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Thursday, May 13, 2010

Recovering court costs as compensation for expropriation - OMB decision

With the Smith v. Alliance Pipeline case heading to hearing before the Supreme Court of Canada this October, I was surprised to hear that the Ontario Municipal Board, similar to the Pipeline Arbitration Committee under the National Energy Board Act, had itself made a decision in 2008 awarding court costs to landowners as part of the expropriation compensation process.  Farmland owned by Dale and Mary McKean was expropriated by the Ministry of Transportation (MTO), but not before the Superior Court of Justice had to decide exactly what land was available to be expropriated.  There was an issue as to whether certain portions of the farm were actually public roads that had never been opened.  If the lands were public roads, then no expropriation (and no compensation) was necessary.

The MTO was successful in the court case, and costs were awarded against the McKeans in the amount of $1,550.  The McKeans themselves had expended approximately $55,000 in legal costs.  Before the OMB, they sought to recover those costs under Section 32 of the Expropriations Act as costs incurred for the purpose of resolving their compensation claim related to the expropriation.  The OMB ruled in their favour:
The Board finds that if s. 32(1) is given its proper interpretation, the McKeans are entitled to compensation by the MTO for costs associated with the Court Proceedings. The Board finds that the McKeans actually incurred costs in association with the Court Proceedings and that these proceedings were for the purposes of determining compensation payable for the expropriation and injurious affection. But for the proceedings before the Court, the MTO could not have determined what lands would be expropriated or to what extent, and therefore what compensation would be payable to the McKeans.
As far as I know, this decision was not appealed and was not cited by the Federal Court of Appeal in its decision in the Smith v. Alliance Pipeline case.  While the facts of the two cases are not entirely the same, they are similar.  However, the main distinction between the cases is that in Smith the court costs were pursued as damages, while in McKean the court costs were pursued as costs under the Expropriations Act.  It seems less likely that court costs could be recoverable under the costs provision of the NEB Act since it provides only for costs incurred "in asserting that person's claim for compensation".

Read the decision at: McLean v. Ministry of Transportation.  Thanks to Lindsay Lake at my firm for bringing this decision to my attention.