Case Law Update: Interest Awards on Legal Fees in Expropriation Matters
Expropriated owners are generally entitled to their reasonable legal, appraisal, and other costs incurred for the purpose of determining compensation under section 32 of the Expropriations Act.
The Divisional Court recently released a decision concluding that the Ontario Land Tribunal[1] does not have statutory authority to award interest on costs before the Tribunal issues its costs order. This decision serves as a reminder that, while full indemnification for owners remains a key principle in expropriation law, compensation awards should be grounded in relevant statutory entitlements.
Background
In the context of a lessee whose leased property was expropriated, the expropriating authority and the Claimant resolved all of the Claimant’s expropriation claims with the exception of legal fees. The issues surrounding legal fees were adjudicated by the Ontario Land Tribunal.
In January 2025, the Tribunal issued its decision, Kareem George Saikaley v Ottawa (City).[2] The decision addressed several cost considerations regarding the reimbursement of legal fees in expropriation matters. As part of this decision, the Tribunal awarded interest on the Claimant’s legal fees from the date the bill was delivered, noting that it was sufficient for interest to have been incurred – it did not need to have been paid to be recoverable.[3]
The expropriating authority, the City of Ottawa, appealed the decision on the basis that the Claimant should not have been awarded interest on legal fees before the Tribunal fixed its order for costs. Nearly one year after the Tribunal’s decision, the Divisional Court allowed the appeal.[4]
The Divisional Court’s Analysis
The primary question at issue is whether the Tribunal was entitled to order interest on costs from a date prior to issuing its order.
The Court’s opinion was informed by a statutory analysis of both the Expropriations Act and the Courts of Justice Act (the “CJA”), in addition to case law.
The Expropriations Act does not expressly consider interest being awarded on outstanding costs; neither the section establishing reimbursement of an expropriated owner’s reasonable professional costs nor the section relating to the provision of interest on certain categories of compensation explicitly contemplate interest being awarded on costs.[5]
In contrast, the CJA explicitly allows for interest to be awarded on costs awards. However, the statute is clear that interest may arise upon the date the order is issued, and not before.
The Court then reviewed several cases. Beginning with WMI Waste Management of Canada v Metropolitan Toronto (Municipality),[6] the Court noted that this precedent reasoned the legislature precisely defined the circumstances in which interest was payable on expropriation compensation, and the interest provision did not confer a right to interest on costs. The Court of Appeal subsequently endorsed part of the WMI decision, finding that while the Expropriations Act could not be read to permit interest on costs, the CJA conferred substantive rights to do so.
However, interest awards under the CJA are limited to interest on post-judgement orders. This proposition was supported by case law that considered whether interest on costs could begin following the success of a motion, rather than the date costs were awarded. The Court found that only an order for the payment of interest on costs from the date costs were awarded was permitted.[7] This was later reinforced by the Court of Appeal.[8]
Although the Tribunal has previously awarded interest on costs from the date of settlement, [9] the Court noted that the Tribunal did not comment upon the statutory authority to do so. Therefore, the Court disagreed the Tribunal had the authority to order interest on costs from the settlement date.
Outcome
The Court concludes that under the CJA, post-judgement interest runs from the date of the Tribunal’s order.
The Court acknowledged that there remain two possibilities for achieving an interest award on costs prior to receiving an order from the Tribunal:
- Compensation for interest that has already been paid by a party (including a solicitor’s account). This may entitle a party to compensation under section 32 of the Expropriations Act; and
- Parties may agree upon interest owing as part of settlement negotiations.
For more information about the expropriation process, we invite property owners or expropriating authorities to contact our firm for an initial consultation at no cost.
[1] Reference to the Ontario Land Tribunal or “Tribunal” is intended to encompass the current Ontario Land Tribunal as well as prior tribunal’s with jurisdiction to dispose of expropriation matters, including the Board of Negotiation and the Local Planning Appeals Tribunal.
[2] Kareem George Saikaley v Ottawa (City), 2025 CanLII 5384 (OLT).
[3] For a more fulsome case summary, please refer to our previous blog post.
[4] City of Ottawa v MacEwen Petroleum Inc., 2025 ONSC 6955.
[5] Expropriations Act, RSO 1990, c E.26, ss. 32, 33.
[6] WMI Waste Management of Canada v Metropolitan Toronto (Municipality),1981 CanLII 1632 (ON SC).
[7] Courts of Justice Act, RSO 1990, c C.43, s. 130(1)(c).
[8] Rajic v Spivak, 2025 ONCA 363.
[9] Hume v Ontario, 2019 CanLII 117324 (ON LPAT).