compensation resulting from the expropriation (or interference with land) and the property owner must pursue an action through the Local Planning Appeals Tribunal in Ontario. The requirements to pursue such an action under the Expropriations Act and technical and time-dependent so it is important that professional advise is obtained at an early stage.
Prior to formal expropriation proceedings, governments will notify the property owner that they tend to acquire their land for public purposes. An amount of compensation will be offered, and the government will seek to acquire the property by way of an Agreement of Purchase and Sale of land. This is typically the most expeditious and cost-effective means of acquiring land. Where the government and landowner cannot agree on a purchase price, formal expropriation proceedings are commenced. In any event property owners would be well advised to seek out professional counsel (i.e., lawyers, appraisers, business valuators, etc.) in order to seek advice on the compensation offered. Ultimately, all reasonable professional fees incurred in an expropriation proceeding are to be reimbursed by the authorities, so there is no downside in the property owner securing professional advice to ensure their interests are protected.
After the expropriating authority obtains approval to expropriate property which must be granted by the local municipal council in the region of the expropriation, a form called a Notice of Application for Intention to Expropriate Land is served on all “registered owners” of the property’s that will be subject to expropriation. This is the first notification that property owners will receiving regarding a pending expropriation.
Any owner of lands in Ontario who has been served with a Notice of Intention to Expropriate is entitled to a hearing of necessity, in which case an inquiry will be made into the proposed expropriation. The inquiry officer is directed to inquire whether the proposed taking is fair, sound and reasonably necessary in the achievement of the objectives of the expropriating authority. The inquiry officer’s report must be provided to the expropriating authority and the registered owner of the property. Where an owner disputes the plan of expropriation, the onus is on them to lead evidence of a preferable alternative; absent, which the inquiry officer will “rubber stamp” the proposed plan.
An exception to the right to challenging a decision to expropriate property came with the introduction of the Building Transit Faster Act, 2020 ( https://www.ontario.ca/laws/statute/20b12#BK57 ), which dispensed with the right of an owner to request a hearing of necessity if the land is at least partly on a transit corridor or the expropriation is primarily for a transit project. The purpose of this legislation was to expedite the expropriation process and speed up construction times for infrastructure projects across Ontario.
There are many forms of compensation that a registered owner of land is entitled to in the context of an expropriation. Accordingly, it is important that legal advice is obtained from a specialized expropriation lawyer in the early stages of the expropriation process soon after the notice of expropriation is served upon the owner. By way of summary, the categories of compensation available to expropriated property owners include:
Compensation for the market value of the land acquired;
Damages attributable to disturbance;
Damages for injurious affection;
Special difficulties in relocation;
Business losses including loss of goodwill.
For a more detailed discussion of compensation entitlements when the government expropriates your land, contact an expropriation lawyer for advice.
Where a proposed expropriation is approved by the local municipal council, the expropriating authority shall register a plan of expropriation within three months after granting of such approval in the proper land registry office, at which time, ownership of the land vests in the authority. Once the land vests in the authority and the owner has been served with a notice that the authority requires the possession of the land on a specified date, the authority shall take possession of the expropriated land at that date
The date for taking possession of the land must be at least three months after serving of the notice of possession on the registered owners of the land to be expropriated.
Yes, if you are a business owner operating as a tenant on expropriated land (and not the owner of the property), you are entitled to compensation if your business is required to shut-down due to expropriation. Where a business is located in an expropriated land, the authority shall pay compensation for losses resulting from the relocation or for the goodwill value of the business where it is not feasible to relocate.
Often the loss is not determined until the businesses is in operation at a new location for at least a 6-month period;
It includes relocation costs relating directly to the move (i.e., marketing expenses or losses on the sale of inventory, moving expenses, realtor commissions, survey costs and legal expenses, land transfer taxes if it involves purchasing a new premises, all other non-recoverable expense)
Where capital improvements have been made to a premises and the business owner is forced to re-locate, they will have to incur a fresh set of improvements at the new premises. The accelerated costs of doing so are compensable;
Goodwill value – often paid to a business owner where it is not feasible for the business to relocate (i.e., due to age/infirmity or absence of a second suitable location or premises).
Where a business is situated on expropriated land, professional legal counsel will typically engage business loss valuators to assess the businesses financial statements and operating performance to prepare a report to determine an estimate of the total compensation payable to the owner resulting from the land expropriation.
Market value under s.14 of the Expropriations Act in Ontario depends on the highest and best use of the land. The land includes any estate, term, easement or right or interest in or over land .
The highest and best use of the property means the highest economic use to which a buyer and seller would reasonably anticipate the lands would be put. When a rezoning is required to achieve the use, it is not enough that the rezoning is “good potential” it would be “reasonably probable.” It is up to the property owner to advance evidence and convince the LPAT as to the amount of compensation the claimant is entitled.
The appraiser will use an income approach, development cost approach or comparable sales approach to valuations where appropriate.
s.18 of the Expropriations Act in Ontario codifies the rights to compensation for disturbance damages, which is a broad umbrella for any damages that are a natural consequence of the expropriation.
Inclusive of disturbance damages are compensation for relocation costs (i.e., the cost to move your residential property or business after your land is expropriated by the expropriating authority), which are not restricted to relocation of a residence but also to the transferring of a business. Relocation costs include non-recoverable expenses incurred in acquiring another premises, including moving costs, capital costs of building out a new premises, rent payable to a temporary location, storage costs, lost net wages during moving, among other costs.
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 landowner, who has been subject to the expropriation of property, with “full and fair compensation.” (Dell Holdings v. Toronto Area Transit Operating Authority 1997 142 DLR)
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. (Tripp v. Ontario (MTO) 1999 67 LCR 161). Section 32 of the Act generally provides for the recovery of full indemnity costs by an expropriated landowner.