The Expropriation Process
Frank Sperduti, Senior Partner at BLG LLP, has approximately 20 years of experience with Ontario’s expropriation legislation. According to Sperduti, “If you are unable to come to terms with an expropriating authority about the extent of compensation payable to you, your land (or an interest in your land) may be expropriated.”
“To expropriate your land, the expropriating authority must follow an established, but complex, procedure proscribed by the Expropriations Act in Ontario,” continues Sperduti. “The process starts with the delivery of a Notice of Application for Approval to Expropriate, which must be served on every owner.” Upon receipt of such a notice, an owner has 30 days to request what is commonly referred to as a “Hearing of Necessity”. At this Hearing, the expropriating authority must demonstrate to the satisfaction of the Inquiry Officer that the proposed expropriation is “fair, sound and reasonably necessary” to accomplish the authority’s objectives. It is important to bear in mind that the powers of an Inquiry Officer at a Hearing of Necessity are limited to making recommendations, which the approving authority may ignore. Furthermore, the power to award costs, even to a successful owner at a Hearing of Necessity, in Ontario, is limited. Owners must balance the risks and potential rewards of requesting a Hearing of Necessity carefully, usually with the assistance of counsel.
Once the approval to expropriate is granted, the authority will register a Plan of Expropriation. When registered, title to the land in question passes to the authority but the authority cannot take possession of the land until (a) at least 90 days after registration of the Plan of Expropriation and (b) the authority has served an offer of compensation on the owner – known as a “Section 25 Offer” because of the section of the Expropriations Act which requires the offer.
A Section 25 Offer is unique in the sense that it must have two parts. Part A, if accepted, will often provide a release to the authority in exchange for payment of the stipulated amount. In other words, if accepted, payment of the set amount will constitute a full and final settlement with the expropriating authority. Part B of the Section 25 Offer must be a “without prejudice” offer of advance compensation. If accepted, the owner will be paid the offered amount but he or she would be free to pursue the authority for additional compensation including reimbursement for legal costs.
A Section 25 Offer must be accompanied by an appraisal report, and is often limited to “market value” only. So, in cases where there is a disagreement about market value, or where there are claims for additional compensation like business loss or disturbance damages which have not been addressed in the Section 25 Offer, an owner may be well advised to accept the without prejudice offer and advance a claim for additional compensation.
In the next part to this series, we’ll look at the compensation claim process, and review what types of compensation are available to owners and tenants who suffer an expropriation. Stay tuned!