When private property is expropriated in Ontario, the Expropriations Act entitles the owner to full compensation. In addition to compensation for the land itself, this entitlement usually includes compensation for reasonable costs that the owner has incurred as a result of the expropriation process, such as legal, appraisal, and other professional fees.
What are Recoverable Costs?
The Act recognizes that landowners rely on legal and professional services for advice and representation during the process. Section 32 of the Act is designed to ensure that landowners can obtain this support without financial penalty. It requires the expropriating authority to pay the owner their reasonable costs associated with:
- Legal Fees: Costs for legal representation and advice.
- Appraisal Costs: Fees for professional appraisals to determine the fair market value of the expropriated property and injurious affection.
- “Other Costs”: The Tribunal has typically awarded other professional fees related to the expropriation process, including for expert witnesses or consultants.
Tax Advice May Be Recoverable
The recent Tribunal decision Cynthia Lynch v Regional Municipality of Halton, 2025 CanLII 59840, illustrates that owners may recover some fees for legal advice about the tax implications of an expropriation. The fees must be reasonably related to the question of compensation. This decision underscores that “reasonable costs” should be broadly interpreted to include any services reasonably connected to determining compensation.
Interest on Costs
Section 33 explicitly entitles owners to recover interest on compensation owing under the Act for the value of the land and injurious affection. However, the Act does not speak to whether owners are entitled to interest on costs.
Despite this ambiguity in the Act, the Tribunal has previously awarded interest on legal costs, usually against the objection of the expropriating authority. The legality of this practice is currently under consideration by the Divisional Court on appeal from Kareem George Saikaley v Ottawa (City), 2025 CanLII 5384 (ON LT). The decision in this appeal will hopefully clarify whether interest on legal or professional costs can be awarded. Given the significant size of professional fees often incurred, the implications of this decision could be significant.
Consequences for Refusing Reasonable Offers
An owner may lose their entitlement to recover their full costs where they refuse unreasonable offers. Under the Act, entitlement to all reasonable costs is only guaranteed if the compensation ultimately awarded by the Tribunal is at least 85% of the value of the expropriating authority’s best offer. In other words, if an owner refuses a reasonable offer and does not come close to beating it at a compensation hearing, the owner loses their automatic entitlement to fully recover their costs, and the Tribunal has discretion to award fewer costs. The intent is to promote settlement and deter parties from taking unreasonable positions.
Takeaway
Legal advice and representation are essential to obtaining fair compensation under the Act. Owners should seek legal advice as soon as they are approached about an acquisition or expropriation to ensure they fully understand and exercise their rights. The ability to recover costs is an important part of minimizing the financial impact of seeking advice.
Our Municipal Law team supports property owners and expropriating authorities at every stage of the expropriation process. Please contact us at 613-546-8098 for any questions about the expropriation process.
This blog is for informational purposes only and does not constitute legal advice. Consulting a qualified lawyer for specific legal guidance. Should you have any questions or require legal advice, please do not hesitate to contact us by phone at 613-544-0211 or by email at [email protected].