NO COMPENSATION FOR FUTURE DEVELOPER'S PROFIT The decision of the Ontario Court of Appeal in 747926 Ontario Limited v. Upper Grand District School Board, released on October 10, 2001, is significant for its interpretation of the scope of disturbance damages compensable under the Expropriations Act. The Court allowed the appeal of the School Board against the award of future developer's profit made by the Divisional Court and restored the decision of the Ontario Municipal Board, confirming the Board's longstanding practice. Also noteworthy, was the Court's deference to the expertise of the O.M.B., both in determining that there was no injurious affection to the remaining lands and in its assessment of market value. The Court held that developers are not entitled to an award for prospective profit in addition to an award of market value for the land expropriated for school, or other sites. The Court stated that the loss of land purchased for development is fully compensated by its market value which will reflect its proximity to development. The Court rejected the argument that the loss of vacant land was comparable to the loss of a business operated on the land, as was argued by the claimants. In this case, the claimants had lost inventory which could be replaced by purchasing land elsewhere. Also significant was the Court of Appeal's clear statement that the ruling of the Supreme Court of Canada in, Dell Holdings v. The Toronto Area Transit Operating Authority had no application to the facts of the claimants' case. A claim for lost future developer's profit was not the "natural and reasonable consequence" of the expropriation as was found by the Divisional Court. The Court's ruling should guard against the growing reliance on Dell Holdings as a blanket rationale for new and inventive claims. By limiting the application of Dell Holdings, the Court has provided some guidance to parties attempting to define the scope of claims for disturbance damages covered by the Expropriations Act. The Court further clarified that there is no authority under the Act to award interest on disturbance damages. The decision also provides guidance in weighing approaches to property valuation. The Court of Appeal was expressly critical of the development approach, stating that it was an unsatisfactory means to determine market value, although it was used in the Upper Grand case by the appraisers for both the claimants and the School Board. Periodically, the development approach gains acceptance and then is discouraged by the Courts. On a long-term basis, the decision of the Divisional Court could have increased the cost of public acquisitions across Ontario and indeed, elsewhere in Canada, by as much as 40%, depending on the particular circumstances. The claimants would have received a windfall since they could have earned their profit twice. The decision of the Court of Appeal represents a return to a more balanced approach to protecting the competing interests in private property and public projects. - Gabrielle Kramer

This article is published in the OEA Newsletter, Spring 2002.

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