Owners may accept compensation at fair market value — or hire a lawyer if not
Last year, businessman Noel Francis Chantiam received an expropriation order for the lot he owns at Keele Street and Station Road in King City, Ont., a The property, which Chantiam has owned for nearly 20 years, is currently rented to an auto garage, generating an income of $10,000 per month.
The order came from Metrolinx, the Ontario Crown agency that manages and integrates road and public transport in the Greater Toronto and Hamilton Area that comprises much of the province’s populous Golden Horseshoe region.
In 2020 Metrolinx began expropriating private property for development of extensive public transit projects, from Lake Simcoe, north to Toronto, to Kitchener-Waterloo southwest, to Durham region and beyond in the east. The new infrastructure will include more than 40 kilometres of new subway lines, nearly 50 kilometres of new light rapid transit (LRT) lines, and more than 200 kilometres of new GO train tracks that will bring close to 100 new stations and stops throughout the region.
So, the expropriation order may not have come as a complete surprise to Chantiam, but what did surprise him was the compensation offer from Metrolinx: $1. Chantiam had bought the land for $750,000 back in 2009, and had already refused several offers to purchase it. Metrolinx said it had appraised the land at $2.1 million, but because of contamination due the tenant (a garage), it would cost more than that to clean it.
Shane Rayman, a partner in Rayman Beitchman LLP in Toronto with an expropriation law practice and who is representing Chantiam, says he has “a few cases” involving expropriation orders by Metrolinx.
On the one hand, the expropriation of private land is for the public good. “It’s a real invasion of one’s interest and rights, but it is necessary,” Rayman told Canadian Lawyer; “you wouldn’t be able to build infrastructure without it.”
But public authorities that expropriate must offer fair compensation to property owners, namely:
- an amount equal to the market value of the expropriated property as if it were sold on the open market between a willing buyer and a willing seller;
- for any reduction in the land value of the remaining (non-expropriated) land caused by the expropriation and associated works (“injurious affection”);
- disturbance damages relating to a business, including any out-of-pocket costs, business losses, relocation expenses or any consequential losses arising from the expropriation;
- for any special difficulty in relocating: because a homeowner can’t find a similar house for the same price, for example, or because the property is dedicated to a unique use such as a church, and the cost to the church of buying new land and rebuilding may exceed the appraised market value of the existing church building and lot.
The expropriating authority must also pay interest on certain elements of outstanding compensation, and reasonable legal costs to the owner, says Rayman.
“If the government's being fair, they're going to bend over backwards to make you happy, to give you what you deserve and to try to settle the file.” When the parties can't agree, the matter may go to litigation, but he adds that three-quarters of his land expropriation files never get there. If he can demonstrate to government a fair compensation number, as determined by experts, the government or other expropriating authority usually agrees, he says.
Rayman says he would never recommend to an expropriating authority that they offer $1 for a piece of land other than in extreme circumstances, “because what it does is leave the impression that you're taking property without compensation, and that’s getting a little bit close to what we call stealing.”
Chantiam’s property was appraised based on its highest and best use continuing, says his lawyer, and the property could have continued generating rental income or be sold for use as another garage or a gas station. “Most auto repair centres have some level of contamination, but it would still be worth something,” Rayman says. Instead, expropriation without compensation leaves the property owner with a mortgage but with no property asset or revenue stream.
The matter of Chantiam’s and fellow respondents was heard before Justice Andra Pollak of Ontario’s Superior Court of Justice in November, and in January she granted an adjournment pending Metrolinx conducting an environmental assessment of the property. She noted that Metrolinx had not submitted evidence of the cost of required remediation to offset the $2.1 million market value set out in its appraisal, nor had there been any attempt by Metrolinx to value the land as contaminated.
The respondents went to court for a refusals motion in August and are still awaiting the results, says Rayman.
Who can expropriate land in Canada?
Not only government, but any public authority such as Metrolinx and its provincial counterparts, universities, school boards, and oil and gas pipelines, or any “statutory authority” may expropriate land, Rayman says.
“Expropriation is happening more and more frequently as more and more public works take place,” he says, pointing to Ontario’s Building Transit Faster Act, which enacted new powers for Metrolinx to acquire land.
Where a property owner is offered fair market value for property that must be expropriated, they only need hire a real estate lawyer to close the deal while the offer is still on the table. “But on the other hand, if the owner thinks the price is too low, that’s where I get called.”