Loss claims after an expropriation: 1085372 Ontario Limited v. City of Toronto
The Divisional Court, in a February 25, 2020 decision stemming from an appeal of a decision of the Local Planning Appeal Tribunal (the “LPAT”), largely upheld the LPAT’s decision to award disturbance damages for lost real estate commissions and costs associated with a loan in an expropriation matter.
The circumstances of the case are that the City of Toronto expropriated a number of adjacent properties owned by the appellants in 2014, the valuation of which was appealed to the LPAT. The appellants had previously submitted a development application seeking a 14 storey residential building that had not yet been approved. The City had initially offered the appellants $9,000,000, which was further revised to $14,000,000 before the hearing and $17,000,000 at the hearing, although only $9,000,000 was paid to the appellants prior to the expropriation proceedings.
The LPAT, in addition to valuing the property at $18,000,000 – double the amount the City initially offered – awarded damages to the landowner incurred as a result of delay by the City in the form of interest on the $9,000,000 that remained outstanding as the proceedings occurred. The LPAT’s decision was largely upheld in a positive development for those seeking damage awards in expropriation matters.
In summation, the Divisional Court found that:
- There was no error in the LPAT’s valuation of the property at $18,000,000;
- The LPAT determined this value based upon the “direct comparison approach”, which utilizes comparable property sales in the vicinity of the expropriated lands to arrive at a valuation, as opposed to the more rarely used “residual approach”, which values the proposed development as if it were complete and subtracting the costs of construction.
- The LPAT rejected the appellants argument that the residual approach should be used, stating that it was only appropriate where development was imminent, which was not the case as there were further steps in the planning process that had to be taken before being “shovel ready”.
- There was no error in the LPAT’s finding that the City of Toronto caused delay in expropriating the property and should pay 12% interest on the outstanding expropriation amount;
- The main factor in this aspect of the decision was that the City had only paid $9,000,000 to the appellants despite revising their valuation to $14,000,000 prior to the hearing and $17,000,000 during the hearing.
- The LPAT determined that the start date for interest accrual would be the date on which the City paid the $9,000,000 to the appellants.
- There was no error in the LPAT’s decision to award disturbance damages for the Appellant’s lost commissions but to not award disturbance damages for the Appellant’s lost business opportunities;
- The LPAT awarded $2,100,000 in lost real estate commissions to the appellants, which they would have received for pre-construction sales if the properties had not been expropriated, because this loss was directly tied to the expropriation.
- There was no error in the LPAT’s decision not to award disturbance damages for the cost of purchasing alternative properties
- The appellants argued that they should receive disturbance damages for the cost of buying a replacement property, which they claimed would include the land transfer tax and legal fees associated with the purchase.
- The Divisional Court agreed that this claim should be dismissed because the appellants had not yet purchased or made arrangements to purchase an alternative property.
This decision furthers the ability for landowners to receive damage awards in expropriation cases and largely exalted the LPAT’s decision-making in a high stakes expropriation case.
Our team at Davies Howe is at the forefront of expropriation matters in Ontario and would be happy to assist you in receiving fair treatment during an expropriation proceeding.
If you have any expropriation related questions, please contact Ava Kanner (416) 263-4503.