Ontario Proposes Significant Changes to the Expropriations Act in Bill 245

The Province of Ontario has proposed new legislation which will introduce amendments to the Expropriations Act¹ respecting hearings of necessity, the board of negotiation and statutory interest rates. The changes represent some of the most significant changes to the Ontario Expropriations Act in the past 25 years and may be a sign of further substantive changes to come.

On February 16, 2021, Bill 245, the Accelerating Access to Justice Act, 2021 was carried through a first reading in the Provincial Legislature and on March 2, 2021, after second reading, it was referred to the standing committee on the legislative assembly.

This omnibus bill is being touted by the Ministry of the Attorney General as “legislation that will improve access to justice for people across the system by modernizing processes and breaking down barriers in the province’s courts, tribunals, estates law, family law and child protection sectors.”

Bill 245 introduces several changes to the expropriations regime in Ontario, both procedurally and substantively.

In summary, Bill 245 proposes three key changes to the law of expropriation in Ontario:

• The Board of Negotiation, as a separate entity charged with mediating disputes, is eliminated and merged into the new Ontario Land Tribunal – the successor to the LPAT;
• The default 6 per cent statutory interest rate is eliminated; and
• Hearings of Necessity may be entirely eliminated through a forthcoming regulation and may be replaced with requirements to provide reasons for a taking.

Bill 245 Introduces a New Format for Consolidated Hearings

Schedule 6 of Bill 245 proposes to merge the Local Planning Appeal Tribunal, the Environmental Review Tribunal, the Board of Negotiation, the Conservation Review Board and the Mining and Lands Tribunal into a new single tribunal called the Ontario Land Tribunal. This change will have far reaching implications across multiple industries and areas of law.

Of particular importance for expropriation proceedings involving multiple approvals under multiple statutes, the Consolidated Hearings Act² will be repealed by Bill 245, and consolidated hearings will be provided for under section 21 of the new Ontario Land Tribunal Act, 2021. Regulation-making authority is given to the Attorney General to provide for transitional matters.

Currently, the Consolidated Hearings Act provides for the establishment of a single administrative board to conduct the procedures and hearings that would otherwise be required in order to obtain statutory approvals for major undertakings under multiple statutes (known as a “Joint Board”). For instance, a hearing of necessity could be combined with a Planning Act³ appeal or a hearing with respect to approvals under the Environmental Assessment Act⁴ under a single Joint Board.

Hearings can be combined and be heard by a Joint Board if they deal with matters relating to the same “undertaking”⁵, which is defined as “an enterprise or activity, or a proposal, plan or program in respect of an enterprise or activity.”⁶

Consolidated hearings will now be addressed by the new Ontario Land Tribunal pursuant to section 21 of the Land Tribunal Act, 2021.

Hearings of Necessity

A hearing of necessity, which is an inquiry into whether lands are necessary for the purpose for which they are to be expropriated, is one of the few opportunities for a landowner to challenge an expropriation commenced under the Expropriations Act.

Previously, and as highlighted in our updates on Bill 171, Bill 197 and Bill 222, the province has taken legislative steps to eliminate and modify the substantive rights of a landowner faced with an expropriation for a select group of enumerated transit priority projects and highway development.

Further changes to the hearing of necessity process are introduced under Schedule 5 of Bill 245.

Regulatory power to eliminate hearings of necessity altogether

Further to the legislative limits on hearings of necessity introduced with respect to specific policy areas (transit and highway transportation), Bill 245 proposes new regulatory authority to eliminate the hearing of necessity altogether in certain circumstances.

Bill 245 proposes to add new section 8.1 to the Expropriations Act. This section will permit the Lieutenant Governor in Council to make regulations to establish, for any or all proposed expropriations, a process for owners to provide comments respecting a proposed expropriation to the approving authority, and for the approving authority to consider those comments and make a determination respecting the proposed expropriation. This process would apply instead of the hearing of necessity process currently provided for under section 7 of the Expropriations Act.

This section also provides that the regulation may require that the approving authority provides reasons for its determination and that the reasons be served.

The legislative intent appears to be to streamline and expedite the expropriation process; however, the introduction of the requirement that the approval authority provide reasons and the elimination of the statutory right to a hearing of necessity may give rise to an increase in judicial reviews of expropriation decisions that could have the opposite effect and may slow down certain expropriations.

No more inquiry officers

Currently under section 7 of the Expropriations Act, the Attorney General is mandated to appoint a chief inquiry officer and such inquiry officers as he or she considers necessary. The chief inquiry officer has powers of general supervision and direction over inquiry officers, while inquiry officers themselves are responsible for actually conducting hearings of necessity. The roles of chief inquiry officer and inquiry officers are proposed to be eliminated under Bill 245. Hearings of necessity will instead be heard by a single member of the new Ontario Land Tribunal.

Potential changes to costs awards for a hearing of necessity

Currently, pursuant to subsection 7(10) of the Expropriations Act, an inquiry officer may recommend to the approving authority that a party to the hearing of necessity be paid a fixed amount for the party’s costs of the inquiry, to a maximum of $200. This fixed sum was introduced decades ago, when such a value could have reasonably covered the costs of participation; it has not been updated to take into account inflation. The approving authority may, in its discretion, order the expropriating authority to pay such costs forthwith. The sum of $200 is a very modest sum in light of the real costs that may be incurred leading up to, and during, a hearing of necessity. The fixed sum of $200 stands in stark contrast to the general expropriations costs framework, which promotes full indemnification for expropriated owners.

Bill 245 proposes to make slight changes to the statutory framework governing costs of a hearing of necessity. Under proposed subsection 7(7), the Tribunal may recommend to the approving authority that a party to the hearing be paid a fixed amount for the party’s costs of the hearing, and the approving authority may in its discretion order the expropriating authority to pay the recommended costs. Under proposed subsection 7(8), costs recommended under subsection (7) shall not exceed $200, or such higher amount as may be prescribed. This opens the door to the possibility that a cost award for a hearing of necessity may ultimately be greater than the current maximum of $200.

Interest Rate Changes

Currently under subsection 33(1) of the Expropriations Act, an expropriated owner is entitled to be paid interest on the portion of the market value of the owner’s interest in the land and on the portion of any allowance for injurious affection to which the owner is entitled, at the rate of 6 per cent a year (which is calculated from the date the owner ceases to reside on or make productive use of the lands). 

In the current historically low interest rate environment, 6 per cent is quite generous. In previous decades, the statutory rate of interest fell below the prevailing rate. This change will likely have significant financial implications for claimants. Bill 245 proposes to amend subsection 33(1) to provide for annual rates of interest specified in that section to be determined by regulation. The forthcoming regulation will need to detail transition provisions for expropriations that took place before the change and on which date the interest rate will be fixed.

Aird & Berlis LLP has experience acting on behalf of property owners and expropriating authorities. A member of the firm’s Expropriation Law Group would be happy to answer any questions you have about how this new legislation may impact you.