OMB declines to award landowner pre-expropriation costs where expropriation did not proceed

The City of Hamilton moved successfully for the dismissal of expropriation-related Notices of Arbitration and Statements of Claim on the basis that the Ontario Municipal Board (OMB) had no jurisdiction to hear the matters; no expropriations had taken place.

The proposed expropriations related to construction in Hamilton for the 2015 Pan American Games, and the landowner claimants had retained counsel to advise them with respect to the land acquisition process.  The City and the landowners then entered into negotiations, and when offers were refused by the landowners, a notice of application for approval to expropriate was served.  However, not longer after that notice was sent the City decided that it did not require the properties in question, though it was still open to purchasing the properties for the amounts previously offered.

By that time, the landowners had incurred legal costs and forwarded to the City a Bill of Costs.  They then served Notices of Arbitration and Statements of Claim to commence a claim to the OMB for consequential damages arising from the City's abandonment of the expropriation.

The City asked the OMB to throw the claims out, which the OMB did.  The OMB confirmed that pre-expropriation costs are compensable when there is an expropriation, but found that costs are not generally compensable under the Expropriations Act where there is no expropriation.  The OMB decided that this was not a circumstance in which it could exercise its discretionary powers to find that the term "expropriation" applies to the overall process for the taking of land (as had been argued by the landowners) and not just to an expropriation commenced by way of a formal Notice of Expropriation.

The OMB concluded:

In the absence of a formal registered expropriation, an expropriating authority should not be bound to compensate for damages or costs in a case where there is a potential for an expropriation. Furthermore, in the absence of a taking of land, negotiations for the purchase of the lands does not, and should not, attract a claim for costs, merely because the potential buyer has the power, if fully exercised, to expropriate.

Landowners in Ontario should question whether to engage in any negotiations whatsoever with an expropriating authority prior to receiving a Notice of Expropriation without an agreement in place requiring the authority to pay the landowner's legal costs of the negotiations.

Read the decision at: Marsdin v. Hamilton (City).