Expropriation Legal Fee Recovery and Reimbursement: Recent Developments
Expropriated owners are generally entitled to their reasonable legal, appraisal, and other costs incurred for the purpose of determining compensation under section 32 of the Expropriations Act.
In a recent decision titled Kareem George Saikaley v Ottawa (City), OLT-21-001312, the Ontario Land Tribunal (“Tribunal”) addressed several cost considerations for legal fees in expropriation matters.
Background
The City of Ottawa expropriated land from MacEwen Petroleum Inc. The expropriation issues were settled for a negotiated amount, noted to be significantly higher than previous settlement offers from the City.
Subsequently, the Claimant brought a motion before the Tribunal solely to determine legal fees payable to MacEwan. Specifically, the Claimant sought $479,789.20 in legal fees related to the determination of compensation, legal fees related to the costs motion, and interest on the costs calculated from the date of the parties’ settlement.
By contrast, the City requested that legal fees be capped at $246,401.73. Among other points, the City took the position that no interest was payable on legal fees, costs must have been paid by the owner to its counsel to be considered ‘incurred’, and that the Tribunal should consider that the Claimant’s counsel expended significantly more time and fees than the City’s counsel in the compensation proceeding.
The Outcome
The Tribunal ordered the City pay $356,755.45 for the Claimant’s legal fees and interest at an agreed upon rate calculated from the date the Claimant proposed an amount for legal costs. The issue of costs related to the cost adjudication was deferred.
The rational underpinning the Tribunal’s decision suggests that owners should not be penalized on costs for investigating or testing their reasonable claims. The Tribunal also noted that an owner is not required to have paid legal fees for such fees to be compensable. It is sufficient for the accounts to be “known” to be incurred and recoverable.
When considering whether interest is payable on legal fees, the Tribunal opined that interest is only recoverable if it is at a legally permissible rate (rate not determined in this decision), and consistent with the ordinary business practices of law firms and the retainer agreements with their clients. Enforcement of interest owed by the owners was not determinative of whether interest accrued.
In addressing the authority’s assertion that the Claimant’s counsel expended significantly more time on legal work than the City’s counsel, the Tribunal took the view that the Claimant would have likely spent more time explaining the expropriation process, building a case, prosecuting, resolving, and answering the City’s inquiries than the City’s counsel. Accordingly, a difference in fees / time spent was not determinative of the reasonableness of costs.
For more information about the expropriation process, we invite property owners or expropriating authorities to contact our firm for an initial consultation at no cost.