The Interest Clock Starts at the Order:

A recent Ontario Divisional Court decision addresses a focused but consequential question for expropriation matters: when does interest begin to accrue on a claimant’s legal costs? The Court’s answer is definitive: interest on costs runs only from the date the Ontario Land Tribunal (the “Tribunal”) issues its costs order, not from earlier milestones such as a settlement date or the delivery of a bill of costs.[1] The result carries tangible budgetary and strategic consequences for expropriating authorities (i.e., municipalities, Ministry of Transportation, Metrolinx, etc.) and claimants alike. 

Short Summary

The Tribunal’s costs order is analogous to activating an interest meter. Before that switch is flipped, the law does not let the Tribunal start the meter. After the switch is flipped, interest starts to run automatically. If a Claimant had to borrow money or paid interest out of pocket before the order, a Claimant may still be able to recover those amounts as part of “reasonable costs,” but the Tribunal will likely not retroactively turn on the general interest meter. 

Case Overview and Procedural History

The decision in City of Ottawa v. MacEwen Petroleum Inc., 2025 ONSC 6955 (“MacEwen”), released by the Ontario Divisional Court on January 13, 2026, arose out of the City of Ottawa’s expropriation of property leased by MacEwen for the expansion of the city’s rail transit line. Although the parties settled the compensation claim under the ExpropriationsAct (the “Act”), they remained at odds over the entitlement and timing of interest on legal costs. 

On January 24, 2025, the Tribunal fixed MacEwen’s costs at $356,755.45 and ordered the City to pay interest beginning November 1, 2023, which is the date MacEwen delivered its bill of costs, on the basis that early interest accords with the principle of fully indemnifying claimants in expropriation proceedings. The City appealed, submitting that the Tribunal lacked statutory authority to award interest from any date preceding the formal costs order. 

Final Disposition

The Divisional Court allowed the City’s appeal and held that the Tribunal erred in law. It set aside the November 1, 2023, commencement date and ordered that interest on costs run from January 24, 2025, the date of the Tribunal’s original costs order. Because only one lawful outcome remained on the record, the Court did not remit the matter to the Tribunal. Each party was directed to bear its own costs of the appeal. 

Reasons for Decision

In reaching its conclusion, the Court considered the following principles: 

• Section 33 of the Act provides for interest on amounts representing market value and injurious affection, not on costs; nothing in Section 33 authorizes interest on legal costs. Section 32 authorizes “reasonable” legal and other costs but likewise does not mention interest. These provisions set the analytic framework. 
   
• Prior authorities are instructive. In WMI Waste Management v. Metropolitan Toronto, 1981 CanLII 1632 (ON SC), the High Court held that the Act is a complete code and does not provide for interest on costs. The Ontario Court of Appeal later endorsed that point in Ministry of Transportation v. Tripp, 1999 CanLII 3762 (ON CA). The Divisional Court followed that approach here. 
   
• Accordingly, the Act itself does not authorize interest on costs, so any interest must come, if at all, from the Courts of Justice Act  — and only in the manner the CJA permits. 

Restrictions Under the Courts of Justice Act (“CJA”)

A critical question the Court considered was whether the Tribunal could make an order for interest on costs that ran before its order under the CJA. The provisions below supported the Court’s determination that there is no authority to order prejudgment interest on costs under the CJA.

• Section 129(1) of the CJA says money owing under an order, including costs, bears interest at the post-judgment rate “from the date of the order.” The parties agreed this supports interest on costs starting on the date of the Tribunal’s order. The Tribunal’s Rules of Practice and Procedure Rule 23.11 ties into s. 129 as it provides that the Tribunal’s costs award may bear interest in the manner as that made under s. 129 of the CJA. 
   
• Section 129(4) (costs assessed without an order) did not apply because the Tribunal fixed costs rather than referring them to an assessment. 
   
• Section 130(1)(c) allows a Court to vary the period for interest under s. 128 or 129 where just; but s. 128(4)(c) flatly bars prejudgment interest “on an award of costs.” That bar prevents using s. 130 to backdate interest on costs prior to the order date. 
   
• United States of America v. Yemec, 2007 CanLII 65619 (ON SCDC) confirms that interest on costs can only run from the date of the order awarding costs and not earlier because of the explicit wording of s. 129(1) and the prejudgment interest bar in s. 128(4)(c). 
   
• The Court of Appeal’s recent decision in Rajic v. Spivak, 2025 ONCA 363 aligns with this reading: even where underlying claims are settled, interest on costs runs from the order date, not the settlement date. 
   
• Although the Tribunal in Hume v. Ontario (Transportation),  2019 CanLII 117324 (LPAT) had ordered interest from settlement to reflect full indemnity, the Divisional Court here found no statutory footing for that approach.

Two Alternatives for Claimants: Actual Interest Paid and Settlement Negotiations

Critically, the Court identified two pathways that remain open to claimants seeking full indemnification:

1. Claim actual interest paid as "reasonable costs": Where a claimant has actually paid interest on a solicitor's account or financed litigation costs, those amounts may be sought as part of "reasonable costs" under s. 32 of the Act. Claimants should document all financing costs and interest payments throughout the proceeding.
    
2. Negotiate interest terms in settlement agreements: Parties remain free to negotiate interest as an express term of a private settlement. Claimants should ensure that settlement agreements explicitly address interest on costs, including the start date and applicable rate.

Absent a private agreement or evidence of interest actually paid, the statutory default applies strictly from the date of the order. Claimants should therefore move expeditiously to obtain a costs order, because the statutory interest clock starts only when the order is made. At the same time, claimants should consider whether expert accounts have in fact accrued interest. Expropriating authorities may object to paying interest in those circumstances or argue that any interest could have been mitigated had the claimant paid the account on a timely basis. Accordingly, claimants should not let costs disputes linger unnecessarily and should take steps to preserve the basis for any interest claim.

Significance for Claimants in Expropriation Proceedings

The Court’s decision in MacEwen narrows the practical scope of the "full indemnity" principle that claimants rely upon in expropriation litigation. While claimants are entitled to be made "economically whole," the Court held that statutory limits constrain the Tribunal from backdating interest on costs to earlier procedural or settlement milestones. The Court acknowledged the Supreme Court's repeated instruction that the Act is remedial and should be read to fully compensate landowners, but refused to let remedial purpose override explicit statutory limits. 

For claimants, the practical implications are:

• Post-order interest is secure: Interest on costs runs automatically from the costs order date under CJA s. 129(1). This is not in dispute.
   
• Pre-order interest via Tribunal order is foreclosed: Claimants cannot obtain prejudgment interest on costs through a Tribunal order, whether pegged to the settlement date or the bill-of-costs date.
   
• Alternative recovery strategies are essential: To recover financing costs or interest incurred before the order, claimants must either (a) quantify and claim those amounts as part of "reasonable costs" under s. 32, (or as disturbance damages, a point not noted by the Divisional Court[2]) supported by evidence of actual interest paid, or (b) negotiate interest terms expressly in settlement agreements.
   
• Expedite the costs order: Claimants have an incentive to move efficiently toward obtaining a costs order, as every day of delay before the order is a day without accruing statutory interest.

Case Comment: A Claimant's Perspective

From a claimant's perspective, this decision is a setback but not a dead end. The Court's text-first approach limits the Tribunal's discretion to fashion remedies that would fully compensate claimants for the time value of money during protracted proceedings. MacEwen argued, with considerable force, that the principle of full indemnification should permit interest from settlement, as the Tribunal had done in Hume. The Divisional Court's rejection of that approach means claimants must look to alternative avenues to achieve full recovery.

The indemnity principle underlying expropriation law supports awarding interest on costs from an earlier date, as claimants should not have to bear the expense of financing litigation caused by the expropriating authority’s delay. That concern is not limited to delay in payment after settlement; it also engages the indemnity principle, because a claimant may be required to carry the cost of litigation for years while awaiting final settlement or a hearing. The issue is particularly acute where no claim has been filed and the authority prolongs the resolution of compensation and costs, since the absence of a case number may further slow the process and discourage claimants from seeking OLT assistance to obtain an order, which appears to be the only mechanism that triggers interest. The Court noted that when the legislature wanted interest to run earlier, it said so explicitly, including for market value and injurious affection under s. 33. Where it stayed silent, as with costs under s. 32, the CJA framework governs.

Conclusion

The Court’s decision in City of Ottawa v. MacEwen Petroleum Inc. clarifies a precise but consequential point in Ontario expropriation cases: Expropriations Act interest on legal and expert costs runs from the date of the Tribunal’s costs order, not before. That point aligns Tribunal practice with the text of the CJA and long-standing case law treating the Act as a complete code that does not itself authorize interest on costs. Parties retain tools to reach full economic indemnity but not by retroactively starting the interest clock. 

[1] The Ontario Land Tribunal’s decision in Onnki Donburi Ltd. et al v Toronto (City),2026 CanLII 46865 (ON LT) follows the interest on costs provisions from City of Ottawa v. MacEwen Petroleum Inc., 2025 ONSC 6955.

[2]Paciorka Leaseholds Limited v Windsor (City),2020 CanLII 10059 (ON LPAT) at para. 277.