



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 Boards 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 appellants
    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 Boards 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 communitys 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 Managers 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 Citys 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 seniors 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. Warlings 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 Citys
    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 Citys 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 Citys 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 Boards 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 appellants president, said the withdrawal
    occurred in light of what I understood to be the [School Boards] 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 Citys 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 Boards 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 Boards
    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
    appellants 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 appellants 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 Applicants 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 Boards 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 Boards 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 Boards
    submission that s. 41 is not triggered because the subject lands have not been
    found to be no longer required for the Boards 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 Boards 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 appellants 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 Boards 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 Boards 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 Boards 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 appellants 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 Educations approval been obtained, as required by the Boards
    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 Boards 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 Boards 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 Boards 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 Boards approach.

[49]

To
    summarize the discussion below, I agree with the appellant that the School
    Boards 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 persons property
    constitutes a severe loss and a very significant interference with a citizens
    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: Queens 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
    appellants 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 appellants 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 persons 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 appellants argument that the
Education Act
is
    irrelevant to the interpretation exercise required in this case. In my view,
    the School Boards 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, teachers
    residence, caretakers residence, gymnasium, school offices, parking areas or
    for any other school purpose. A school boards expropriation power is limited
    to school sites.

[61]

The
    application judge was right, at para. 6, to accept the appellants 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
    appellants 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 owners 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 Respondents
    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 Boards
    authority to expropriate a school site was entirely sufficient to justify the
    propertys expropriation.

(b)

The Abandonment Provisions of the
Expropriations Act

[70]

The
    logic of the appellants position is that s. 41(1) is to be applied by taking
    into account the expropriation authoritys 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 Reports 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 authoritys 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 Citys 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
    Ontarios
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 Boards 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 courts function, nor that of the
Expropriations Act
,
    to micromanage the School Boards 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 appellants main argument was that the Board took the property for the
    Citys 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 appellants argument that the School Boards
    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 authoritys 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 Boards 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 judges 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 owners 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 courts 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 Ministers 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 appellants 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 courts 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 appellants first costs argument.

[95]

The
    appellants 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 appellants
    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. DAndrea Management Inc
., 2015 ONCA 557. The School
    Boards 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
    judges 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 appellants 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).


