Who Can Help Maximize the Compensation For a Land Expropriation?

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A Helpful Guide For How to Determine and Understand the Law and Process Involving Land Expropriation Issues

Surveying for Expropriation When the government needs to expropriate land the fight to obtain proper compensation requires a professional with strong knowledge of the realty valuation issues, the relevant laws, and the legal process involved.  Common concerns include compensation for partial land expropriation, injurious affection as economic harm due to valuation changes occurring when adjacent or neighbouring lands are expropriated, and even business disruption losses due to disturbance arising from expropriation of neighbouring land.

The Law
Applicable Statutory Legislation

There are many legislated statutes that may be relevant to expropriation concerns including the Expropriations Act, R.S.O. 1990, c. E.26, the Municipal Act, 2001, S.O. 2001, Chapter 25, the Local Planning Appeal Tribunal Act, 2017, S.O. 2017, Chapter 23, Schedule 1, among others.  In addition to a strong understanding of these statutes, legal disputes also require knowledge of the applicable precedent case law from previous board or judge made decisions which help to define and to clarify meanings within the statutes.

Commonly Disputed Concerns

When land is expropriated, adequate compensation value issues often arise and may develop into disputes requiring legal proceedings.  Generally, compensation value disputes are heard by the Board of Negotiation and then, if appealed, the Land Planning Appeal Tribunal.  If further appealed, the Divisional Court and higher appeal courts may become involved (and at which point a paralegal is unable to assist and a lawyer will be required).

Compensation
Principles for Damages

There are variety of ways that a land expropriation may result in compensation deserved to the owner of the land expropriated or even owners, or perhaps others, whose adjacent or neighbouring land or interests are adversely impacted by an expropriation.  Generally, four forms of compensable damages may apply, being:

  1. The market value of the land;
  2. The losses attributable to disturbance;
  3. The injurious affection losses; and
  4. The special difficulty in relocation losses.

These forms of compensable damages are specifically identified and expanded upon within section 13 through section 19 and section 21 of the Expropriations Act, which state:

Compensation

13 (1) Where land is expropriated, the expropriating authority shall pay the owner such compensation as is determined in accordance with this Act.

Idem

(2) Where the land of an owner is expropriated, the compensation payable to the owner shall be based upon,

(a) the market value of the land;

(b) the damages attributable to disturbance;

(c) damages for injurious affection; and

(d) any special difficulties in relocation,

but, where the market value is based upon a use of the land other than the existing use, no compensation shall be paid under clause (b) for damages attributable to disturbance that would have been incurred by the owner in using the land for such other use.

Market value

14 (1) The market value of land expropriated is the amount that the land might be expected to realize if sold in the open market by a willing seller to a willing buyer.

Idem

(2) Where the land expropriated is devoted to a purpose of such a nature that there is no general demand or market for land for that purpose, and the owner genuinely intends to relocate in similar premises, the market value shall be deemed to be the reasonable cost of equivalent reinstatement.

Idem

(3) Where only part of the land of an owner is taken and such part is of a size, shape or nature for which there is no general demand or market, the market value and the injurious affection caused by the taking may be determined by determining the market value of the whole of the owner’s land and deducting therefrom the market value of the owner’s land after the taking.

Idem

(4) In determining the market value of land, no account shall be taken of,

(a) the special use to which the expropriating authority will put the land;

(b) any increase or decrease in the value of the land resulting from the development or the imminence of the development in respect of which the expropriation is made or from any expropriation or imminent prospect of expropriation; or

(c) any increase in the value of the land resulting from the land being put to a use that could be restrained by any court or is contrary to law or is detrimental to the health of the occupants of the land or to the public health.

Co-operative developments

(5) Where two or more expropriating authorities, including Her Majesty the Queen in right of Canada, participate in a development or a number of related developments, the Lieutenant Governor in Council may, by regulation, designate such development or developments as a co-operative development and subsection (4) shall apply to the determination of the market value of any land expropriated by any of the participating provincial expropriating authorities for any aspect or part of the co-operative development as if the entire co-operative development was a single development being carried out by that expropriating authority.

Increase by Tribunal

15 Upon application therefor, the Tribunal shall, by order, after fixing the market value of lands used for residential purposes of the owner under subsection 14 (1), award such additional amount of compensation as, in the opinion of the Tribunal, is necessary to enable the owner to relocate his or her residence in accommodation that is at least equivalent to the accommodation expropriated.

Separate interests

16 Where there are more separate interests than one in land, other than the interest of a security holder or a vendor under an agreement for sale, the market value of each such separate interest shall be valued separately.

Interests of security holders

Definition

17 (1) In this section,

bonus” means the amount by which the amount secured under a mortgage exceeds the amount actually advanced.

Determining value

(2) Where land is subject to a security interest,

(a) the value of the interest of the security holder shall be determined in accordance with this section and section 20 and not otherwise; and

(b) the market value of the land shall be determined without regard to the interest of the security holder and the amount of such market value plus any damages for injurious affection shall stand in place of the land for the purposes of the security.

Payment out of market value

(3) Security holders shall be paid the amount of principal and interest outstanding against the security out of the market value of the land and any damages for injurious affection payable in respect of the land subject to the security, in accordance with their priorities, whether or not such principal and interest is due, and subject to subsections (4) and (5).

Bonus

(4) Where the land is subject to a mortgage and the amount payable to the mortgagee under subsection (3) is insufficient to satisfy the mortgage in full,

(a) where the mortgage is a purchase-money mortgage, the mortgage shall be deemed to be fully paid, satisfied and discharged for all purposes; and

(b) where the mortgage is not a purchase-money mortgage and includes a bonus,

(i) the amount by which the amount payable to the mortgagee under subsection (3) is insufficient to pay the amount remaining unpaid under the mortgage, or

(ii) the amount of the bonus,

whichever is the lesser, shall be deemed to be fully paid and satisfied for all purposes.

Idem

(5) No amount shall be paid in respect of a bonus until all security holders have been paid all amounts payable other than any bonus.

Payment out of market value

(6) Where land held as security is expropriated in part or is injuriously affected, a security holder is entitled to be paid to the extent possible in accordance with the security holder’s priority, out of the market value portion of the compensation and any damages for injurious affection therefor, as the case may be, a sum that is in the same ratio to such portion of the compensation and damages as the balance outstanding on the security at the date of the expropriation or injurious affection is to the market value of the entire land, provided however that the sum so determined shall be reduced by the amount of any payments made to the security holder by the owner after the date of expropriation or injurious affection.

Allowance for disturbance

Owner other than tenant

18 (1) The expropriating authority shall pay to an owner other than a tenant, in respect of disturbance, such reasonable costs as are the natural and reasonable consequences of the expropriation, including,

(a) where the premises taken include the owner’s residence,

(i) an allowance to compensate for inconvenience and the cost of finding another residence of 5 per cent of the compensation payable in respect of the market value of that part of the land expropriated that is used by the owner for residential purposes, provided that such part was not being offered for sale on the date of the expropriation, and

(ii) an allowance for improvements the value of which is not reflected in the market value of the land;

(b) where the premises taken do not include the owner’s residence, the owner’s costs of finding premises to replace those expropriated, provided that the lands were not being offered for sale on the date of expropriation; and

(c) relocation costs, including,

(i) the moving costs, and

(ii) the legal and survey costs and other non-recoverable expenditures incurred in acquiring other premises.

Tenant

(2) The expropriating authority shall pay to a tenant occupying expropriated land in respect of disturbance so much of the cost referred to in subsection (1) as is appropriate having regard to,

(a) the length of the term;

(b) the portion of the term remaining;

(c) any rights to renew the tenancy or the reasonable prospects of renewal;

(d) in the case of a business, the nature of the business; and

(e) the extent of the tenant’s investment in the land.

Business on expropriated land

Business loss

19 (1) Where a business is located on the land expropriated, the expropriating 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 expropriating authority otherwise agree, the business losses shall not be determined until the business has moved and been in operation for six months or until a three-year period has elapsed, whichever occurs first.

Good will

(2) The Tribunal may, in determining compensation on the application of the expropriating authority or an owner, include an amount not exceeding the value of the good will of a business where the land is valued on the basis of its existing use and, in the opinion of the Tribunal, it is not feasible for the owner to relocate.

.....

Compensation for injurious affection

21 A statutory authority shall compensate the owner of land for loss or damage caused by injurious affection. 

Claimable Damages Summary
Market Value

In common law, meaning from the decision of judges, the market value is determined as the fair market value of the total land minus the fair market value of the remaining land including improvements, if any.

Disturbance Damages

The basis for determining disturbance damages involves the actual losses suffered that are deemed caused by the expropriation process including reasonable and necessary costs incurred within the expropriation process, business disruption, among other things; however, such excludes any potential or unrealized profits involving the land and also omits any interest that may arise due to compensation delays due to dispute in the expropriation compensation process.

Injurious Affection

Regardless of whether a statutory authority, usually a level of government, acquires part of the land of an owner or otherwise, injurious affection compensation is considered.  Injurious affection may apply to property adjacent, or neighbouring, to land that is expropriated or where a change of use occurs.  Generally, in a partial expropriation, injurious affection is calculated as the reduction in market value of the remaining land of the owner that is attributable to the acquisition of the expropriated land or to the change in use of the adjacent, or neighbouring land.  Essentially, injurious affection is based upon principles similar to the tort of nuisance and may involve physical damage to land or interference with the use or enjoyment of land that is incicental to the expropriation of the expropriated land, or a combination of these factors.

Special Difficulties

Sometimes an expropriation results in losses or expenses or costs incurred for reasons such as moving costs for relocation or perhaps costs for surveyors, among other things, as expenditures for acquiring alternative premises.  Additionally, the Expropriations Act provides for compensation to a business that suffers a loss due to relocation or the value of the good will of the business if relocating is unfeasible or impractical.

Furthermore, in addition to special difficulties compensation for land owners, such may also be available to tenants who are displaced or relocated, or otherwise affected by an expropriation.

Legal Dispute Costs

Generally, per section 32 of the Expropriations Act, although with discretion remaining within the authority of the decision maker, when expenses arise due to a dispute of expropriation compensation, the reasonable legal costs incurred for lawyer or paralegal representation may be awarded along with expense for disbursements including appraisals, expert reports, among other things.  Typically, these costs are awarded if the Board of Negotiation (BON), Land Planning Appeal Tribunal (LPAT), or an appeal court, awards compensation in an amount of eighty-five (85%) percent or higher than the amount offered by the owner of the expropriated land.

Furthermore, where the awarding of compensation is delayed due to the dispute process, and the delay is wholly or partially deemed attributable to the conduct or position of the expropriating authority, interest may be awarded in the range of six (6%) percent to twelve (12%) percent.

Important Case Precedents

Toronto Area Transit Operating Authority v. Dell Holdings Ltd., [1997] 1 S.C.R. 32

This decision of the Supreme Court provided that the Expropriations Act, "should be interpreted in accordance with its intended purpose, and strictly in favour of those whose land is being expropriated" and "in order to comply with the aim of the Act to fully compensate a land owner whose property has been taken".  Furthermore, expropriation is "a process" and if in the process of taking the property a land owner suffers losses, then damages should be paid to the land owner.  The key to a right to damages is causation and actual damages caused by the expropriation process are compensable.

Gray Coach Lines v. City of Hamilton, [1973] S.C.R. 108

In this case decided by the Supreme Court, the issue of "reasonable cost of equivalent reinstatement" was addressed and compensation was awarded for special difficulties in relocation when the claimant was unable to find a suitable replacement property under the same market value due to zoning limitations related to special equipment used.  The award was for the difference between the lower market value of the expropriated land and the the minimum amount required to buy a suitable replacement land necessary to duplicate the owners operations.

747926 Ontario Ltd. v. Upper Grand District School Board, 2000 CanLII 29057

The dispute in this matter involved concern for loss of profits, being specifically the anticipated future lost profits to a land developer.  In the result, the Divisional Court deemed that profits are uncompensable damages under disturbance as the definition of fair market value already adjusts for the potential of the land for future development.  Also decided were restrictions on interest payment whereas interest was deemed payable on fair market value and injurious affection but excluded for disturbance damages.

Antrim Truck Centre Ltd. v. Ontario (Transportation), 2011 ONCA 419

Within this case, the Court of Appeal reviewed the issue of injurious affection and deemed that the interference with use or enjoyment of land must be substantial as well as reasonable.  The ruling also stated that the competing interests of the land owner and the expropriating authority must be balanced without undue weight given for any abnormal sensitivity of the land owner.  It is notable that this case only dealt with injurious affection to an adjacent land rather than any land expropriated from the complainant.

Bernard Homes Ltd. v. York Catholic District School Board, 2004 CanLII 12069

Within this decision, the Divisional Court confirmed that a land owner is entitled to compensation for actual damages sustained as a result of delays inherent to the expropriation process.  It was also decided that disturbance damages are unintended as a supplement to the market value as disturbance damages are a consequence of the expropriation that are unaddressed by the compensation for market value of the land and may involve relocation expenses, business disruption, among other things.

Montana Equipment Ltd. v Robert B. Somerville Company et al, 2017 ONSC 3092

In this dispute, it was determined that claims for injurious affection are sometimes outside the jurisdiction of the Land Planning Appeal Tribunal (formerly known as the Ontario Municipal Board) and that sometimes a matter may only proceed directly to the Superior Court where the relief sought fails to fall entirely within the scope of, or jurisdiction of, the Land Planning Appeal Tribunal.

Curactive Organic Skin Care Ltd., 2011 ONSC 2041

At paragraph 29 of this case, subsequently affirmed by the Court of Appeal, injurious affection was deemed a statutory remedy to substitute for “a nuisance claim in tort that would otherwise be barred by the common law defence of statutory authority because the alleged injury is an inevitable consequence of construction of a work authorized by statute and done without negligence.

Spragg v. Middlesex (County), 2018 CanLII 47942

This case provides an example of the issued reviewed by, and compensation decision of, the Land Planning Appeal Tribunal for disturbance and injurious affection in partial expropriation for public highway.

Examples of recoverable damages included:

  • The fair market value of the expropriated land calculated as fair market value of the total land less the fair market value of the remaining land;
  • The improvements and costs related to mitigation of any adverse impact on enjoyment of the land use including additional fencing, drainage, repairs, maintenance, and cleanup costs;
  • The professional fees, such as legal fees, surveying costs, architectural and engineering costs, utility connections, costs of environmental or planning applications (if applicable), bridge financing, etc.;
  • The adverse impact on the remaining property value (if reasonable and supported by evidence) due to any increased traffic, increased noise and pollution, trespass and nuisance, reduced or diminished amenity space or related privacy enjoyed by the remaining lands;
  • The loss of revenue or other financial benefit presently derived from the expropriated portion of land;
  • The loss of riparian rights, if applicable;
  • The adverse tax implications, if any;
  • The relocation costs for any structures, assets, residence or business, affected by the expropriation or the process of expropriation or the new boundaries and setbacks; and
  • The reasonable evaluation costs including impact studies and reports, surveys, and appraisals.

Examples of unrecoverable damages included:

  • The loss of future or potential utilization of expropriated lands;
  • The evaluation costs unless directly attributable to the expropriated lands or to the expropriation process or to the impact upon the remaining lands; and
  • The inconvenience or loss of executive time.

NOTABLE:

THIS IS NOT A COMPLETE GUIDE TO EXPROPRIATION but is merely a summary of some common points and issues.  If the property you own or rent for your residence or business is being expropriated, it is important that you consult with a competent paralegal or a lawyer to ensure that you become aware of and pursue all possible compensation that you may be entitled to.


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