Executive Summary: Key Legal and Evidentiary Issues

• Scope of the Ontario Land Tribunal’s jurisdiction under the Expropriations Act to award interest on legal costs in expropriation proceedings
• Characterization of the Expropriations Act as a “complete code” and whether its silence on interest for costs in s. 32 precludes such awards
• Interaction between the Expropriations Act and the Courts of Justice Act, particularly ss. 128, 129 and 130, on prejudgment and post-judgment interest on costs
• Proper interpretation of case law (WMI, Tripp, Yemec, Rajic) regarding when interest on tribunal costs awards can begin to accrue
• Tension between the remedial, full-indemnity purpose of expropriation law and the express statutory prohibition on prejudgment interest on costs
• Determination that interest on MacEwen’s fixed costs award may only run from the Tribunal’s costs order date, not from an earlier settlement or bill-of-costs date

Factual background

The case arises out of the City of Ottawa’s expropriation of land required for the construction of a segment of the City’s rail transit line. MacEwen Petroleum Inc. was not the fee simple owner of the property but held a leasehold interest. It sublet the premises to a third party that operated a gas station and convenience store on the site, from which MacEwen derived rent and a share of profits from fuel sales. As an “owner” under the Expropriations Act (a term that expressly includes tenants), MacEwen advanced claims for compensation in respect of its interest in the expropriated lands. Those claims were pursued before the Ontario Land Tribunal under the statutory framework that governs compensation for expropriation in Ontario.

Settlement of compensation and the remaining dispute on costs

The City of Ottawa and MacEwen ultimately reached a settlement of MacEwen’s compensation claims under the Expropriations Act. This settlement covered the substantive monetary compensation for MacEwen’s leasehold interest and any injurious affection it suffered as a result of the taking. Following this agreement, the only outstanding issue between the parties concerned MacEwen’s entitlement to costs arising from the expropriation proceedings. Under s. 32(1) of the Expropriations Act, where the amount awarded to an owner is at least 85 per cent of the amount offered by the expropriating authority, the Tribunal must order the authority to pay the owner’s “reasonable legal, appraisal and other costs actually incurred” in determining the compensation payable. There was no real dispute that MacEwen met this statutory threshold and was entitled to recover its reasonable costs. What remained contentious was the quantum of those costs and, critically for this appeal, the date from which interest on those costs should run.

Ontario Land Tribunal decision on costs and interest

The Ontario Land Tribunal heard the parties on the issue of costs and released its decision on January 24, 2025. It fixed the amount of MacEwen’s legal and related costs at $356,755.45, representing the reasonable expenses MacEwen incurred in pursuing its expropriation claim. This costs figure itself was not challenged and is treated as final. Beyond setting the quantum, the Tribunal also ordered the City of Ottawa to pay interest on those costs. It determined that interest should commence on November 1, 2023, the date MacEwen had delivered its bill of costs to the City. In doing so, the Tribunal reasoned that starting interest from the bill-of-costs date aligned with the remedial purpose of the Expropriations Act and the principle that expropriated owners should be fully indemnified and made economically whole. In its view, requiring the City to pay interest from the earlier date reflected the time value of money and avoided leaving MacEwen out-of-pocket during the period before a formal costs order was pronounced.

Statutory framework and the key legal provisions

Two statutes provided the core legal framework for the dispute: the Expropriations Act and the Courts of Justice Act. Under the Expropriations Act, s. 33 specifically addresses interest, but only in relation to compensation for the “market value of the owner’s interest in the land” and for “injurious affection.” This section entitles an owner whose land has been expropriated to interest on those substantive compensation amounts, and grants the Tribunal a measure of discretion in adjusting interest where there are delays in determining compensation. However, s. 33 does not speak to interest on costs. Section 32(1), by contrast, governs costs and requires the Tribunal, where the 85 per cent threshold is met, to order the expropriating authority to pay the owner’s “reasonable legal, appraisal and other costs actually incurred” in determining compensation, either by fixing the costs itself or by referring them to an assessment officer. Importantly, this costs provision is silent on interest. MacEwen urged that this silence should not be read as a prohibition, and that the broad language of “reasonable” costs, in light of the remedial nature of the statute, permitted the Tribunal to include interest as part of full indemnity. The City responded that the Act is a complete code for expropriation rights, that s. 33’s express treatment of interest for compensation indicates a deliberate legislative decision not to extend interest to costs, and that s. 32’s silence cannot be used to infer a power to award prejudgment interest on costs. The Courts of Justice Act provided the second layer of rules. Section 129(1) states that “money owing under an order, including costs to be assessed or fixed by the court,” bears post-judgment interest from the date of the order at the prescribed rate. Section 129(4) provides that where costs are assessed without an order, they bear interest “as if an order” had been made on the date the person to whom the costs are payable became entitled to them. Section 128(1) governs prejudgment interest generally and grants a party entitled to an order for payment of money a right to interest from the date the cause of action arose to the date of the order. Critically, s. 128(4)(c) expressly prohibits the award of prejudgment interest “on an award of costs in the proceeding.” Section 130(1)(c) gives the court some flexibility to allow interest for a period “other than provided” in ss. 128 or 129 where it is just, but that discretion operates within the constraints imposed by the rest of the statute.

Positions on appeal and the role of precedent

The City of Ottawa appealed the Tribunal’s decision to the Divisional Court, arguing that the Tribunal had made an error of law by awarding interest on costs from a date earlier than its own costs order. The City maintained that the Expropriations Act did not authorize interest on costs at all, and that while the Tribunal could rely on the Courts of Justice Act to order post-judgment interest, s. 129(1) limited such interest to the period beginning on the date of the Tribunal’s order. In support, the City relied on earlier authorities, including WMI Waste Management of Canada v. Metropolitan Toronto and Ministry of Transportation v. Tripp, which had treated the Expropriations Act as a complete code and found that its provisions did not themselves confer a right to interest on costs. It also cited cases like United States of America v. Yemec and Rajic v. Spivak for the proposition that interest on costs and settlements, under the Courts of Justice Act, is tied to the date of the relevant court order, not to earlier milestones such as the date of success or the date of settlement. MacEwen opposed the appeal and brought a cross-appeal. On its view, s. 32(1) of the Expropriations Act granted the Tribunal broad authority to fashion a truly indemnifying costs order, including, where appropriate, awarding interest from a pre-order date. MacEwen further asserted that, properly understood, the Tribunal had intended interest to run from the date of the settlement between the parties, and that the reference to November 1, 2023 (the bill-of-costs date) was an error. It sought to rely on the remedial nature of expropriation law, Supreme Court of Canada authority emphasizing full compensation to expropriated owners, and s. 130(1)(c) of the Courts of Justice Act as a basis for flexibility in selecting an interest period that would fully indemnify it.

Divisional Court’s reasoning and treatment of the legislation

The Divisional Court treated the question of whether the Tribunal had statutory authority to award interest on costs from a pre-order date as a question of law subject to correctness review. Starting with the Expropriations Act, the Court held that s. 33’s express and detailed treatment of interest on compensation for land value and injurious affection, coupled with its silence on interest for costs, indicated that the Legislature had confined statutory interest rights in that way. It accepted the view articulated in earlier cases that the Act is a complete code for substantive expropriation rights, including rights to interest, and that s. 32(1)’s broad wording about “reasonable” costs could not be stretched to create a new head of interest entitlement on costs. Turning to the Courts of Justice Act, the Court found that s. 129(1) clearly authorizes post-judgment interest on costs awards, but only from the date of the order granting costs. It agreed with Yemec that while interest can begin before the precise dollar amount of costs is known, it cannot begin before there is an order that actually awards costs. The Court concluded that s. 129(4) did not apply because this was not a case of costs being assessed without an order. It then rejected MacEwen’s reliance on s. 130(1)(c) to justify an earlier interest start date. In the Court’s view, s. 130(1)(c) cannot be read as permitting what s. 128(4)(c) explicitly forbids: the award of prejudgment interest on costs. The flexibility provided by s. 130 operates within the boundaries of the express prohibitions elsewhere in the Act and cannot be used to circumvent them. The Court also noted that Rajic confirmed that interest under s. 129 is anchored to the date of the court order, not to a private settlement date. Overall, the Court concluded that neither the Expropriations Act nor the Courts of Justice Act gave the Tribunal jurisdiction to order interest on costs from the date of settlement or the bill-of-costs date.

Final disposition and overall outcome

On the basis of this statutory and case law analysis, the Divisional Court allowed the City of Ottawa’s appeal. It held that the Tribunal had erred in law by directing that interest on MacEwen’s costs of $356,755.45 run from November 1, 2023. The Court determined that interest could only lawfully accrue from January 24, 2025, the date of the Tribunal’s costs order, at the applicable post-judgment interest rate under the Courts of Justice Act. Because there was only one possible lawful outcome, the Court did not remit the matter to the Tribunal but instead simply corrected the operative interest start date. The cross-appeal by MacEwen, which sought an even earlier date (the date of settlement), was effectively rendered moot by the Court’s conclusion that no pre-order interest on costs is authorized. Each party was ordered to bear its own costs of the appeal, so no additional costs award was made at the appellate level. In summary, the City of Ottawa emerged as the successful party in the Divisional Court because it succeeded in narrowing the interest period applicable to the Tribunal’s costs award in favour of MacEwen Petroleum Inc. The Tribunal’s underlying costs quantum of $356,755.45 in MacEwen’s favour was left intact, but the City avoided having to pay interest from any date preceding the Tribunal’s order. The exact total monetary amount payable, inclusive of interest, cannot be determined from the decision alone because the judgment does not calculate the resulting interest figure.