EXPROPRIATION: A legal and valuation perspective

OVERVIEW

Expropriation is commonly understood to be the compulsory acquisition of property by statutory authority. Expropriation law does not exist at common law and is considered to be entirely a creature of statute - federal, provincial or territorial.

Expropriation powers may be exercised by governments as well as by a host of statutory bodies and institutions, including municipalities, hospitals, universities and public utilities, all of whom have expropriation powers delegated to them by legislation. Privately owned pipeline companies may acquire expropriation powers under the National Energy Board Act or under certain provincial legislation. These expropriating bodies are usually called the "expropriating authority."

Expropriation legislation encompasses interests in land, some interests falling far short of complete ownership. Interests in land include not only the fee simple, but also mortgage interests, interests in tenancies, formal and informal easements, licenses, and the like. Almost any interest in land recognized in law is capable of being expropriated, despite any informalities that may surround the creation of the interest.

Expropriation usually transfers ownership of the expropriated property effective the date of registration of the expropriation documents in the appropriate registry of deeds. However, the expropriating authority need not expropriate the fee simple in a property. Often, it expropriates an interest less than fee simple. Pipeline expropriations are an example, where the pipeline company normally expropriates an easement or right of way under the National Energy Board Act or provincial pipeline expropriation legislation. In the end, all persons having legal interests in land are considered to be "statutory owners."

Many expropriation statutes permit expropriated owners to object to the fact of expropriation.  Nevertheless, such provisions may be more window dressing than real. It is not often that an aggrieved owner can successfully challenge the fact of an expropriation. The issue thus comes down to one of compensation.

COMPENSATION

If the landowner's claim cannot be resolved by informal negotiation, the process in most jurisdictions requires the expropriating authority to launch a formal expropriation by filing the notice of expropriation in the Land Title Office, and serving the notice on all those who have an identifiable interest in the property. The following guidelines are used for determining compensation:

Advance Payment: Within 30 days of approval being given to proceed with an expropriation, the expropriating authority must make an advance payment of compensation. This payment must be accompanied by an appraisal report that forms the basis for the amount advanced. You, in turn, have the right to have your property valued by an appraiser of your choice. The reasonable cost of this appraisal will be paid by the expropriating authority.

You are entitled to receive the advance payment on a "without prejudice" basis. This means that accepting payment does not deprive you of the right to claim additional compensation, providing you make the claim within one year. There could be elements of value of which the approving authority is unaware at the time the advance payment is made. Therefore, you may:

In B.C., expropriation compensation claims are heard by a permanent administrative tribunal, the Expropriation Compensation Board. There may be significant differences in the frequency of cases heard, degree of expertise and knowledge about expropriation matters in compensation tribunals from one jurisdiction to another. The Chairman and eight members of the ECB, determine the amount of compensation, and often deal with experts in complex valuation matters.

Types of Compensation Claims

In B.C., a "market value" jurisdictions, there are three or four different types of damage or heads of claim that may be advanced: 

1. Fair market value of the property taken.
2. Injurious affection (i.e., severance damage or diminished value) to the owner's remaining property caused by the construction or public work following from the expropriation. In some jurisdictions, injurious affect lion may also include personal and business losses and other consequential damages, whether or not land is taken.
3. Disturbance damages, i.e., the losses, costs or expenses involved in a dislocation of the expropriated owner or tenant from her property due to a complete or almost complete taking of the property. 
4. Loss of a special economic advantage (in some jurisdictions) which accrued to the owner personally and was not an attribute influencing the market value of the property itself.