The York Catholic District School Board (“School Board”) appealed aspects of the Ontario Municipal Board’s (“OMB”) decisions in respect of expropriation of land for a school site from a developer (“Bernard”). Bernard cross-appealed. The OMB decisions were largely upheld.

Bernard Homes Ltd. v. York Catholic District School Board, [2004] O.J. No. 2650, Ontario Superior Court of Justice, June 22, 2004, O’Driscoll, McCombs and Wilson JJ.

Bernard developed, for residential and commercial purposes, a 61 hectare parcel in Richmond Hill between 1989 and 1995. A condition of approval of Bernard’s plan of subdivision, imposed by OMB at the School Board’s request, was that a block of land be reserved for the School Board for 7 years. During that period, the School Board and Bernard were permitted to negotiate a purchase agreement. Bernard entered into an option agreement for it to sell the School Block to the School Board. The School Board did not have the financial resources to purchase the School Block during the term of the Option Agreement. Later, the School Board expropriated the School Block.

The OMB ordered payment of compensation to Bernard. Before the Court on this review was the issue of whether the OMB’s decision to deny Bernard’s claim for lost builder and developer profits arising out of the expropriation was appropriate.

The Court applied the standard of review articulated in London (City) v. Ayerswood Development Corp., [2002] O.J. No. 4859 of correctness or reasonableness depending on the degree to which the subject matter of the decision engages the OMB’s particular expertise.

The Court held that the Expropriation Act, R.S.O. 1990, c.E.26 (the “Act”) should be interpreted in accordance with its intended purpose, and strictly in favour of those whose land is being expropriated. The Court reviewed the decisions in 747926 Ontario Ltd. v. Upper Grand District School Board (2000), 51 O.R. (3d) 25 and Toronto Areas Transit Operating Authority v. Dell Holdings Ltd., [1997] 1 S.C.R. 32 and stated:

The principles of Dell Holdings confirm that actual damages caused by the expropriation process are compensable. What constitutes disturbance damages must be interpreted broadly in light of the intended purpose of the legislation to compensate the land owner for actual losses sustained.

The Court of Appeal for Ontario confirms in Upper Grand (supra) that fair market value of the expropriated land is to be determined in accordance with s.14(1) of the Act and does not include prospective lost developers’ profits. As well, a claim for lost developers’ profits cannot be claimed as a disturbance damage. (paras. 42 & 43)

Future loss of profits was held not to be recoverable. The Court stated that if builders’ and developers’ profits are not permissible within the framework of the Act, then secondary alleged losses as a result of not receiving those profits could not be allowable claims. The OMB decision granting lost builders’ profits was set side, and the later OMB decision dismissing the claim for lost developers’ profits was affirmed.

Bernard also argued that they were entitled to $350,000 for the reduction in the fair market value of the School Block during the term of the Option Agreement and up to the date of expropriation. The Court affirmed the OMB’s decision not to grant this claim. The OMB’s decision that the School Block had not lost value, or that if there was a loss, that loss was due to the parties’ decision to enter into the Option Agreement, was reasonable and supported by the evidence.

Bernard also claimed for time lost by the principals of Bernard with respect to their redevelopment efforts between the expiry of the Option Agreement and the expropriation. No time dockets were put before the OMB to show the time lost. The Court affirmed the OMB’s denial of this claim, stating:

However, Dell Holdings cannot be construed as an invitation to embellish disturbance damage claims. Actual losses caused by the expropriation process are compensable. A broad purposive reading should not embark into the subjective, and the speculative. The test for disturbance damages contained in s.18 of the Act includes the reasonable costs that are the natural and reasonable consequences of expropriation. Executive compensation of the principals of Bernard is not recoverable under this section. (para . 68)

The OMB’s order on costs was also upheld.

To stay current with the new case law and emerging legal issues in this area, subscribe here.