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Like It Or Not, Government May Expropriate Private Land and Transfer It To Another Private Entity, and the Supreme Court Ain’t Hearing It

The law of expropriation is a necessary curse, one that ample owners find lucrative while others view it as a nuisance that literally strips land from under one’s feet. In Ontario, the primary legislative instrument is the Expropriations Act, along with the  Municipal Act  and Planning Act playing an important role.

The Supreme Court of Canada’s decision not to grant leave to hear a decision from the Ontario Court of Appeal has effectively shut the door on an appellant landowner whose property was subject to expropriation and sale by a municipality.

In Vincorp Financial Ltd. v. Oxford (County), Toyota’s plans to build a new plant in North America prompted its existing host to move quickly to entice it and expand on its presence in the area. The County of Oxford (“Oxford”), with its seat in Woodstock, was ready to facilitate and do what it could to make sure Toyota realized its expansionist dreams.

It began in 2004 when Toyota sought at least 1000 acres of land to build a new plant.  In February 2005, Oxford initiated the process of purchasing lands from 28 owners whose properties amounted to the minimum 1000 acres required. Oxford was successful with 27 of those owners, and the 28th, Blandford Square Developments Limited, refused to accept their offer.

In response to this,  Oxford passed a bylaw in May of 2005 granting it authority to expropriate the lands in dispute from the Appellant. There were some communications between the Appellant and Oxford’s representative to negotiate a price before Oxford invoked the powers of the new bylaw, but nothing materialized.

From this point until the City of Woodstock’s Council vote in June 2005 to begin the process of expropriation, Toyota and all of the relevant levels of government had made the necessary announcements to cement Toyota’s seemingly inevitable decision to build its newest plant not too far from its existing one. During this, and this is the dispute at the heart of the costly case, Oxford confirmed its plan to essentially flip the expropriated land to Toyota, along with others it purchased. Simply put, land was taken from one private owner and given to another.

The Plaintiffs’  primary argument was that Oxford could not justify expropriation and conveyance of the land to a private entity on the basis of economic development. Oxford’s  efforts to mount such a spectacular set of steps to showcases this (read the trial decision for a thorough presentation of the facts) was premised on the the fact that the expropriation and, more importantly, the transfer of the property to Toyota was indispensable to securing the plant.

During the hearing (parties had agreed to avoid the trial route and instead settled on a statement of facts and documents) the judge answered two of three questions posed to the Court in the affirmative (the 3rd was not necessary in light of the first two answers):

Q1: “Could Oxford lawfully expropriate the mall lands for the purposes set out in Oxford By-law No. 4545-2005, including in order to transfer the mall lands to Toyota for the proposed development of the Toyota Plant?”

Q2: “Did the expropriation and later sale of the mall lands by Oxford, or any step in that transaction or series of transactions, confer a “bonus” on Toyota contrary to the provisions of s. 106(1) of the Municipal Act.”

In the Appeal to the Ontario Court of Appeal, the Appellants (Vincorp is the mortgagee of Blanford) simply asserted that the judge erred in answering the questions. Primarily, the Appellants submitted that sale of the expropriated land to Toyota was not at the fair market value and that the expropriation was illegal.

The Ontario Court of Appeal dismissed this appeal, and disagreed with the Appellants’ argument that the expropriation and sale of the land to Toyota constituted one transaction; rather, the expropriation per se was legal and was properly instituted within the framework of the expropriation process of Ontario.

This, according to the Ontario Court of Appeal, is the only transaction that the Appellants had an interest in with respect to disputing the value of compensation and the expropriation process, and Oxford was permitted by the legislative regime to expropriate the land in question for a valid purpose.

A reading of the facts as set out in the trial (motion) decision is exceptionally useful in appreciating the entire context of this case, and the Supreme Court’s decision not to grant leave to hear the appeal, perhaps set against the backdrop of Ontario’s efforts to get things rolling economically in the manufacturing sector, sends a strong message to anyone involved in this field.