1739061 Ontario Inc. v. Hamilton-Wentworth District

1739061 Ontario Inc. v. Hamilton-Wentworth District Collection Decisions of the Court of Appeal Date 2016-03-15 Neutral citation 2016 ONCA 210 Docket numbers C60267 Judges Feldman, Kathryn N.; Lauwers, Peter D.; Benotto, Mary Lou Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: 1739061 Ontario Inc. v. Hamilton-Wentworth District School Board, 2016 ONCA 210 DATE: 20160315 DOCKET: C60267 Feldman, Lauwers and Benotto JJ.A. BETWEEN 1739061 Ontario Inc. Applicant (Appellant) and Hamilton-Wentworth District School Board Respondent (Respondent) Frank Sperduti and Christel Higgs, for the appellant Paul R. Henry, for the respondent Heard: October 30, 2015 On appeal from the order of Justice Kevin W. Whitaker of the Superior Court of Justice, dated March 9, 2015, with reasons reported at 2015 ONSC 1442. Lauwers J.A.: [1] The respondent Hamilton-Wentworth District School Board (the “School Board”) expropriated a parcel of land located at 1055 King Street in the City of Hamilton, from the appellant in 2013 (the “property”). In November 2014 the School Board authorized its staff to implement a land swap with the City by which much of the property would be exchanged for City lands. The appellant asserts that the Board’s authorization triggered s. 41(1) of the Expropriations Act, R.S.O. 1990, c. E.26, and obliged the Board to offer to re-convey the property to it. For convenience in these reasons I refer to this as the “offer-back obligation”. The appellant submits the application judge erred in failing to require the Board to meet its s. 41(1) offer-back obligation. [2] For the reasons set out below, I would dismiss the substantive appeal but allow the costs appeal. While I would accept some of the appellant’s arguments they do not affect the result. [3] I begin these reasons by describing the factual and legal contexts in which the parties were operating, including the application of the Expropriations Act, then turn to address the issues raised by this appeal. A. The Factual and legal contexts [4] At the hearing of this appeal, the School Board sought leave of this court to admit the affidavit of Ellen Warling, the School Board’s Manager of Accommodation and Planning, as fresh evidence. Her affidavit details the evolution of the joint project since the application was heard and supplements the factual context. The evidence is admissible because it is relevant and credible, and does not infringe the due diligence requirement of the test set out in Palmer v. The Queen, [1980] 1 S.C.R. 759. (1) The Property [5] The property is about 1.47 acres in size. It is surrounded by about 5.5 acres of land owned by the City of Hamilton. From 1968 to 2001, the School Board operated Scott Park Secondary School on the property, which was physically connected to and used the neighbouring City swimming pool, recreational facility, playing fields and parking lot. [6] In the face of declining enrolment, the School Board determined that the school was surplus to its needs and sold it in 2004. In December 2011, the appellant purchased the property. It intended to redevelop the old school building as a seniors centre. (2) The School Board Changes its Mind [7] With continuing enrolment declines in the group of secondary schools near to the property, the School Board reconsidered its secondary school accommodation strategy. After a public consultation period, the Board determined the community’s accommodation needs would be best served by closing three other secondary schools and building a new centrally located school on the property, being the old Scott Park Site. (3) The Evolution of the Joint Development [8] The documentary evidence shows that, throughout, the School Board and the City knew that the property, given its small size, could realistically only be used to accommodate a secondary school if the students and staff had access to ancillary facilities located on adjoining City land. From early spring 2013, School Board and City meetings considered reports regarding joint developments of the school, community centre, and green space to be utilized by the student body and members of the community. [9] Daniel Del Bianco, then Senior Facilities Officer for the School Board, prepared multiple staff reports recommending the Board adopt a joint development course of action. Mr. Del Bianco stated in his affidavit: “It would have been impossible to purchase and assemble a conventionally-sized secondary school site to ministry [of Education] guidelines, so the central site had to be contiguous to City lands and compatible city facilities.” Similarly, the City Manager’s report to the Mayor and the General Issues Committee, dated September 4, 2014, stated the rationale for the recommended joint development: “Staff from the City and HWDSB explored how the various components at Scott Park could fit together best from a design and use perspective. With limited space available, the goal was to better locate the facilities on the site.” [10] The nature of the project evolved over time leading to the development of different options. There are signs in the record of positional bargaining between the School Board and the City. [11] On March 20, 2013, the City’s General Issues Committee recommended that City Council consider entering a memorandum of understanding with the School Board for the joint development of a new school, community centre, and green space on the property. However, at its September 11, 2013 meeting, City Council deleted this item from the report and resolved to construct a senior’s recreation and community centre on its land contiguous to the property on its own. In response to the withdrawal of City support, Board staff recommended the construction of a new school on the Parkview/King George site, located nearby, using the expropriated property “to address associated parking requirements”. Ultimately, the City reconsidered joint development of the property and surrounding City-owned land. Negotiations and discussions resumed in the spring of 2014. Between September and November 2014 the prospect of a land swap between the School Board and the City began to take shape. [12] In Ms. Warling’s affidavit tendered on the fresh evidence application, she set out the context for the original application: As of the date of the hearing of the Application by the Appellant [December 15, 2014], the discussions between the Board and the City had not resulted in the preparation of architectural drawings showing how the new secondary school and recreation center could be constructed and connected with City facilities. The Board and the City had not entered into their required agreement under the Education Act, before there could be a land exchange by transfers or a long-term lease, nor had such an agreement received the approval of the Minister of Education. The Appellant brought its Application before the architectural study and the negotiations were complete. [13] Before the hearing of the application in December 2014, the School Board and the City examined several different options for joint development: (a) construction of a single building on the property and on City land to house both the new school and a City recreational facility; (b) building the new school on the property, and locating the parking and playing fields on another nearby piece of land owned by the School Board known as the Parkview/King George site; (c) building the new school and playing fields on the Parkview/King George site and locating the parking lot on the property; (d) exchanging lands with the City, by conveyance or long-term lease, so that the new school would be built in part on the property and in part on City land, and the City’s recreation center would be built in part on the property and in part on City land. [14] The second and third options began to fall away by September 2014 as the School Board recognized the City’s intention to prevent the demolition of the old King George High School located on the Parkview/King George site by heritage-designation. The City did so on June 16, 2015. According to the Warling affidavit, the fourth option was abandoned at some point after the hearing of the application and prior to this heritage designation, when the architect jointly retained by the City and the Board advised that a better design could be achieved that would situate the new school squarely on the property. [15] Ms. Warling provided an update as to the option that is now preferred: the new school and its parking lot would be built on the property and also on land to be leased from the City: Since the Application was heard, the architect for the [School Board] and the City has advised that a better design can be achieved for the new secondary school and the recreation center which would result in the Subject Property being used for part of the secondary school and parking. The balance of the school would be constructed on land leased from the City. [16] City Council passed a resolution on June 24, 2015 authorizing City staff to negotiate agreements with the School Board to implement this new option. The Board has continued to participate in the related design process. There is, as yet, no agreement between the Board and the City that has Ministry of Education approval and complies with the Education Act R.S.O. 1990, c. E.2, which is prerequisite to any joint development arrangement with the City. [17] As things stood on the date this appeal was argued, with the new plan under way, Ms. Warling noted that: The Board is not divesting itself of the Subject Property, either to the City or any third party. I expect that the City and Board staff will enter into an agreement providing for the lease of some of the City’s land abutting the subject property for the construction of the new central secondary school. [18] I observe that the new plan does not contemplate any of the property being transferred to the City. (4) The Expropriation [19] School boards are required by s. 170(1) of the Education Act, para. 6, to “provide instruction and adequate accommodation” for their students, and are given power under s. 195(1) of the Education Act, to expropriate a “school site” within their area of jurisdiction. [20] When it became clear that the appellant would not sell at what the School Board considered to be a reasonable price, the Board moved to expropriate the property. The Expropriations Act establishes the procedural requirements the School Board, as an “expropriating authority”, must follow. An expropriating authority must obtain the approval of the “approving authority”. Section 5(1)(b) makes each school board its own approving authority. [21] In April 2013, the School Board served a notice of application for approval to expropriate land on the appellant, as required by s. 6(1) of the Expropriations Act. The notice stated the expropriation was “for the purposes of the construction and operation of a secondary school and related amenities.” This was consistent with Form 1 under the Act, which requires the expropriating authority to set out “the purpose(s) of” the expropriation. Form 1 also provides for a “description of project or work”: R.R.O. 1990, Reg. 363; O. Reg. 268/15, s. 5. [22] On May 27, 2013, the appellant requested a “hearing of necessity” before an inquiry officer under s. 6(2) of the Expropriations Act, which, under s.7(5) requires the officer to inquire into whether the taking is “fair, sound and reasonably necessary in the achievement of the objectives of the expropriating authority.” Section 7(4) of the Expropriations Act states the notice must set out “the grounds upon which it intends to rely at the hearing”. The School Board issued its notice of grounds on August 12, 2013. It set out the Board’s approach: Because of changing demographics and a reduced school age population in this district of Hamilton, HWDSB closed and subsequently sold Scott Park Secondary School on the Subject Property and has closed, or will shortly close, Sir John A. MacDonald, Parkview and Delta Secondary Schools. HWDSB proposes to construct a new secondary school in a location central to the neighbourhood which will serve students who formerly attended the three secondary schools which are closing. [23] The notice of grounds advised: “The Province of Ontario has committed funding to construct a new secondary school on the Subject Property.” It added that the City of Hamilton “will agree to construct and will commit funding (subject to final approval expected in September) which will help construct a joint school and recreational facility which will include gymnasiums and a pool which will also serve the community.” The notice: “The placement of a joint school and recreational facility on the Subject Property will enable the parties to cooperate to realize a project which individually they could not achieve due to funding and/or space restrictions.” [24] The appellant withdrew its request for a hearing of necessity on September 26, 2013. The hearing had been adjourned twice and was scheduled to begin on October 1, 2013. Jamil Kara, the appellant’s president, said the withdrawal occurred “in light of what I understood to be the [School Board’s] intention to construct a school on the Subject Property.” [25] On November 11, 2013, the School Board, acting as approving authority, approved the expropriation of the property by resolution, consistent with s. 8 of the Expropriations Act. The resolution stated that the expropriation was “for the purpose of constructing a parking lot for a new Secondary School to be built on the current King George/Parkview site.” The Board registered its expropriation plan, thus taking title to the property, on December 12, 2013. (5) The Appellant Seeks Judicial Relief [26] In the summer of 2014, press reports stated that the City and the School Board were considering a “land swap”. The joint development plan under discussion with the City at that time would have located most of the school building on City lands, and most of the City’s recreation centre on the property. The purpose of the land swap was to make title to the land congruent with the ownership of the buildings. [27] On September 22, 2014, the School Board’s Executive changed its earlier recommendation to build the new school on the Parkview/King George site, and instead recommended joint development with the City at the property, being the old Scott Park site, because: “the potential [heritage] designation of the former King George School has presented a number of challenges and delayed the start of the project.” The School Board approved this recommendation on September 29, 2014, and authorized staff to implement the proposed land swap with the City, “provided that”: the Board complies with the Education Act, receives the necessary Ministry of Education approvals, and the terms and conditions of the Agreements are in a form satisfactory to the Board’s solicitor. [28] Counsel for the appellant responded to this event by asserting, in correspondence with the School Board, that any land swap with the City would give rise to the appellant’s “rights pursuant to s. 41 of the Expropriations Act.” Counsel took the position: “In the event that the School Board no longer requires the property for a parking lot, my client expects the School Board to comply with the requirements of the Act, including the opportunity to take the land back from the School Board if he so chooses.” [29] Section 41 of the Expropriations Act applies, when, as in this case, the former owner has not yet been paid compensation in full for the land. It provides: where “the land or any part thereof is found to be unnecessary for the purposes of the expropriating authority or if it is found that a more limited estate or interest therein only is required,” the former owner can elect to take back the unnecessary interest in the land, or can require the authority to acquire all the land nonetheless. [30] On October 20, 2014, the appellant brought the application under s. 41(1) of the Expropriations Act, to compel the School Board to offer the appellant the election to take back the property. [31] Section 42 of the Expropriations Act is also relevant. Where the expropriating authority determines that the expropriated land is “no longer required for its purposes” and decides to dispose of it, the authority is obliged to give the former owner a right of first refusal to buy the land, unless the approving authority dispenses with this right. The School Board, as approving authority, purported to dispense with this obligation by resolution dated November 17, 2014. [32] The old school building on the property was demolished, according to the fresh evidence, in the summer of 2015. B. The Decision Under Appeal [33] As noted, the appellant’s application under s. 41 of the Expropriations Act was to compel the School Board to offer to the appellant the election to take back the property. The appellant sought: (1) a declaration that all or part of the property “is unnecessary for the purposes of the expropriating authority”, or that a “more limited interest” is required for the purpose of the School Board, “as those purposes were expressed in the ... notice of application for approval to expropriate”; (2) an order requiring the School Board to serve a notice under s. 41 of the Expropriations Act “advising of the Applicant’s option to elect to take the expropriated lands back and seek consequential damages”; and, (3) an interim and interlocutory injunction order preventing the School Board from conveying the property to the City of Hamilton and from demolishing the existing school building on the property before the application was determined. [34] The first question determined by the application judge, at para. 5, was: ‘”[W]hether the property is necessary for the purpose stated by the [School Board] to trigger the application under s. 41(1) of the Act.” He held that it was, and noted, at para. 13: [T]he Board has the power to expropriate a site within its area of jurisdiction. The Education Act in s. 1(1) defines site to include lands and premises for any other school purposes. …this formulation is broad enough to include swimming pool, recreational facilities and parking lots which may be built by the City. [35] The application judge noted, at para. 10, the Board’s reliance on s. 183 of the Education Act, which encourages school boards to pursue joint developments with municipalities. He described, at para. 14, the School Board’s submission: “it is essential and fundamental to the creation of shared services” that “related amenities” be interpreted broadly enough to include the development of the property to be completed by the City. He implicitly accepted this submission, in expressing his view, at para. 12, that “the courts should be reluctant to interfere with school board policy choices regarding whether or not facilities such as parking lots, pools, and recreation centres are captured by the term ‘related amenities’ as that was used in the Notice of Expropriation.” The application judge also implicitly accepted, at para. 14, the School Board’s submission that s. 41 is not triggered “because the subject lands have not been found to be no longer required for the Board’s purposes, [which] include a pool and recreational facility.”[1] [36] The second question set out by the application judge, at para. 5, was whether the School Board is “obligated the give the Applicant the right to elect, pursuant to s. 41(1) of the Act to take the subject property back or continue with its claim for compensation.” The application judge found that the Board was not obligated to offer the property back to the appellant. He stated, at para. 15: “the Board has met its obligations under the Education Act and the Applicants have not made [out] their claim.” He added, at para. 14: “If s. 42 is to apply as argued in this case, there is no obligation on the part of the Board to give the Applicant the first chance to repurchase the lands”; I infer this to be an implicit acceptance of the School Board’s argument that its November 17, 2014 resolution under s. 42 of the Expropriations Act to dispense with that requirement was effective. C. The Issues [37] The issues to be considered on this appeal are the following: 1) Are the appellant’s rights under s. 41 of the Expropriations Act engaged on the facts, and if so, what are the consequences? 2) Is the School Board required to offer the property back to the appellant under s. 41 of the Act despite its resolution not to do so under s. 42 of the Act? 3) Did the application judge err in his award of costs to the School Board? D. Analysis ISSUE ONE: IS S. 41 OF THE EXPROPRIATIONS ACT ENGAGED ON THE FACTS OF THIS CASE? [38] As noted, s. 41 of the Expropriations Act applies where, as in this case, the former owner has not yet been paid compensation in full for the land.[2] Section 41(1) provides that, where “the land or any part thereof is found to be unnecessary for the purposes of the expropriating authority or if it is found that a more limited estate or interest therein only is required,” the authority must offer the former owner an election between taking back the unnecessary interest in the land, or requiring the authority to acquire all the land nonetheless. This is the offer-back obligation. [39] In this section of the reasons, I first set out the positions of the parties, provide a brief overview, then address the principles of statutory construction and their application. (1) The Positions of the Parties [40] The appellant submits the phrase, “the purposes of the expropriating authority”, in s. 41(1) of the Expropriations Act, “should be strictly construed” against the expropriating authority. Accordingly, the appellant argues that the relevant “purposes” for s. 41(1) are strictly limited to the express purposes set out in the School Board’s original notice of application for approval to expropriate, being “the construction and operation of a secondary school and related amenities”, as those purposes were “clarified” by its November 2013 resolution approving the expropriation, as being “for the purpose of constructing a parking lot for a new Secondary School to be built on the current King George/Parkview Site.” [41] The appellant argues that the School Board’s “purpose, as events unfolded, was to convey the Expropriated Lands to a third party,” which would be utterly impermissible. Accordingly, the application judge erred “in his failure to interpret the purpose referred to in Section 41(1) of the Expropriations Act as the purpose of the expropriating authority rather than some other public purpose served by another public body” – the City – which “has yet to determine [for] what purpose it will” use the property. [42] The appellant submits the School Board’s September 2014 authorization of the land swap with the City operates as a binding admission that most of the property was “found to be unnecessary for the purposes of the expropriating authority” by the Board itself. Accordingly, before transferring all or part of the property to the City, the Board is required to comply with s. 41(1) of the Expropriations Act and offer to the appellant the opportunity to make the election to take the property back. [43] The School Board responds by asserting the appellant’s application is premature. Although in September 2014 the Board of Trustees had authorized the transfer of all or part of the property to the City in exchange for City lands, that plan has been superseded. Further, there is no agreement with the City, nor has the Minister of Education’s approval been obtained, as required by the Board’s September 2014 motion. The Board notes: “The process of the design of the school, the parking, the Bernie Morelli Centre and the rebuilding of the Jimmy Thompson Pool were underway, but incomplete at the time of the application.” [44] The School Board also submits the offer-back obligation under s. 41(1) of the Expropriations Act is only mandated where the Board has found the property to be “unnecessary for the purposes of the expropriating authority.” The Board has not made this finding. To the contrary, the Board asserts: “The Subject Property is necessary for the purposes of the Board in that it must provide one of the elements of the school site, namely part of school structure, the parking, playing fields, gymnasium, swimming pool and recreational facilities.” (2) Overview [45] In my view, the School Board’s actions have not triggered the offer-back obligation in s. 41(1) of the Expropriations Act. [46] The court must take a purposive approach to the interpretation of the Expropriations Act, not a “strict construction” approach. While the protective measures in the Act have teeth, including s. 41(1), these protective measures are not engaged on the facts of this case. [47] Throughout the process, the appellant was fully aware of the School Board’s intent to use the property as part of a joint development with the City. The joint development would provide a secondary school and ancillary facilities that would permit a full academic program for its students. This purpose is reflected in the Board’s notice of application to expropriate and in its notice of grounds, and continues to be operative. [48] The appellant acknowledges that the School Board may use the property for “the construction and operation of a secondary school and related amenities.” The appellant complains those purposes later changed impermissibly when the Board decided to swap land with the City; in effect, the Board used its expropriation power for the purposes of the City. I reject this complaint as being inconsistent with the Board’s approach. [49] To summarize the discussion below, I agree with the appellant that the School Board’s expropriation power can be used only to acquire a school site. The Board is not permitted to change the purpose for the expropriation. In this case, the Board did not change the purpose for the expropriation nor did it act as an agent for the City in expropriating the property. Further, since the Board has not finally decided to swap lands with the City or permit the construction of a City-owned facility on the property, the question of the proper application of s. 41 of the Expropriations Act is premature. (3) The Relevant Principles of Statutory Interpretation [50] In support of its argument that the phrase, “the purposes of the expropriating authority”, in s. 41(1) of the Expropriations Act, “should be strictly construed” against the expropriating authority, the appellant relies heavily on the decision of the Supreme Court of Canada in Toronto Area Transit Operating Authority v. Dell Holdings Ltd., [1997] 1 S.C.R. 32, at paras. 20-23. A majority of the court held: The expropriation of property is one of the ultimate exercises of governmental authority. To take all or part of a person’s property constitutes a severe loss and a very significant interference with a citizen’s private property. It follows that the power of an expropriating authority should be strictly construed in favour of those whose rights have been effective. … Further, since the Expropriations Act is a remedial statute, it must be given a broad and liberal interpretation consistent with its purpose. Substance, not form is the governing factor. … The application of these principles has resulted in the presumption that whenever land is expropriated, compensation will be paid. This has been the consistent approach of this Court. It follows that the Expropriations Act should be read in a broad and purposive manner in order to comply with the aim of the act to fully compensate a land owner whose property has been taken. [Internal citations omitted.] [51] But the development of the law in recent decades has limited the application of the strict construction approach to situations where an irreducible ambiguity appears. No such ambiguity exists in this case. In Canada 3000 Inc. (Re); Inter-Canadian (1991) Inc. (Trust of), [2006] 1 S.C.R. 865, Binnie J. noted, at para. 84: [O]nly if a provision is ambiguous (in that after full consideration of the context, multiple interpretations of the words arise that are equally consistent with Parliamentary intent), is it permissible to resort to interpretive presumptions such as "strict construction". The applicable principle is not "strict construction" but s. 12 of the Interpretation Act, which provides that every enactment "is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects". See also R. v. Dunn, 2013 ONCA 539, at paras. 36-39, Toronto Condominium Corporation No. 1908 v. Stefco Plumbing and Mechanical Contracting Inc., 2014 ONCA 4806, at para.37; Tyendinaga Mohawk Council v. Brant, 2014 ONCA 565, at para. 51; 1420041 Ontario Inc. v. 1 King West Inc., 2012 ONCA 249, at para. 32. [52] The modern approach to statutory interpretation requires the court to consider the grammatical and ordinary sense of the words used, the broader context having regard to the scheme and objects of the Act, and the intention of the Legislature. There is no need to import a presumed intent when the actual intent is clear, and doing so in the absence of an irreducible ambiguity would be an error of law. (4) Applying the Principles of Statutory Interpretation [53] The legislation strives to balance the interests of the property owner against the public interest in the work that the expropriation would advance. The Expropriations Act largely reflects the Report of the Royal Commission, Inquiry into Civil Rights, Report No. 1 (Toronto: Queen’s Printer, 1968), vol. 3 (the “McRuer Report”).[3] The McRuer Report proposed protective measures in order to establish, as noted at p. 980, “sufficient control over the exercise of the power,” were later found in the Expropriations Act. Two are particularly implicated in this case. [54] The first protective measure is the obligation of the expropriating authority to use the expropriation power for a purpose authorised by the empowering legislation. The second is that ss. 41 and 42 give the former owner some rights in respect of the expropriated land when it is abandoned by the expropriating authority. These bear on the interpretation of the Act and its application in this case, and I discuss each in more detail below. (a) The Use of the Expropriation Power for Proper “Purposes” [55] The appellant focuses on the expression, “the purposes of the expropriating authority,” in s. 41(1) of the Expropriations Act. I agree with the appellant’s argument that this expression in s. 41 is linked to the purpose expressed in the notice of application for approval to expropriate land under s. 6(1), and to the hearing of necessity process in s. 7(5). Together they help to set the entire interpretive context, in which, as the Supreme Court of Canada has stated, the express words of certain provisions of an act must be examined: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27, at paras. 21-23 and 40. [56] But I do not agree with the appellant’s argument that the application judge erred in adverting to the Education Act instead of confining his considerations to the Expropriations Act, as I explain below. [57] The concepts of the “purposes” or “objectives” of the expropriating authority are critical to the exercise of the power in the first place, its evaluation by an inquiry officer, and what is to happen on an abandonment of the expropriated land. This is plain from the legislative history. See the McRuer Report, at p. 984. [58] A statement of purposes for expropriation “accords with the basic principle that a person’s property rights should not be taken from him except for the purposes specified by the Legislature”: McRuer Report, at p. 1074. [59] The terms “purposes” and “objectives” are not defined in the Expropriations Act, because the actual power to expropriate is found in other legislation. Accordingly, the purposes and the objectives to be considered in interpreting and applying the Expropriations Act flow from the legislation that authorizes the expropriation under scrutiny. For example, in Kathrose Developments v. Peel (Regional Municipality) (1998), 42 L.C.R. 161, [1989] O.J. No. 1724, this court upheld a decision quashing a municipal expropriating bylaw on the basis that it purported to exercise authority under s. 193(1) of the Municipal Act, R.S.O. 1980, c. 302, but did so, "without a stated reason, without stating a municipal purpose, and without reports from any member of the staff.” [60] I therefore reject the appellant’s argument that the Education Act is irrelevant to the interpretation exercise required in this case. In my view, the School Board’s decision to expropriate the property for use as a “school site” must take account of the meaning of that term in s. 1(1) of the Education Act: “land or premises or an interest in land or premises required by a school board for a school, school playground, school garden, teacher’s residence, caretaker’s residence, gymnasium, school offices, parking areas or for any other school purpose.” A school board’s expropriation power is limited to school sites. [61] The application judge was right, at para. 6, to accept the appellant’s argument that it is not open to an expropriating authority to redefine or change its purposes after the original taking so as to avoid an inquiry on the true purpose of the expropriation. The appellant relies on two authorities for the proposition that an expropriating authority is bound by its statement of purposes and objectives in expropriating land: Progressive Developments (1978) Ltd. v. Winnipeg (City) (1982), 145 D.L.R. (3d) 405 (Man. C.A.), leave to appeal to S.C.C. refused (1983), 27 L.C.R. 142n; Grauer Estate v. Canada, [1986] F.C.J. No. 946 (T.D.). [62] At issue in Progressive Developments was a scheme by the City to avoid paying consequential damages to expropriated owners. The City expropriated the appellant’s land as part of a land assembly to permit redevelopment. Three years later, the City decided not to complete the land assembly. It required former owners to release their claims for consequential damages in exchange for the return of their land. The appellant refused, on the basis that the equivalent of s. 41 in The Expropriation Act, C.C.S.M. c. E190, permitted it to both recover the land and also sue for consequential damages. [63] The Manitoba Court of Appeal agreed with the appellant, at para. 12, that the word, “purposes”, in the Act refers to the purposes “for which the expropriation was undertaken,” which were “not simply for the general purposes of an authority but for specific purposes which must be set out in the documents initiating such expropriations.” The court explained: “Otherwise it would be impossible to determine by inquiry whether the expropriation is fair and reasonably necessary for the achievement of the objectives stated by the expropriating authority.” The court held that the purposes of the authority “are the purposes set out in the expropriating bylaw.” [64] In Grauer Estate, the land was taken in 1954 “for the extension of Vancouver Airport at Sea Island, British Columbia.” The trial judge found that the taking could not validly be found to be for the general “purposes of airport activity”, but only “for the restricted purpose of the taking”, which “was for the extension of runways”. [65] I agree with the rigorous approach taken in each of these cases. The expropriating authority must state its purposes and objectives, and must be held to them, in order for the protective elements of the Expropriations Act to be effective in protecting the owner’s interest. [66] Finally, the appellant also argues that the application judge erred in law in relying on s.183 of the Education Act as “justification for the Respondent’s transfer of expropriated property to a third party in spite of the fact that nothing in the Education Act speaks to disposal of expropriated land and notwithstanding the specific conflict of laws provision in Section 2 of the Expropriations Act”. [67] Section 183 of the Education Act permits school boards to pursue agreements with municipalities for the joint development of facilities, including, as provided in ss. 183(2)(b) and (c): (b) for the purpose of establishing and providing for the maintenance and operation of facilities on the property of any of the parties to such agreement, for such cultural, recreational, athletic, educational, administrative or other community purposes as are set out in the agreement, and such agreement shall include provision for, (c) the acquisition of any land that may be required for the purposes of the agreement, and the manner of approving and the method of apportioning the cost thereof… [68] Section 183 of the Education Act provides a method by which a school board can acquire a school site, through participation in a joint development that maximizes the efficient use of public resources, but it does not expressly authorize a school board to expropriate land for that purpose. [69] I agree with the appellant that the application judge erred to the extent, which is not entirely clear from his reasons, that he relied on s.183 of the Education Act to provide authority to the School Board to expropriate the property. In my view, his reference to s. 183 adds nothing, since the School Board’s authority to expropriate a school site was entirely sufficient to justify the property’s expropriation. (b) The Abandonment Provisions of the Expropriations Act [70] The logic of the appellant’s position is that s. 41(1) is to be applied by taking into account the expropriation authority’s purposes and objectives. I agree. I also agree with the appellant that s. 41(1) of the Expropriations Act empowers the court to provide the former owner with a remedy. [71] This is borne out by the legislative history of s 41. With respect to the abandonment of expropriated land, the McRuer Report’s recommendation, at p. 1073, was that where the expropriated land or part thereof “is found to be unnecessary for the purposes of the expropriating authority”, “the owner should have the right to elect to take the land back with a right of compensation for consequential damages, or to insist on the expropriating authority’s retaining the land expropriated and paying full compensation therefor.” This right of election with respect to expropriated property abandoned by the authority was incorporated into s. 41(1) of the Expropriations Act as the offer-back obligation: Morden monograph, at p. 34; Coates and Waqué, at p. 10-243. [72] The appellant relies again on Progressive Developments and Grauer Estate in its argument that the abandonment provisions are engaged. In Progressive Developments, the Manitoba Court of Appeal found, at p. 410, “it is clear that the purposes for which the land was expropriated, namely, for the Fort Garry land assembly scheme, were abandoned when the scheme itself was abandoned and hence the land was found to be unnecessary for the purposes of the authority.” Accordingly, the court found that the City was obliged to comply with the legislation and offer the election to take the land back without requiring the appellant to give up the right to sue for consequential damages. The court rejected the City’s argument that it had not yet formally decided that the land was unnecessary for its purposes, so that the election required by the legislation had not been triggered. [73] In Grauer Estate, the court found that, by 1958, a series of decisions led to the conclusion that a future runway would not enter or affect the expropriated property. The Crown never took possession of the property. The trial judge added “once the proposed runway was obviously going to be planned for further south, the Grauer property became… unnecessary for the contemplated runway construction or extension.” The Minister ought to have declared the property to be abandoned, so the landowner could take the property back under s. 24 of the federal Expropriation Act, R.S.C. 1952, c. 106 (similar to s. 41 of Ontario’s Expropriations Act). The trial judge concluded: “The decision had, in all fairness, as I see it, to be that, back in 1958, the Grauer property was unnecessary for the purposes of the proposed runway; the land was therefore not required.” [74] These cases stand for the proposition that, since an expropriating authority is bound by its statement of purposes and objectives in expropriating land, it is open to the court to declare that expropriated land has been abandoned, and compel the expropriating authority to comply with the offer-back obligation in s. 41 of the Expropriations Act. (c) Application of the Principles [75] In my view, for the purpose of s. 41 of the Expropriations Act the Board is bound by its April 2013 notice of application for approval to expropriate land, which stated the expropriation was “for the purposes of the construction and operation of a secondary school and related amenities”; and the August 2013 notice of grounds, which provided: “The placement of a joint school and recreational facility on the Subject Property will enable the parties to cooperate to realize a project which individually they could not achieve due to funding and/or space restrictions”. [76] The narrower description of the School Board’s purpose found in the November 2013 resolution authorizing the expropriation, “for the purpose of constructing a parking lot for a new Secondary School to be built on the current King George/Parkview site,” is not binding for the purpose of s. 41. I say this for three reasons. First, the use of the property as a school parking lot is just one of the permissible ways in which the School Board could use it in providing a school site. How the Board ultimately uses the property is a matter for it to determine. This is consistent with the approach taken by Sharpe J. (as he then was), in Marisa Construction v. Toronto (City) (1998), 65 L.C.R. 81, [1998] O.J No. 4069 (Div. Ct.), who observed, at para. 12, that the test in the legislation of whether the expropriation is fair, sound and reasonably necessary: …implies that some latitude has to be accorded to the expropriating authority and that the court is not entitled to substitute its opinion for that of the expropriating authority. In a case such as the present, some consideration has to be given to the practicality of the situation that confronts the expropriating authority. [77] It is, in short, not the court’s function, nor that of the Expropriations Act, to micromanage the School Board’s actual use of the property, so long as it is used as part of a school site or related amenities owned by the Board. [78] Second, in the statutory scheme of the Expropriations Act, as envisioned by the McRuer Report, the critical purposes are those set out in the notice of grounds to be served before the hearing of necessity. Since the notice of grounds is the basis for the hearing of necessity, it is more detailed than the notice of application. The appellant abandoned the request for a hearing of necessity based on the notice of grounds. In my view, nothing that has happened with respect to the property is inconsistent with the notice of grounds. The motion to approve the expropriation by the School Board was mere implementation. [79] Third, the appellant’s main argument was that the Board took the property for the City’s use, not its own use, and the appellant relied on the prospective land swap to substantiate the argument. The appellant did not argue that that Board was compelled to use the property only as a parking lot for a school to be located on the nearby King George/Parkview site. Indeed, in oral argument, in response to a question from the bench, counsel for the appellant made it clear that he was not arguing the narrow ground in the notice of expropriation that the Board can only use the property as a parking lot for a school to be located on the King George/Parkview site. That argument would have failed. [80] To sum up, in my view, the School Board did not abandon the property when it authorized the land swap with the City in September and again in November 2014. The motions do not operate as an admission binding on the Board that most of the property was “found to be unnecessary for the purposes of the expropriating authority” by the Board. The swap was not executed by staff, and it appears unlikely that it will be, although the Board has not yet rescinded the approvals. The School Board is set to use the property “for the purposes of the construction and operation of a secondary school and related amenities” consistent with the original notice of application. In short, the School Board did not change its purposes for expropriating the property, and s. 41 of the Expropriations Act was not triggered. [81] There is accordingly no merit in the appellant’s argument that the School Board’s expropriation was actually done for the benefit of the City and its purposes. The application was premature and should have been dismissed on that basis. ISSUE TWO: IS THE SCHOOL BOARD REQUIRED TO OFFER THE PROPERTY BACK TO THE APPELLANT UNDER S. 41 OF THE ACT DESPITE ITS RESOLUTION NOT TO DO SO UNDER S. 42 OF THE ACT? [82] As noted above, under s. 42 of the Expropriations Act, where the expropriating authority determines that the expropriated land is “no longer required for its purposes” and decides to dispose of it, the authority is obliged to give the former owner a right of first refusal to buy the land, unless the approving authority dispenses with this right. [83] The legislative history of s. 42 explains its purpose. The McRuer Report, at p. 1074, identified shortcomings in the earlier legislation, which did not contain, “any statutory restrictions on an expropriating authority’s right to do with the land what it wishes. The Commission saw “The absence of any restrictions is an unjustified encroachment on the rights of owners” that encouraged, “expropriation of more land than is required in order that a speculative profit may be made.” [84] This led to the recommendation, at p. 1075, “to require the consent of the appropriate approving authority before any surplus land could be sold by an expropriating authority.” These recommendations formed the basis of s. 42 of the Expropriations Act: Morden monograph, at p. 35; Coates and Waqué, at p. 10-245. [85] The School Board, as expropriating authority, applied to itself under s. 42 of the Expropriations Act, as approving authority, for approval to transfer all or part of the property to the City in exchange for City lands “without offering the owners from whom the expropriated lands were expropriated the first chance to repurchase the expropriated lands.” The Board approved the application on November 17, 2014. The Board submits that this dispensed with its offer-back obligation under s. 41 of the Act. [86] The appellant submits that the Board’s resolution under s. 42 of the Expropriations Act is not effective. If the School Board is found to have abandoned the property in whole or in part, then the Board is absolutely required to offer the property back to the appellant under s. 41 of the Expropriations Act, so long as compensation for the property is not paid in full. [87] In view of the disposition of the first issue, I would decline to rule definitively on the relationship between ss. 41 and 42 of the Expropriations Act. That issue should be explicated in a situation in which it is directly engaged on the facts. ISSUE THREE: DID THE APPLICATION JUDGE ERR IN HIS AWARD OF COSTS? [88] In its notice of application, the appellant sought costs on a substantial indemnity basis. The application judge’s costs ruling is at para. 17: With respect to costs, I have considered the factors that should guide the exercise of my discretion to award costs under Rule 57. I am particularly aware of the Court's obligation to award costs that are proportionate to the circumstances of the dispute and also within the reasonable expectation of the losing party. With these considerations in mind, the Respondent is entitled to its costs, including disbursements and taxes fixed at $58,815.46. [89] The appellant seeks leave, under s. 133(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43, to appeal the costs award, on two bases. [90] First, the appellant submits the application judge did not apply the principle that an expropriated owner should not be put out of pocket for defending its legal rights, especially in novel circumstances where no other remedy is readily available. Accordingly, the appellant seeks indemnity for legal expenses in the application, despite its lack of success. The appellant relies on Dell Holdings, at para. 23, in support of the argument that such a costs award would comply with “the aim of the [Expropriations] Act to fully compensate a land owner whose property is taken.” [91] The Dell Holdings principle of full compensation, which provides for indemnity for the expropriated owner’s reasonable legal and other expenses, applies when the issue is the determination of compensation payable. This is reflected in of s. 32 of the Expropriations Act, which provides that where the Ontario Municipal Board awards an expropriated owner 85 per cent or more of the compensation offered by the expropriating 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.” [92] I see no reason to extend the principle of full compensation for the costs of collateral civil litigation expropriated owners may bring to challenge the legality of the expropriation. [93] The appellant also relies on this court’s decision in Dam Investments Inc. v. Ontario (Finance), 2007 ONCA 527. The case concerned the interpretation of the Land Transfer Tax Act, R.S.O. 1990, c. L.6. This court allowed the appeal and set aside an award of substantial indemnity costs against the Minister of Finance. There was no conduct on the Minister’s part that would justify such an award. But the court did require both sides to bear their own costs on appeal and below, on the basis, noted at para. 20, the issue was novel, the positions of both parties were reasonable, and “there is a public interest in having the relevant statutory provisions clarified.” [94] Although the issue is novel, the lack of litigation around the meaning of s. 41 of the Expropriations Act over the years suggests there has been no burning public interest or need to have the legislation clarified. Nor do I find the appellant’s position to have been particularly reasonable. It pursued its own interest with full knowledge of the risks, as is its right, but I see no reason why costs should not simply follow the event as in the normal course. In particular, I see no reason to invoke the court’s jurisdiction or discretion under rule 57.01(2) of the Rules of Civil Procedure to award costs against the successful party. For these reasons, I would reject the appellant’s first costs argument. [95] The appellant’s second costs argument has more merit. The appellant submits that the application judge erred in awarding the School Board costs in the amount of $58,815.46 (the amount of partial indemnity costs sought by the appellant), rather than $29,574.17 (the amount of substantial indemnity costs sought by the Board). In effect, the application judge gave the Board twice the costs it was seeking on the application. [96] The School Board submits simply that “Justice Whitaker has accepted the appellant’s submissions as to the appropriate quantum of partial indemnity costs as being reasonable and applicable to either party.” [97] There is no basis in principle for an award of costs exceeding the amount sought by the successful party, and in this case there was no basis for an award of substantial indemnity costs against the unsuccessful appellant: 790668 Ontario Inc. v. D’Andrea Management Inc., 2015 ONCA 557. The School Board’s claim for substantial indemnity costs in the amount of $28,363.00 should be reduced to the amount of partial indemnity costs sought by the Board in the application, which was in the range of $11,000- $14,000 for partial indemnity costs.” Accordingly, I would grant leave to appeal the application judge’s costs award, set aside the award and substitute for it the amount of $14,000 all-inclusive for the application to be paid by the appellant to the respondent. [98] In this court, the appellant seeks substantial indemnity costs of $23,540.19, and partial indemnity costs of $15,886.14, all-inclusive, on the expropriation indemnity principle that I rejected above. The respondent filed a costs outline seeking $56,319.00 in substantial indemnity costs, or $33,757.50 in partial indemnity costs, all-inclusive. The increase in costs from the application no doubt reflects the fresh evidence application, which entailed a cross-examination, but an award of costs on an appeal that exceeds the costs in the court below would be unusual. [99] I would fix the costs of the appeal payable to the respondent School Board in the amount of $16,000, all-inclusive. This represents an amount that the appellant sought, and which it must therefore be prepared to pay: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.), at para. 38. Released: March 15, 2016 (KF) “P. Lauwers J.A.” “I agree K. Feldman J.A.” “I agree M.L. Benotto J.A.” [1] The application judge erroneously cited s. 42 in making this statement. [2] The record shows that the School Board made the statutory offer of compensation, which the appellant declined to accept, even on a without prejudice basis, as is the appellant’s right. [3] I rely on two works by John W. Morden (as he then was), who was counsel to the McRuer Commission. The first is An Introduction to the Expropriations Act 1968-69 (Ontario) (Toronto: Canada Law Book Ltd., 1969) (the “monograph”). The second is the lecture entitled: “The New Expropriation Legislation: Powers and Procedures” published as part of the 1970 Law Society of Upper Canada Special Lectures on Recent Developments in Real Estate Law (the “Special Lecture”). I will also refer to John A. Coates and Stephen F. Waqué, New Law of Expropriation, loose-leaf (2015-Rel. 3) (Scarborough: Carswell, 1990).