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November 07, 2016

Into/Out of the Shadows: “Ignoring the Scheme” in Expropriation Valuation

Expropriation law dictates that when land is expropriated, its market value must be determined without the scheme. For example, if an authority announces plans to build a future highway through a particular neighbourhood, property values may drop. When the authority eventually expropriates the required lands, the owners must be compensated as though the highway scheme never existed.

The period in between the announcement of the project and the valuation of lands ultimately expropriated is known as the “shadow period.” The market fluctuations during this time can have a significant impact on an owner’s compensation. The nature of the scheme and the length of the shadow period was at issue in a recent preliminary motion before the Ontario Municipal Board in 1353837 Ontario Incorporated v. Stratford (City), (2016 Carswell Ont. 16310).

The City began expropriation proceedings in 2008 to acquire lands for “economic development purposes,” for a new university campus. However, the owner argued that the City had sterilized the lands in the 1990s, though an alleged “campaign of interference.” The owner wanted to be able to claim damages throughout that prolonged time frame.

The City brought a motion before the OMB seeking to confirm the purpose of the expropriation and to define the potential time frame associated with the scheme. The City’s position was that the purpose was to “facilitate the University of Waterloo satellite campus.” The City had entered into a Memorandum of Understanding with the University in October 2006, had directed staff to try to purchase the lands in April 2008, and authorized the commencement of expropriation proceedings in December 2008. Therefore, the City argued, the scheme commenced in either October 2006, April 2008, or December 2008, but not in the 1990s as alleged by the owner.

To determine the scheme and its start date, the Board looked for a clear announcement of the City’s intent to acquire the lands. The Board noted that since a municipality acts only through resolutions of its council, in-camera discussions without a formal resolution do not amount to intent. Based on the evidence presented, the Board concluded that there was a genuine issue for trial over whether the precise commencement date was October 2008, April 2008 or December 2008. However, the owner’s claim for damages during a prolonged shadow period dating back to the 1990s was disallowed.

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Legal Costs Under the Expropriations Act

The Expropriations Act is a remedial statute with the purpose of rendering the expropriated land owner economically whole. Accordingly, in addition to prescribing compensation for land taken and related impacts, the Act also prescribes the reimbursement of reasonable legal and professional costs incurred by an owner in the determination of compensation. The reimbursement of costs is contemplated under section 32 of the Act.

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