Cost indemnity is one of the more interesting features of the Expropriations Act. Its purpose is to ensure that innocent property or business owners facing an expropriation are not out of pocket for having to involuntarily engage in the often lengthy and complex expropriation process. It is meant to alleviate the difficulties already associated with having ones land forcefully taken and, more importantly, to ensure that an owner can adequately protect his or her interest.
The provisions in the Act dealing with costs are as follows:
32(1) Where the amount to which an owner is entitled upon an expropriation or claim for injurious affection is determined by the Board and the amount awarded by the Board is 85 per cent, or more, of the amount offered by the statutory authority, the Board shall make an order directing the statutory authority to pay the reasonable legal, appraisal and other costs actually incurred by the owner for the purposes of determining the compensation payable, and may fix the costs in a lump sum or may order that the determination of the amount of such costs be referred to an assessment officer who shall assess and allow the costs in accordance with this subsection and the tariffs and rules prescribed under clause 44 (d).
32(2) Where the amount to which an owner is entitled upon an expropriation or claim for injurious affection is determined by the Board and the amount awarded by the Board is less than 85 per cent of the amount offered by the statutory authority, the Board may make such order, if any, for the payment of costs as it considers appropriate, and may fix the costs in a lump sum or may order that the determination of the amount of such costs be referred to an assessment officer who shall assess and allow the costs in accordance with the order and the tariffs and rules prescribed under clause 44 (d) in like manner to the assessment of costs awarded on a party and party basis.
These provisions can be confusing as they reference the Ontario Municipal Board, an 85% threshold, the concept of reasonable costs, and may be mandatory or permissive depending on the situation. However, the effect of the provisions in practice are a little different.
It is important to recognize that a majority of expropriation matters settle before reaching the Board of Negotiation or even the Ontario Municipal Board. It is often in the interest of the Expropriating Authority to settle a matter as soon as it can. For instance, prolonging a matter may result in the Authority having to pay additional interest or not being able to commence use of the lands expropriated. With s. 32 of the Act in mind, and to also encourage settlement, an Authority will very often simply agree to cover the reasonable legal and appraisal expenses in a settlement (even though this is not mentioned in the Act). After all, if this wasn’t the case, owners would always seek a hearing before the Board to take advantage of s. 32, which would prolong the process for the Authority and cause the issues as mentioned above.
If a matter does not settle and proceeds to the Ontario Municipal Board, then the elements found in s. 32 will need to be more carefully scrutinized. This is outside of the scope of this article as matters do not often reach the Board level. In most cases, there is often little conflict on whether an Authority will cover reasonable expenses.
For general purposes, the following are important things to keep in mind for owners seeking recovery of costs:
Cost recovery is a very important element of the expropriation process. If you have any questions with respect to costs and what you are entitled to, please contact us. For more on expropriations, please visit our main page.