Canada: Expropriation With Compensation

Edited by Stephen Antle

It is a defining attribute of government that it has the power to take private property for public purposes, without the owner's consent. However, most expropriations of land in British Columbia are governed by the Expropriation Act, which ensures a fair procedure and entitles owners to be paid compensation. There are many public infrastructure initiatives in the works to help stimulate the B.C. economy. If your business owns property these projects may have an impact on you, whether they affect access to your property during construction or involve an actual expropriation of part of your land. It is important for property owners to understand the process under the Expropriation Act and their rights, to avoid being "taken" by surprise.

One of the best defences for a property owner is a good offence. Major public projects are rarely conceived overnight. The types of large-scale projects that require the acquisition of significant tracts of land typically involve years of planning and are well publicized. But even though they may seem for a long time to be just political "pipedreams", once funding is secured they may proceed very quickly. One example of such a major project is the proposed expansion of the "Evergreen" rapid transit line from Burnaby through Coquitlam to Port Moody, which has been in the research, planning and design stages for nearly a decade. Now the provincial transportation authority has started discussions with affected property owners about the land required for the project. Before acquiring new property or beginning a significant upgrade to your existing property you should consider whether a major infrastructure project is expected which might change the access to your property, turn your street frontage into a new transit route or affect the ability of customers to use your business. Even a proposed change in the designation of land use (which is not itself an expropriation), such as the designation of abandoned railway tracks through a residential neighbourhood as a new "light rail" corridor, may be an indication of future expropriations.

Usually, short of a change in political will, property owners cannot stop a public project from proceeding. However, in single site or "non-linear" projects, such as a new park or school, the Expropriation Act gives owners the right to request that a public inquiry be held before the project is approved. This allows owners to challenge the reasonableness of the amount of land that is required, and investigate whether there are design alternatives. Although "linear" projects, like new highways and hydro lines, do not provide the right to a public inquiry, these projects can still, literally, change course. During the project design stage property owners should remain actively involved. You may be able to advocate for small shifts in the location or configuration of the project to your benefit. For example, owners may succeed in lobbying for a construction method that would minimize the interference with their businesses and customers.

The Expropriation Act allows property owners and expropriating authorities to negotiate different types of agreements depending on the circumstances. An owner can agree on the compensation to be paid and "sell" the necessary part of his or her land to the expropriating authority, similar to an ordinary land transaction. Or the owner and the expropriating authority can agree to preserve the owner's right to challenge the amount of compensation as if the land had been expropriated, but to cooperate on other aspects of the process. In this kind of agreement, called a "section 3 agreement", the parties may be able to find common ground on logistical issues, such as traffic and access arrangements, that will help the owner maintain normal business operations. Governments prefer consensual arrangements and only use expropriation as a tool of last resort. This gives owners some leverage in negotiating arrangements. Given that most large-scale public projects take many years to be constructed, fostering a cooperative relationship with the expropriating authority and avoiding expropriation can have long term benefits for owners.

However, if discussions between a property owner and the expropriating authority break down and, as the saying goes, "the show must go on", then the authority can expropriate the land it needs without the owner's agreement. The expropriating authority must pay the owner compensation for the land determined in accordance with a qualified appraiser's report. Under the Expropriation Act the owner has one year to challenge the amount of compensation.

A common misconception is that the expropriating authority must "make the owner whole". The Expropriation Act provides that an expropriating authority must pay a property owner the market value of the land taken, plus reasonable costs and damages directly attributable to the disturbance caused by the expropriation (which may include business losses), and the owner's reasonable legal fees and appraisal costs to advance a claim for more compensation. However, there are a number of factors that can make the compensation less than an owner might expect. For example, the fact that it was annoying and inconvenient for customers to access your business during construction will not entitle you to compensation unless you can establish actual business losses that are directly attributable to the project. A new infrastructure project that coincides with a downturn in the economy may make the depression in market value of your land more difficult to prove. You may not be entitled to any compensation, despite several years of heavy construction right outside your front door, because some expropriating authorities are exempt by statute from paying compensation unless some of your land was actually expropriated. Also, the Expropriation Act does not provide for full indemnity for your legal or consulting fees. It only allows for "reasonable" fees.

The determination of compensation is the main source of disputes in expropriations. Where agreement cannot be reached within one year, a property owner may commence a lawsuit in the Supreme Court of British Columbia to have the court determine the compensation. A lawyer can help with the court proceeding, but seeking legal advice on strategic decisions before the situation escalates to expropriation, and afterwards to assist with properly valuing your claim, can help owners to get the most out of a difficult situation.

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