What’s Yours is Mine

Expropriation is a process by which a government authority (known as the “expropriating authority”) acquires real estate without the owner and leaseholder’s consent for the purpose of furthering a public interest. With increased federal spending on infrastructure and LRT expansions underway in both Edmonton and Calgary, cities in Alberta are engaging in significant expropriation activities.

Each landowner and leaseholder that receives a Notice of Intention to Expropriate from the expropriating authority (such as a city) has rights under the Expropriation Act. They may object to the expropriation itself on the grounds that the expropriation is not fair, not sound, excessive or not reasonably necessary in the achievement of the public good. An inquiry officer is appointed to conduct a public hearing to determine if the objection is valid or if the expropriation should proceed. If the expropriation continues following an inquiry, then the expropriating authority will serve a Notice of Expropriation on owners and tenants faced with the forced taking of their interest and will offer compensation in respect of the taking.

Should an owner or tenant wish to challenge the compensation offered by the expropriating authority, the owner/tenant can initiate proceedings before the Land Compensation Board to seek losses caused by the expropriation, and even losses caused by the notice of the forthcoming expropriation. Owners and tenants are generally insulated from bearing legal costs as the Act requires that reasonable legal fees be borne by the expropriating authority in most cases. The typical types of compensation available to an owner are:

  1. Payment of the market value of the land;
  2. Damages attributable to disturbance (the reasonable costs and expenses arising from the expropriation);
  3. Value to the owner of any element of special economic advantage to the owner arising out of or incidental to the owner’s occupation of the land to the extent that no other provision is made for its inclusion;
  4. Damages for injurious affection, (when the use to which the expropriated land is put adversely affects the value of the remaining land, or when the dividing of lands affects the value of the remaining lands);
  5. Business losses until a business has relocated and operated for 6 months or a 3 year period has elapsed (first of);
  6. Loss of good will of a business;
  7. Relocation costs for primary residence owners; and
  8. Interest.

The recent decision of the Alberta Land Compensation Board in Celtic Homes Inc. v Alberta (Transportation), confirms many of these principles. In that decision, the Board addressed a scenario where the Government of Alberta had taken some prime commercial land at the intersection of Highway 2 and Cardiff Road. However, the shape of the land was an “unsaleable strip” such that a true market valuation was not possible. The Government attempted to argue that the land should be valued by looking at the surrounding land. The Board held that given the taken land was superior than surrounding land with regard to location, visibility, and zoning, it would be inappropriate to use surrounding land to value the expropriated property. As a result, expert evidence about comparable lands in the province was used to secure the land owner a more favourable valuation.

While an appropriating authority may put forward a plausible basis for valuing land based on neighbouring parcels, such comparisons may not be the best means of determining value. This case reminds those facing expropriation that it may be worth challenging the valuation provided by an expropriating authority – particularly in light of the fact that the authority is responsible to cover the cost of reasonable legal fees.