Court of Appeal for Ontario

Date: 2019-10-08 Docket: C66736

Judges: Sharpe, Hourigan and Jamal JJ.A.

Between

The Corporation of the City of Owen Sound Appellant (Respondent)

and

Naidal Incorporated Respondent (Appellant)

Counsel

Ondrej Sabo, for the appellant

Errol Treslan, for the respondent

Heard

October 3, 2019

On Appeal From

The order of the Divisional Court (Justices Carolyn J. Horkins, Harriet E. Sachs and Julie A. Thorburn), dated October 17, 2018, with reasons reported at 2018 ONSC 6207, affirming the decision of the Ontario Municipal Board, dated October 5, 2017, with reasons reported at .

Reasons for Decision

[1] This appeal concerns the applicable scale of costs when a municipality unsuccessfully appeals an expropriation matter to the courts.

[2] The Ontario Municipal Appeal Board ("OMB") ordered the respondent to compensate the appellant when the respondent expropriated its property. The respondent then appealed parts of the OMB's decision to the Divisional Court.

[3] The Divisional Court dismissed the respondent's appeal and ordered partial indemnity costs of the appeal to the appellant of $7,500, rather than the claimed full indemnity costs of $23,586.84. The appellant had relied on s. 32(1) of the Expropriations Act, R.S.O. 1990, c. E.26, which in relevant part requires the OMB to make an order "directing the statutory authority to pay the reasonable legal, appraisal and other costs actually incurred by the owner for the purposes of determining the compensation payable". The Divisional Court declined to apply this provision and ruled that because this was a court proceeding rather than a proceeding before the OMB, the ordinary costs rules apply.

[4] The appellant now appeals the costs order, with leave granted by this court on March 21, 2019, and asks the court to substitute an order for full indemnity costs. The respondent does not dispute that the Divisional Court erred in law but asserts that the costs claimed by the appellant are unreasonable.

[5] Section 32(1) of the Expropriations Act, as it appeared before statutory amendments made in April 2018, provided as follows:

Costs

32 (1) Where the amount to which an owner is entitled upon an expropriation or claim for injurious affection is determined by the Board and the amount awarded by the Board is 85 per cent, or more, of the amount offered by the statutory authority, the Board shall make an order directing the statutory authority to pay the reasonable legal, appraisal and other costs actually incurred by the owner for the purposes of determining the compensation payable, and may fix the costs in a lump sum or may order that the determination of the amount of such costs be referred to an assessment officer who shall assess and allow the costs in accordance with this subsection and the tariffs and rules prescribed under clause 44 (d). [Emphasis added.]

[6] While on its face s. 32(1) applies only to proceedings before the OMB, this court has accepted that it should give effect to the principle reflected in this provision when considering the costs payable to a claimant in successfully resisting an appeal taken by a municipal corporation from an expropriation award. As stated by Kelly J.A. in Re A.M. Souter & Co. Ltd. and City of Hamilton (1973), 1 O.R. (2d) 760 (C.A.), at p. 761:

In our opinion, there is in the Expropriations Act an expressed intention that a claimant who, involuntarily, has to resort to the procedures set down in the Act in order to secure the compensation to which he is adjudged entitled, is to have, in addition to this compensation, the reasonable legal, appraisal and other costs actually incurred by him for the purpose of determining the compensation payable….

The discretion of the Court with respect to costs is not disturbed by the provisions of the statute referred to, although the principle above stated must be kept foremost in mind. In a case such as this one the Court should give effect to the principle set forth in s. 33(1) [now s. 32(1)] and the costs of successfully resisting the appeal taken by the municipal corporation from the award should be taxed as between solicitor and client.

[7] See also Parks v. Ontario (Ministry of Transportation) (1997), 109 O.A.C. 1 (Div. Ct.), at p. 18.

[8] In our view, the Divisional Court erred in law by not keeping "foremost in mind" the principle reflected in s. 32(1) — that the appellant was entitled to its reasonable legal, appraisal, and other costs actually incurred in resisting the respondent's appeal to the Divisional Court.

[9] The respondent contends that the amount claimed for the appeal to the Divisional Court of $23,586.84 was unreasonable for several reasons, especially because the subject matter of the Divisional Court appeal was valued at only $16,000. We do not agree. In our view, the amount claimed was reasonable on a full indemnity basis for an appeal to the Divisional Court in which the appellant was responding to the respondent's expropriation appeal.

[10] The appeal is allowed. The appellant shall have its costs fixed on a full indemnity basis, inclusive of disbursements and taxes, in the amounts of $23,586.84 for the appeal to the Divisional Court and $11,622.50 for the motion for leave to appeal and the appeal to this court.

Robert J. Sharpe J.A.

C.W. Hourigan J.A.

M. Jamal J.A.