The Ontario Land Tribunal (“Tribunal”) recently released a decision on costs in a hard-fought expropriation saga in the City of Stratford that may portend a future direction in costs decisions for expropriation matters at the Tribunal. In 1353837 Ontario Inc. (“Claimant”) v. City of Stratford (“City”) (OLT-22-002455, January 11, 2024), the Tribunal determined that both the Claimant and the City were liable for costs after both parties brought competing motions seeking costs from each other.
Generally, where a determination on costs is made by the Tribunal in expropriation matters, the Tribunal will award only one party costs of the merit proceeding. In the competing motions before the Tribunal, the Claimant sought costs of $6,679,125.74 (later reduced to $6,102,513.04) while the City sought costs of $4,139,201.93. The Tribunal awarded the Claimant $3,709,367.63 in costs for the merit proceeding and $117,052.92 for costs of the motion while the Tribunal also awarded the City $2,901,380.15 in costs for the merit proceeding and $113,751.23 in costs for the motion, resulting in a positive net award of costs in favour of the Claimant.
To give some context to the Tribunal’s decision on costs in 1353837 Ontario Inc., a brief overview of the merit proceeding is necessary. The City expropriated 11.42 acres of industrial land from the Claimant in June 2009 for the development of a satellite campus for the University of Waterloo (“Expropriated Lands”). Due to the prior industrial use, the Expropriated Lands were contaminated and there was significant divergence in expert opinions about what the cost to remediate the lands would have been in order to achieve the highest and best use of the Expropriated Lands. The parties reached a partial settlement in 2010 that paid off a mortgage of $4,277,920.84 and provided $746,708.84 directly to the Claimant, which included compensation, interest and interim costs.
In the ensuing years, the parties engaged in a legal battle that was described by the Tribunal “…of nearly Dickensian proportions” with a final determination about the overall compensation being in favour of the City as the Tribunal concluded in the merit proceeding that the appropriate market value of the Expropriated Lands, taking into account contamination issues, was $290,000.00 and wasted development costs $51,683.00. The amount awarded by the Tribunal was a mere fraction of what the Claimant had sought, being some $22.7M for market value compensation and approximately $1.07M for disturbance damages and business losses.
Prior to the Tribunal’s decision on costs in this proceeding, the Ontario Court of Appeal had ruled in Shergar Development Inc. v. Windsor (City) that the then Ontario Municipal Board (“OMB”), now Tribunal, had the authority to award costs against a Claimant based on successive settlement offers and unreasonable conduct on the part of the Claimant that was worthy of censure by the OMB. Although the Shergar decision was reviewed by the Tribunal for the purposes of determining costs in this proceeding, the Tribunal did not find that the conduct complained of by the City in its motion for costs rose to the same level of sanction-worthy costs consequences as in the Shergar decision.
Notwithstanding its decision that the Claimant’s conduct was not akin to the conduct of the Claimant in Shergar, the Tribunal still thought that the Claimant’s conduct was unreasonable in some respects which should result in costs consequences for the Claimant. In particular, the Tribunal ruled that the City had made a proper Rule 49 offer on June 15, 2018 that was unreasonably refused by the Claimant. The Tribunal also thought that some of the Claimant’s conduct throughout the proceeding “…was unreasonable, inappropriate and wasteful of the Tribunal’s and the City’s time.”
A couple of observations that can be made about the Tribunal’s costs decision in 1353837 Ontario Inc. The first observation is that the Tribunal carefully reviewed a number of offers made by the City but in the end, determined that there were only a couple of offers made by the City with sufficient clarity as to trigger potential Rule 49 costs consequences. For expropriating authorities, this should serve as a caution to carefully draft offers in order to successfully rely on those offers for Rule 49 purposes. For those acting for claimants, it is equally important that counsel must ensure that any offers received from an expropriating authority are in fact clear as to their terms so that counsel are in a position to properly assess the risks of proceeding to trial and advising their clients of potential adverse costs consequences.
The second observation to be made is that counsel have a continuing duty to objectively review cases as they proceed through various litigation stages. It is striking that, according to the Tribunal in the costs decision, the Claimant did not take steps to secure expert reports “…on very relevant issues…” until shortly prior to the merit hearing. The result of this inaction on the part of the Claimant was that an objective reassessment of the merits of proceeding to trial did not manifest itself, in the Tribunal’s view.
While the circumstances of this proceeding may have been unique, there are lessons to be learned by both claimants’ counsel and those acting for expropriating authorities that may be relevant to claims for costs in future expropriation matters at the Tribunal.
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Al’s practice focuses on municipal law, environmental approvals, land use planning and expropriation. Al appears before municipal councils, tribunals (such as the Ontario Land Tribunal, Environmental Review Tribunal, and the Board of Negotiation) and Courts on behalf of municipalities, corporations and private individuals on a variety of matters including expropriation, land development issues, contaminated lands, telecommunications, municipal-by-laws and aggregate resources.