Introduction to Compensation in Expropriation Cases
8/9/2012 7:38 AM
This article is intended to be a very basic introduction to the various types of compensation payable to expropriated landowners. We will cover each component of compensation in much greater depth in future articles. The intention of these articles is to present the information in an objective manner, favouring neither the position of the expropriated landowner nor the expropriating authority.
Any compensation payable to an expropriated landowner must be enabled by legislation, as there is no right to compensation at common law. The reason for this is that in Canada, the United Kingdom, and some other Commonwealth countries, the Crown actually retains the root of title to all land. Therefore, the Crown, and other authorities empowered by the Crown, could simply take back its land without compensating the landowner.
Expropriation legislation has changed the common law in this regard, requiring compensation for the expropriated landowner. All of the Provinces, Territories and the Federal Government have enacted expropriation legislation. The Supreme Court of Canada has interpreted these statutes in a manner that requires full compensation to the landowner. This interpretation will be the subject of a future article.
There are five basic components of compensation to expropriated landowners:
1. The value of the land taken. This is based on the fair market value of the land on the date of the expropriation. In most jurisdictions, this is defined as the value that the land would have brought if it had been sold to a willing buyer.
2. Injurious Affection. When a portion of a landowner’s land is taken by expropriation, the remainder of the land can be “injured” and this loss is compensable. For example, before the expropriation the full parcel of land might have included water-frontage that had the potential for cottage development. If the expropriation removed the water-frontage, the ability to develop the cottages might have been removed. So, in this example, the remaining land has been injured because it has lost development potential. This loss in value is compensable under expropriation legislation as injurious affection.
3. Disturbance. This arises when the expropriation interferes with the landowner’s use of the land. The most common disturbance claim is for business loss, arising from the taking of land that impairs a landowner from conducting its business as it did before the expropriation.
4. Special Economic Advantage. This is a fairly rare claim that is for losses suffered by the landowner when the expropriation takes away some advantage enjoyed before the expropriation that does not have a marketable value.
5. Costs. This refers to the legal and expert costs incurred by the landowner in asserting its claim for compensation. This includes lawyer’s fees, appraiser’s fees and disbursements such as photocopying. The general rule regarding costs in expropriation cases is that the landowner is to receive all of its reasonably-incurred costs. The Supreme Court of Canada has expressed this on several occasions, holding that costs are part of the compensation due to the landowner. See our upcoming blog article on Smith v Alliance Pipeline.
We will be posting articles dealing with these concepts in greater detail.
If you have any questions or would like to discuss this topic further, please contact Robert H. Pineo at Patterson Law at 1-888-897-2001.