The Government of Ontario has proposed changes to the Expropriations Act that, if implemented, will have a significant impact on claims by expropriated landowners. As of March 23, 2021, these changes have survived Second Reading.
Interest rates
Under the current legislation, an expropriated owner is entitled to be paid interest on the compensation for the market value of the expropriated lands and on any amount paid for injurious affection. Interest is paid at the rate of 6% a year, calculated from the date the owner ceases to reside on or make productive use of the lands. In certain situations, the amount of interest can be significant.
The rate was set in the late 1960’s when 6% was a standard rate of interest for a mortgage and people could earn interest by simply depositing money into a bank account. We can refer to those as “the good old days”.
Bill 245 proposes to amend subsection 33(1) of the Expropriations Act to provide for annual rates of interest to be determined by regulation. At the moment, we do not know how the legislator will deal with the transition provisions for expropriations that predate the change but we can be assured that, going forward, the rate will be much lower than 6%.
Reimbursement of Costs
Under the current legislation, subject to certain exceptions, an expropriating authority must reimburse the reasonable costs incurred by an owner in making a claim for compensation. From the perspective of the owner, this is only fair because being forced to relinquish ownership of lands by a government authority should not result in costs being born by the owner.
We have expressed concern about the proposed revisions to the law because they appear to create the possibility that what will now be called the new Ontario Land Tribunal will have the power to award less than the actual reasonable costs incurred by a landowner. From our perspective, this flies in the face of the goal of the Expropriations Act, which is to make the owner whole notwithstanding the exercise of the government’s power to expropriate.
We will continue to monitor these changes and update the blog as appropriate.
For more information, please contact Ava Kanner.
