Expropriation is a process through which a municipal government takes all or part of a privately owned parcel of land for public benefit. When the government expropriates the land, they have an obligation to pay compensation to the land’s owner. However, depending on the applicable legislation and the nature of the taking, the form of compensation may vary. With the ongoing expansion of Ontario’s infrastructure, expropriation is occurring rapidly across the province. Therefore, it is essential for private landowners to be aware of the process and potential consequences of expropriation.
This blog post will explore the concept of municipal expropriation and will answer frequently asked questions regarding the expropriation process.
Expropriation refers to the taking of land by an expropriating authority exercising statutory powers, without the landowner’s consent, for public use. The expropriating authority (often the Crown or other authorized entity) must compensate the landowner.
In Ontario, expropriation is governed by the Expropriations Act, which sets out both the rights of the government and private landowners. However, additional provincial legislation such as the Planning Act, Municipal Act, and environmental legislation may be applicable depending on the circumstances.
Expropriation has also developed through years of court decisions, some of which have been decided upon by the Supreme Court of Canada. In Ontario, the Ontario Municipal Board is the administrative tribunal with exclusive jurisdiction over expropriations, including compensation hearings.
Under Ontario’s Expropriations Act, “land” is defined to include any “estate, term, easement, right or interest in, to, over or affecting land.”
The Expropriations Act defines a “registered owner” as an owner of land “whose interest in the land is defined and whose name is specified in an instrument in the proper land registry or sheriff’s office, and includes a person shown as a tenant of land on the last revised assessment roll.” Stated otherwise, a registered owner is usually a person named on a property’s title or tax assessment roll.
Once a decision to expropriate has been made, the expropriating authority must first apply to obtain approval from the “approving authority” (usually the applicable municipal council or government Minister). A Notice of Intervention for Approval to Expropriate will then be served by the expropriating authority on each registered owner of the property in question. The Notice must also be published in a local newspaper for three continuous weeks.
The Expropriations Act states that the expropriating authority may expropriate land within four months of notifying the landowner. However, in most cases, this process takes longer (even without a formal hearing). Once a registered owner or other owner receives the Notice, they have 30 days to request an inquiry into whether the expropriation of their land is “fair, sound, and reasonably necessary.”
While expropriation is not an ideal circumstance for landowners, it is challenging to prevent expropriation from happening. In most cases, a landowner’s focus shifts from stopping the expropriation to ensuring they obtain full and fair compensation for their land.
However, in some limited circumstances, a landowner may be able to convince an inquiry officer appointed under the Expropriation Act that the proposed expropriation is unnecessary.
If a landowner opposes the proposed expropriation of their land, they may ask for a “Hearing of Necessity” under section 7 of the Expropriation Act. A Hearing of Necessity determines whether the expropriation is “fair, sound, and reasonably necessary” for the intended infrastructure and construction. Once a hearing has been requested, an inquiry officer will notify the expropriating party, the landowner, and the landowner’s representative of the hearing details. The hearing will only address whether expropriation is necessary and will not address compensation issues.
After a hearing, the inquiry officer will prepare a report to be considered by the approving authority before determining whether the expropriation is necessary. However, despite a report recommendation against the expropriation, the approving authority may proceed with expropriation and provide written reasons for proceeding. Alternatively, the expropriation may proceed with modifications. The approving authority may also decide not to proceed with the expropriation.
A landowner can bring a court application to challenge the expropriation, but only on three grounds:
- To challenge the appropriating authority’s jurisdiction;
- To determine whether the expropriating authority is acting in bad faith; or
- To question whether the expropriation is compliant with the Expropriations Act.
If the approving authority approves the expropriation, section 9 of the Expropriations Act requires a plan of expropriation to be registered on the title of the affected lands within three months. After a plan of expropriation has been registered, title to the land “vests” in the expropriating authority.
However, this does not automatically provide the expropriating authority an immediate right to possession. Within 30 days of the plan’s registration, the expropriating authority must serve the registered owner or other owner with the following documents:
- Notice of Expropriation;
- Notice of Possession; and
- Notice of Election.
Once a Notice of Expropriation has been served, the expropriating authority may enter the lands, either with the landowner’s consent or with an Order from the Ontario Municipal Board, to view the land to prepare an appraisal report. After the appraisal report has been prepared, a copy must be provided to the registered landowner along with an offer of compensation (if no agreement has already been made with the landowner) within three months of the plan registration before possession is taken.
A landowner has two options for compensation for expropriation:
- The landowner may accept a full and final settlement offer concerning any and all claims they may have under the Expropriations Act; or
- The landowner may accept an offer as compensation for the land’s market value on a “without prejudice” basis. In this case, the landowner reserves the right to claim additional compensation from the appropriating authority.
Section 13 of the Expropriations Act provides that when land is expropriated, “the expropriating authority shall pay the owner such compensation as is determined in accordance with this Act.” Expropriated landowners are entitled to fair compensation for all of their losses resulting from expropriation and, in essence, should make them “whole.” Depending on the circumstances, compensation may be based on:
- The market value of the land itself;
- The damages attributable to disturbance (for example, business losses);
- Damages for injurious affection (i.e. any loss in value to remaining property caused by the expropriation of the expropriated land);
- Special difficulties in relocation; and
- Other payment for reasonable expenses incurred upon final settlement (for example, legal fees and appraisal fees).
Any additional value the land could have had for a special purpose different from what the landowner used it for isn’t to be considered to increase the compensation payable.
Under section 26 of the Expropriations Act, if the landowner opts to accept the offer “without prejudice,” they may pursue a claim for additional compensation through negotiation (informally or through the Board of Negotiation) under section 27. Alternatively, the landowner may seek to proceed with arbitration through the Ontario Municipal Board in accordance with section 29.
The trusted business lawyers at Willis Business Law regularly advise public and private clients on matters involving municipal issues, including expropriation and acquisition. When dealing with matters involving expropriation, it is crucial for landowners to understand their options and rights under the provincial Expropriations Act and other applicable legislation. At Willis Business Law, we help clients develop practical, tailored strategies to address their unique needs and position them for the best possible outcome.
Willis Business Law is based in the heart of downtown Windsor’s financial district and proudly represents clients throughout Windsor-Essex and the surrounding regions. If you have questions and concerns regarding municipal expropriations, contact us online or call us at 519-945-5470 to schedule a confidential consultation with a member of our team.