We recognize that most people find expropriation to be an upsetting and bewildering process. The purpose of these FAQ’s are to provide you with some general information concerning the law of expropriation in Ontario, and to also provide you with some insight into expropriation procedures and the issues and choices you may face during this process. These FAQ’s are not intended to constitute legal advice or to be a substitution for such legal advice and must not be relied upon as such. You should consult a lawyer concerning your specific fact situation.
Expropriating Authorities must first attempt to negotiate the purchase of the required property before resorting to expropriation. If the Statutory Owner and the Expropriating Authority are unable to negotiate the purchase of the required property interests the Expropriations Actrequires the Expropriating Authority to proceed with a formal expropriation by obtaining approval for the proposed expropriation and by registering a Plan of Expropriation. The Expropriating Authority must serve all Statutory Owners with a Notice of Intention to seek approval for the expropriation. It is at this stage that a Hearing of Necessity can be requested by a Statutory Owner which has the effect of halting the approval process until the necessity of the proposed exproration has been decided by a Board of Inquiry. If such a Hearing is not requested or if the Board rules that the proposed expropriation is fair, sound and reasonably necessary in the public interest, the proposed expropriation then proceeds to the approval stage. Once approval is obtained, a Plan of Exproration respecting the property is registered with the Land Registry Office which vests title to the property with the Expropriating Authority. A Notice of Expropriation is then served by the Expropriating Authority upon all Statutory Owners, being all those who have an interest in the property.
Normally, security holders such as mortgagees are entitled to be paid out according to the terms of their security agreement or to be paid a “bonus” for early repayment of their loan. Where the expropriation involves a partial taking only, a mortgagee is paid an amount out of the compensation for market value and injurious affection which is equal to the ratio which the amount outstanding on the mortgage bears to the value of the entire property as at the date of expropriation. Registered judgment creditors are not considered to be security holders and are therefore not entitled to be paid directly.
The Expropriations Act, R.S.O. 1990, c. E. 26, permits Statutory Owners facing expropriation to object to the expropriation and to require a “hearing of necessity”. However, in many cases a Statutory Owner cannot successfully challenge the fact of an expropriation. Therefore the issue for the Statutory Owner often comes down to one of receiving adequate compensation for the interests which are being expropriated.
Within 90 days of registration of the Plan of Expropriation and prior to taking possession of the expropriated property or interests, the Expropriating Authority must serve a “statutory offer” upon all Statutory Owners, which is referred to as a Section 25 Offer. The Section 25 Offer is a “without prejudice” offer of compensation, which the Statutory Owner is entitled to accept on a without prejudice basis while still exercising his or her right to dispute the amount offered and to claim further compensation under the Expropriations Act. The Section 25 Offer must be accompanied by the Expropriating Authority’s formal appraisal of all property interests expropriated showing how the amount of the Section 25 Offer has been calculated. The Expropriations Act requires that the Section 25 Offer be based upon the full and fair market value of the property and interests taken plus the amount of any injurious affection. The Section 25 Offer is not required to include any amounts for the Statutory Owner’s business losses, disturbance and other damages.
When a Statutory Owner proceeds to litigation before the OMB and the Board makes an Order determining the amount of compensation payable, the Statutory Owner’s legal, appraisal and other costs are recoverable by the Statutory Owner from the Expropriating Authority so long as the amount awarded by the Board is at least 85% of the amount of the Section 25 Offer of compensation. The costs must be reasonable and must have been actually incurred by the Statutory Owner to determine the amount of the compensation. The costs may be assessed at the request of the Expropriating Authority, but the assessment will be as between a solicitor and his own client and therefore provides the highest level of indemnification available at law, which is referred to a “Full Indemnity”. Where a settlement of the Statutory Owner’s claim is reached without the requirement of an OMB hearing, the Expropriating Authority will almost invariably agree to reimburse the owner for his or her legal, appraisal and other costs. In any other case costs may be awarded at the discretion of the OMB.
Loss of access claims are a form of injurious affection and are based upon the impairment of the expropriated owner’s common law right of access to his or her property. It is considered as an actual loss of an incident to property ownership, but need not be the loss of a registerable right. Therefore, there need not be a formal expropriation proceeding taken by the Expropriating Authority. The loss can be very serious, including land-locking the property, or bypassing and re-routing traffic past a commercial property.
Disturbance loss claims generally refer to those losses suffered by an Statutory Owner by reason of having to vacate the expropriated property, including a claim for goodwill if a business operated from the property cannot be relocated. The types of disturbance claims are unlimited, ranging from the costs of moving an entire factory to the purchase of new contents for a home. If the loss is created as a direct result of the expropriation or in anticipation of the expropriation, it is recoverable from the Expropriating Authority.
Tenants are considered to be Statutory Owners and are entitled to be compensated for injurious affection, disturbance and relocation costs, and loss of income. They are also entitled to be paid for the loss of their tenancy, i.e., the difference between the present value of the remaining term of the lease and the current market value for the lease of a similar property.
These FAQ’s are intended to provide you with only a general overview of the law of expropriation in Ontario as it effects property owners and tenants facing the prospect of expropriation. Not all of the principles discussed above may apply to your case and some specific issues peculiar to your case may not have been addressed. We invite you to contact us to discuss any questions you might have arising out of your specific situation.
We invite you to contact us to discuss any questions you might have arising out of your specific situation.