ARTICLES

EXPROPRIATION: the fear and the facts

In this fast-building country expropriation is hitting property holders in new thousands and becoming an ominous bogey to the rest. These misunderstood laws do usurp some private rights. Here's what they can — and can't—do to you

Douglas Dacre November 8 1958
ARTICLES

EXPROPRIATION: the fear and the facts

In this fast-building country expropriation is hitting property holders in new thousands and becoming an ominous bogey to the rest. These misunderstood laws do usurp some private rights. Here's what they can — and can't—do to you

Douglas Dacre November 8 1958

EXPROPRIATION: the fear and the facts

In this fast-building country expropriation is hitting property holders in new thousands and becoming an ominous bogey to the rest. These misunderstood laws do usurp some private rights. Here's what they can — and can't—do to you

Douglas Dacre

Since the end of the war the dynamic expansion of Canada's economy has made many property owners vaguely and uneasily aware of a tangled web of legislation known as the laws of expropriation.

These statutes empower federal, provincial and municipal governments to confiscate any privately owned land or buildings they may need for defense works, airports, harbors, highways, universities, schools, city halls, car parks, sewage plants and scores of other facilities that benefit the community at large. Similar powers are vested in certain railroad, gas, oil, hydro, seaway and other privately or publicly owned utility companies to secure rights-of-way for tracks, pipelines and power cables.

The owner is entitled to compensation computed by independent appraisers and adjusted, if necessary, by a judge or arbitrator. But only under exceptional circumstances may he retain or recover his property.

Although the laws of expropriation repudiate the old ideal that a man’s home is his castle, economists regard them as essential to progress. If they were abolished tomorrow landowners would be able to block schemes of national importance by refusing to part with their holdings or by demanding prices that would cripple the taxpayer and the consumer.

Every landowner in Canada, whether he is a British Columbia shopkeeper with a few feet of main street front, an Alberta rancher with hundreds of square miles of range, an Ontario suburbanite with deeds to a pocket-handkerchief backyard, or a Nova Scotia millionaire with a big seaside estate, is equally vulnerable to expropriation.

Once a government department or authorized utility company has expropriated his land the owner can retrieve it only if he can prove to the satisfaction of a judge that the applicants are motivated by improper or dishonest intentions. If the owner cannot prove such a charge—and there is no record in Canada of one ever being substantiated— then his property is lost. He cannot keep it for reasons of sentimental attachment, or on the grounds that it is vital to his livelihood, or even on the claim that the authority concerned is failing to act in the public interest.

All acts of expropriation are intended to serve the public interest. The person responsible for safeguarding the public interest is invariably a provincial or federal cabinet minister. Ministers of the crown are responsible even in the case of expropriations by town councils and privately owned

utility companies.

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which, before acting, must get the consent of a provincial or federal government department.

Keith E. Eaton of Ottawa, one of Canada's leading legal experts on expropriation, says that the minister responsible for taking the property is “deemed" by the law to be acting in the public interest and that “his judgment in this regard is not open to review by the courts.”

When a property is expropriated the owner’s title vanishes and any lease held b\ a tenant is canceled. The only right remaining to owners and tenants is the right of compensation for loss and disturbance. Owners and tenants may refuse the amount of compensation offered by thi expropriating authority, and appeal for more to a county court, the exchequer court or a board of arbitration. But in making such appeals they run the risk of getting less, for judges and arbitrators are permitted to decrease as w'ell as increase the original award.

As a result of such cavalier powers expropriation is not always a peaceful procedure. Occasionally the expropriating authority has to summon the police when laying hold of newly acquired land. Some owners of expropriated land have tried to prevent its occupation or development by brandishing firearms in the faces of officials or by lying down in the path of advancing construction equipment. A few years ago, in Ottawa, an aged junk dealer clung to his expropriated lot beyond the time given him to quit. He watched helplessly as bulldozers shoved his tons of jumbled stock-intrade. About the same time, in the same city, a woman who had refused to vacate her expropriated house was carried out of it by police in the rocking chair to which she had strapped herself.

Since more and more land is required for communal projects incidents of this kind are increasing and the public sympathy engendered for the dispossessed owners by newspaper reports is gaining political significance. Ontario Premier Leslie Frost voiced the anxiety of many politicians-in-office when he said a few' weeks ago. to a group of provincial civil servants: “Around these parliament

buildings expropriation is becoming a dirty word.”

So many different authorities are expropriating property under so many different statutes that the Dominion Bureau of Statistics has not yet devised any accurate means of counting the cases. An index to the rising incidence of expropriation is visible in figures of the Ontario Department of Highways. In 1947 this department expropriated a thousand properties. Last year it expropriated six thousand. In 1954, when it was accumulating land tor its new trans-Ontario 401 Highw'ay. the department expropriated twenty-one thousand holdings.

An appraiser who appears regularly in courts as an expert witness on the value of real estate guesses that government

departments and utility companies are now expropriating between one hundred thousand and two hundred thousand private properties every year.

While these figures hint at an end to the days of private landholding the overwhelming majority of proprietors bow to the underlying justice of expropriation and accept the compensation offered serenely or grudgingly.

Out of fifty-three hundred properties expropriated in the past two years by Trans-Canada Pipe Lines Ltd.—for its twenty-three-hundred-mile right-of-way from Alberta to Montreal—the owners of only fifty have appealed against the amount of compensation awarded. Of two hundred eastern Ontario properties expropriated this year by the St. Lawrence Seaway Authority the owners of fewer than a dozen have disputed the fairness of the compensation.

Major General H. A. Young, deputy minister of the Department of Public Works, which is responsible for expropriating three quarters of the lands required by the federal government, estimates that only one percent of the disentitled owners involved go to court over compensation.

The amount of compensation awarded, even after appeal, is rarely sensationally high or low. “It’s about the true market price,” says Toronto’s J. I. Stewart, one of Canada’s foremost appraisers. Stewart adds: “Many people used to think that landowners made killings out of property bought by public authorities for big construction projects. Expropriation has exploded that myth. In fact expropriation has saved the taxpayer and the consumer countless millions.”

Time stands in support of Stewart’s estimate. While expropriation on a massive scale is a characteristic of modern development, the practice is more than a hundred years old. Expropriation has been employed by all British Commonwealth countries, by the United States, and by some other nations which espouse English Common Law, ever since the middle of the last century, when civilized communities everywhere began to acknowledge the advantages of drains.

From the moment English town councils assumed the right to run a public sewer under instead of around John Bull’s cabbage patch, expropriation laws have proliferated. In Canada, where ten provincial governments pass different acts, the statutes have intertwined and burgeoned into an enormous Gordian knot, so unwieldy that the Canadian Bar Association has appointed a special committee to draw up and promote simplified and unified legislation.

In Ontario alone there are eighteen statutes authorizing expropriation. The most widely used are the provincial government’s Municipal Act, School Administration Act, Public Parks Act, Public Utilities Act and Highway Improvement Act. Under these, town councils expropriate for municipal buildings and housing developments; school boards and parks boards expropriate for educational and recreational institutions; public utility companies expropriate for plants and rights-of-way; and highway authorities expropriate for widening old roads or laying new ones.

The nine other provinces have comparable acts.

In the federal field such government bodies as the department of public works, department of transport and department of national defense, expropriate land for post offices, airports, military camps and other nationally owned institutions under the authority of the federal Expropriation Act.

Some utility companies expropriate

under federal acts devised for their special requirements. These include the Canadian Broadcasting Act, the National Harbors Board Act, the Northwest Territories Power Commission Act, the Railway Act, the Federal District Commission Act, the St. Lawrence Seaway Authority Act and the Pipe Lines Act.

When the federal Department of Public Works wishes to take a citizen’s land under the terms of the Expropriation Act it deposits into the keeping of the appropriate county registrar of deeds a plan and detailed description of the property. Forthwith title to that property is vested in the department. “There is no

requirement,” says Keith E. Eaton, “for prior negotiation of purchase, nor for any notice to the owner of the expropriation.”

Theoretically, therefore, the owner could at the moment of expropriation be fixing the roof or mowing the lawn in total ignorance of the fact that during the twinkling of an eye these possessions had slipped from his grasp and that his role of proprietor had been transformed into that of trespasser. In practice, however, the department informs the owner of the expropriation. After the plan has been deposited and expropriation is an accomplished fact, agents of the depart-

ment try to make a deal with the owner on price. If the owner holds out for more than the department’s limit — which is based on the valuations of three independent appraisers—he is informed that he will have to submit his case to a judge of the Exchequer Court, a federal bench that deals exclusively with civil claims made by or against the crown. The department then pays the amount of its top offer into the Exchequer Court where it is held for the owner, at five-percent interest, pending final settlement of the price dispute.

The matter of the property and the matter of the compensation are now two separate issues.

The property already belongs in the eyes of the law to the department, which is usually anxious to start construction work. So the department applies to a judge of the Exchequer Court for a warrant for possession. When the department is making this application the former owner is given a chance to appear in court and fend off expropriation by proving that the department is a criminal organization or that its officers took his land by unlawful procedures. If the owner fails to invalidate the expropriation on these grounds the judge of the Exchequer Court gives him a reasonable time to vacate the property and presents the department with a warrant to take possession when that time expires.

Later, usually long after his old property is built upon by the department, the former owner may go to the Exchequer Court again to plead for additional compensation. He may support his case with the evidence of appraisers who disagree with those employed by the department.

After listening to the arguments of the appraisers the judge is guided by a principle laid down in 1949 by the Supreme Court of Canada—the principle that the compensation due is the value of the property to the owner, and not to the taker, at the moment of expropriation. To explain: up to the moment of expropriation a man’s home may be worth ten thousand dollars. At the moment of expropriation it may be worth ten million dollars because that is what it would cost to dig around it a gentle curve in a seaway or subway. But the owner gets the ten thousand.

The prickly “value to owner” principle is sometimes challenged. Before the courts today are proceedings instituted some years ago by Alistair Fraser, then lieutenant-governor of Nova Scotia. At the time Fraser owned Cape Porcupine, a rocky hill overlooking the Straits of Canso. To the casual observer it had little save scenic value.

Then the Department of Public Works expropriated the hill and used the rock as fill for the Canso Causeway. Rock brought from elsewhere might have cost up to five million dollars but Fraser, under the “value to owner" principle, was allowed only fifty-five hundred dollars. Fraser is appealing against the award and claiming one million dollars on the grounds that if the hill had not been expropriated by the public works department its rock would have been purchased from him in the normal way by the CNR and some other companies.

Whether the "value to owner” principle will be overthrown remains to be seen. Meanwhile, in setting compensation the Exchequer Court judge includes the owner’s removal expenses. In the case of a business he adds a sum to cover the loss of profits sustained by the owner during a reasonable period of search for alternative premises. On top of this some judges lump a fiat ten percent of the total sum as balm for pain of disturbance, though this is not required by law.

If the total compensation considered adequate by the judge exceeds the compensation offered originally the judge usually awards the legal costs of the case to the owner. When the judge awards less compensation than that originally offered he usually orders the owner to pay his own costs.

In such circumstances speculators are sometimes caught out. These are the people who, on hearing a rumor that a property is to be expropriated, buy it, and in anticipation of hefty compensation, pay more than the real value. To their chagrin they find the compensation is often less than they paid. W. H. Cherry, chief of the lands division of the Department of Public Works, says: "We don’t care what a man has paid for a property. We only offer him a fair price. And in awarding compensation judges observe the same principle.”

J. I. Stewart, the appraiser, quotes cases in which the avarice of individual owners ends in a salutary retribution. “When a small business is expropriated,” he says, “the owner often compiles a statement of the big profits he’s been making in order to get the highest compensation possible. Then he suddenly is overwhelmed by the afterthought that if he reveals these profits in open court he will be pounced upon by the income-tax authorities whom he has been bilking for years. Thus, to save himself from jail, he has to take less compensation than the amount to which he is really entitled.”

There are other odd angles to the question of compensation. If a man loses only part of his land by expropriation he is entitled to extra compensation for any loss in value sustained by the remainder.

This precedent was established in Nova Scotia, in 1922, by the case of the Sisters of Charity of Rockingham. The sisters operated a girls’ boarding school on land that ran down to the sea in Bedford Basin, near Halifax. The beach part of their land was expropriated under the Railway Act by the Halifax and Southwestern Railway Company and turned into a shunting yard. While the court

remained unconcerned about the ruin of the girls’ bathing parties it awarded the sisters seven thousand dollars extra compensation because the remaining half of their property now overlooked a more ugly scene.

Under a clause known as “injurious affection" the judge also can protect from loss proprietors whose property stands next to or near expropriated properties. This precedent was set in 1917 by the case of a downtown Toronto draper named J. F. Brown. The Toronto City Council excavated the sidewalk in front of Brown's store and sank into the cavity a public lavatory. Brown sued on the grounds that the lavatory was an offense and therefore a deterrent to his customers.

The judge declared that the lavatory was a boon for it stood at a streetcar interchange and was used gratefully by the populace. His Lordship allowed, however, that the "In” and "Out" stairs on the sidewalk, each covered by a protecting metal canopy, constituted an obstruction affecting particularly the staff and customers of Brown's. On these grounds he granted Brown ten thousand dollars for injurious affection.

While the principles governing compensation are the same under all expropriation statutes the methods of expropriation vary slightly.

When a railroad company wishes to expropriate rights-of-way under the Railway Act, or a gas or oil company seeks to expropriate rights-of-way under the Pipe Lines Act. it must first get permission from the Board of Transport Commissioners, a division of the federal Department of Transport. The owner is given an opportunity to protest against expropriation to the Board of Transport Commissioners but unless he can prove unlawful intent his case is forlorn. On receipt of the board's permission to expropriate. the companies concerned are authorized to lay down their right-of-way without the owner's consent, and as soon as they like.

If they cannot reach an agreement with the owner on the amount of compensation these companies must pay into court a sum fixed by a judge of a superior court of the province, plus six months’ interest on that sum. The amount is held in the owner's name pending arbitration proceedings before a county court, or provincial superior-court judge, who may increase or decrease the award.

Pipeline companies usually take a sixty-foot swath across an owner's property and when the trench is filled in permit the owner to use the land for all normal purposes. It may, for example, be cultivated. But no permanent buildings may be erected on it nor may it be crossed by heavy vehicles.

Pipeline companies, other utility companies and government departments buy land in the normal way whenever possible. But when large clusters or long chains of contiguous properties are required for urgent works, expropriation is standard practice, for it simplifies negotiations down to the principle of "take first and argue about price later.”

Obtaining land by conventional purchase is full of snags which might hold up a construction scheme for years. The first of these is the encumbered title. Often in the Atlantic provinces and occasionally elsewhere in Canada, buildings stand on leasehold land. The buildings belong to one owner and the land to another and this calls for tricky, separate negotiations.

In Ontario purchases are sometimes complicated by the dower rights of separated wives, who are entitled by law to one third of the value of all the real estate held by their husbands during the period in which they lived together.

Then there is the case common everywhere of tenants holding a long lease. They have to be compensated just as much as the owner, and in the case of

Another knotty problem involved in conventional purchase is a large number of heirs to an estate held in trust. Not long ago the Ontario Department of Highways, buying in the orthodox manner. had to negotiate separately with fourteen different heirs scattered between California and Scotland. All of them

were reluctant to lose land in Canada.

Frequently expropriation laws give rise to anguish because they make no provision for values which are difficult to assess in terms of dollars and cents.

J. 1. Stewart, the appraiser, cites the case of two elderly bachelor brothers at Windsor who struggled for years to preserve their old family home from the encroachment of commerce. After recon-

ciling themselves to the changed character and rising taxes of the neighborhood they decided that the only way they could afford to go on living in the house they revered was by transforming the grounds into a car park. They did this, retired from their jobs, and began supporting themselves on parking fees. A few months later the whole property was expropriated. Compensation failed to soften the blow. "Within a few weeks,” says Stewart, “one of the brothers was dead and the other was in an institution.

I have no doubt that this shattering of their last resort broke them physically and mentally.”

W. H. Cherry, chief of the lands division of the federal Department of Public Works, a man deeply engaged in expropriation proceedings, admits that his job is “sometimes most distressing.” He recalls having to expropriate a few years ago the home of an elderly blind couple. The compensation was not their first thought. They protested against expropriation on the ground that they knew every inch of their home by touch. The prospects of having to move to a strange house and learn their way about all over again appalled them. But the government needed their property and they had to go.

Once Cherry’s office was invaded by a woman who showed him arms covered with eczema, a condition her doctor ascribed to the shock of expropriation.

His most ironic task was having to expropriate twice within two years property belonging to the same man.

Charles Robbins, director of services for the Ontario Department of Highways, can remember several occasions on which his crews have been brought to a temporary halt by the shotguns of dispossessed farmers. At Durham, Ontario, one of his crews once worked for two weeks in an expropriated meadow while the farmer who owned the next field sat on a fence with a .303 rifle and threatened to shoot the first man who put a toe over the property line.

Another switch on the firearms stories that arise from expropriation was experienced by the late Fred Bronson when he was chairman of the Federal District Commission, a government agency charged with the task of beautifying Ottawa and its environs. A man who had lost his home and gardens to the commission’s landscaping schemes threatened over the telephone to “bring a gun” down to Bronson’s office. Bronson was relieved to learn that the man intended to shoot not Bronson but himself.

Since Bronson’s death from natural causes the Federal District Commission has been guilty of the biggest gaffe in the history of Canadian expropriation. A few years ago, after a war of attrition against the tenacious owner of an expropriated home in the new Gatineau Hills Park district, the commission finally persuaded him to leave by promising to let him keep the house and by undertaking to move it for him to another site. The commission then sent a house-moving crew to do the job. Unfortunately the crew took a wrong trail in the Gatineau bush and moved the house of a couple who lived a quarter of a mile away.

Expropriators themselves often are charged with profiteering as a result of the custom of expropriating more land than is required. During the recent construction of the trans-provincial 401 Highway the Ontario Department of Highways found itself faced with the problem of cutting farms into two halves by expropriating only a strip of land wide enough for the right-of-way. This bisection would have rendered the land

barns would have become separated by s heavily used highway. To simplify pro ceedings the government expropriatec whole farm properties. After the highwa> was built it was left with large tracts ol unwanted land. So it put the land up foi public auction. By this time the highway had made that land desirable for build ing. In one case the department received thirty thousand dollars an acre for land which a year or so earlier had cost it by expropriation five hundred dollars an acre.

Recently the federal Department of Public Works found on its list of Calgary properties land it expropriated in 1904 for a proposed immigration building. The building was never erected and ever afterward the land lay idle. That land was acquired for fifty thousand dollars an acre. A few weeks ago it was sold for three times that amount.

Still another criticism aimed at the laws of expropriation is the absence of clauses enforcing a warning of the owner. Through oversight or deliberate discourtesy many owners learn for the first time that their property has been expropriated when they see government or utility-company officials wandering about the land.

Four years ago Walter Griffiths, an executive of the Canadian Tanners’ Association. walked out into the grounds of his country home at Kleinburg, Ontario, and saw a team of surveyors chopping down trees to get an unimpeded line of sight for their instruments. On questioning the team leader he discovered that a strip of his land has been expropriated for highway widening. The authority responsible for administering this shock—• the Ontario Department of Highways— says the surveyor was at fault in that he did not give Griffiths before starting work the customary courtesy card, which explains what’s going on.

Major General H. A. Young, deputy minister of the federal Department of Public Works, says: “In the old days people often learned for the first time that their property had been expropriated when they read about it in the newspapers. But nowadays we bend over backwards to keep the owners abreast of every move and we even advise them how best to act in their own legal interests.”

That advice amounts to this: if your land is expropriated get a lawyer to tell you about your rights under the particular act the government department or utility company is using. Get a qualified appraiser to value your holding so that you’ll be on firm ground in arguments over compensation. And get rid of all hopes of keeping your property unless you can prove that the minister of the crown who is responsible for taking it is intent on carving it up between himself and his staff, if