June, 2007

Disclaimer: This article was written in order to provide information only and should not be relied upon as legal advice. Detailed legal advice should be obtained which will be appropriate for the specific circumstances of your matter. (Copyright and Disclosure).

Should you need to discuss this article or any other related matter, please contact Ken Strong by e-mail or by telephone at (519) 672-9330.  If corresponding by e-mail, be sure to include your name, your telephone number and a brief message.

BULLDOZERS AT THE CASTLE GATES 

A ROUGH GUIDE TO UNDERSTANDING YOUR RIGHTS AND RESPONSIBILITIES WHEN YOUR LAND IS BEING EXPROPRIATED

You may think of your home as your castle, your inviolate refuge.  And so it can be, unless laid siege by the state.  With paper bullets and bulldozers, the government can expropriate and lay waste to your castle.  It is one of the ultimate exercises of a government.  It is a significant interference with your property rights, and it causes severe losses.  

This short article sets out your basic rights and responsibilities that are triggered when the government seeks to take your land.  This article sets out general information.  Legal complexities and the vagaries of each situation make consultation with legal counsel imperative; this article should not be viewed as a substitute for a careful examination of your circumstances.

PROCEDURAL BASICS

Ontario’s Expropriations Act sets out the detailed procedure to be followed.  There are a series of notices that must be sent and hearings that must be held.

Early in the process, just following the initiation of proceedings by the government authority, you may request that a hearing of necessity be held to determine whether the proposed expropriation is “fair, sound, and reasonably necessary”.  An inquiry officer holds a hearing and generates a report.  The authority approving the expropriation must consider this report, but it is not bound by its findings.  Notwithstanding the findings in the report, the government authority may approve or not approve of the proposed expropriation as it wishes.  In general, you must bear the costs of this hearing yourself.

If the authority approves the expropriation then the expropriating authority must register on title a plan of the lands it is expropriating.  The lands become those of the expropriating authority; you retain a monetary claim for compensation.  After the expropriation plan has been registered on title, the expropriating authority must serve you with an offer of compensation for your interest in the land.  You may accept this offer without prejudice to your right to claim further compensation.  This is known as the “section 25” offer.

You may attempt to resolve matters at the “Board of Negotiation”, failing which the matter is heard by the Ontario Municipal Board.  Expropriation hearings before the Board are very similar to proceedings before a court of law.  As a way to balance the rights of the affected individual against the massive resources and powers of the state, at the end of the Board hearing, you can expect to be indemnified for your reasonable legal, appraisal and other costs incurred in determining the compensation payable by the expropriating authority.

COMPENSATION BASICS

You are entitled to be compensated for the market value of the land, “disturbance damages”, “damages attributable to injurious affection”, special difficulties in relocation, and business loss.  In sum, you are entitled to be compensated in accordance with the Expropriations Act, but you are not entitled to be enriched at the expense of the public purse.

Market Value

The market value of the land is the amount that your expropriated land might be expected to realize if sold in the open market by a willing seller to a willing buyer.  The market value of land depends upon the use to which the land is put or may be put.  The “highest and best use” of land is driven by the viable land use that either does bring or will bring the highest economic value to the owner on the open market.  Once the highest and best use has been determined, the monetary value of the property can be determined.  In determining market value, expert appraisal evidence is essential.  In more complicated situations, the advice of a land use planner, engineer, and architect may be required. 

Damages Attributable to Disturbance and Business Losses

Damages attributable to disturbance are the costs that are the natural and reasonable consequences of the expropriation.  These cover items such as business losses, moving expenses, incidental expenses, landscaping costs, loss of improvements, equipment, window coverings, furnishings, loss of well water, and costs thrown away.  It does not cover things such as loss of expected profits, damages for mental distress, and potential relocation costs that are not actually incurred.  If you owned a business that is extinguished by the expropriation then you are entitled to an amount determined by reference to the goodwill of the business.  Throughout the process, the law expects you to mitigate your losses and behave reasonably, notwithstanding that the taking of your property was not of your choosing.

In proving disturbance damages and business losses, complete and accurate records are essential.  Expert accounting and business valuation advice will often be required.

Damages Attributable to Injurious Affection

Injurious affection is the harm to the land resulting from the public work.  Ontario law provides one regime to compensate for injurious affection when land is taken and another regime of compensation when no land is taken.  When land is taken, you are entitled to be compensated the reduction in market value to the remaining land as well as personal and business damages caused by both the construction and use of the public work.  When no land is taken, you are entitled to be compensated for damages caused by construction, but not the use of the work.  Notice of a claim for injurious affection must be made within one year of the time the damage arose or became know.  Any advantage to the land arising from the construction of the public work must be set off against the damages for injurious affection.

As above, expert appraisal, land use planning, engineering, and accounting advice may be required to successfully advance a claim for injurious affection. 

HOW IT WORKS—EXPROPRIATED ERNIE

Suppose a landowner, we will call him Ernie, owns a home on 300 square metres of land, located along a two lane highway.  A government body seeks to widen the road to four lanes, and in so doing requires 30 square metres of Ernie’s land. 

Ernie does not believe that such a road widening is necessary and engages legal counsel.  Following receipt of a notice of application to expropriate his land, he requests a hearing of necessity.  A few months later, a hearing is convened.  The government body produces its evidence as to why Ernie’s land is required.  Land use planning evidence is given on Ernie’s behalf by a qualified land use planner detailing why the taking of Ernie’s land is not required for the project.  After hearing the evidence, the Inquiry Officer decides that the taking of land is in fact fair, sound and reasonably necessary.  The government proceeds to expropriate Ernie’s land.  Ernie bears his costs of this hearing himself.

Shortly after the expropriation of his land, Ernie receives the “section 25” offer from the government, which Ernie accepts without prejudice to making a claim for greater compensation.  Ernie has a right to compensation for:

• The market value of the 30 square metres of land taken for the construction of the new widened highway;

• The injurious affection to the market value of the remaining 270 square metres of land; and

• Disturbance, noise, dust, vibration, etc. caused by the construction of the widened road.

Ernie and the government proceed to the Board of Negotiation, but fail to reach an agreement.  Documents are exchanged and examinations for discovery take place.  The matter proceeds to the Ontario Municipal Board, and following a trial, the Board orders payment of a further sum to Ernie.  The government must indemnify Ernie for his reasonable legal, appraisal and other costs incurred in determining compensation.

Please note that Ernie and the government could have settled the amount of compensation at any time.  There are several opportunities for settlement built into the expropriation process.  In the example, the matter proceeded to a hearing simply to demonstrate the entire process.  In practice, the majority of cases resolve prior to a hearing.

HOW WE CAN HELP

The prospect of losing your property can be difficult.  Even more daunting can be the spectre of disputing “fair” compensation with the government body.  Despite the fact that the government authority acquired your land, the onus remains on you to put together a case and press for fair compensation for your losses.  You must prove your claims. 

We can help guide you through the process from the outset, resist takings when appropriate, and help you obtain fair compensation.  We can devise an effective strategy, “quarterback” the building of your case and then represent you at hearings.  Expropriations law and practice remains highly specialized.  Given the specialized nature of this area, retaining knowledgeable legal counsel, professional land use planners, competent engineers, and credible appraisers can maximize results while minimizing headaches.