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Case Summary: Vincorp Financial Ltd v Oxford (County), 2014 ONCA 876

Dec 18

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12/18/2014 8:31 AM  RssIcon

In May, we posted a blog entry on Vincorp Financial Ltd v The Corporation of the County of Oxford, 2014 ONSC 2580, a decision of the Ontario Superior Court of Justice concerning the ability of a municipality to expropriation lands to sell to another business (Toyota) to build a factory.  You can review that post here.

The Ontario Court of Appeal just released its decision in Vincorp Financial Ltd v Oxford (County), 2014 ONCA 876, dismissing the appeal. The Appellant, Vincorp, argued three bases for the appeal:

1. Oxford gave Toyota a bonus in violation of s 106 of the Municipal Act, 2001, SO 2001 c 25, by transferring the mall lands to Toyota at the fair value as defined by the Expropriations Act, RSO 1990, c E26, which did not reflect any increase in value attributable to the proposed development.

2. The expropriation of the mall lands was illegal, because it was tainted by the concurrent agreement to sell the lands at the expropriation value.

3. Oxford is liable in trespass for damages for the differential, in addition to the payment for the market value as defined by the Expropriations Act, which the expropriation process will provide to them.

Section 106 of the Ontario Municipal Act says that a municipality shall not assist directly or indirectly any manufacturing business or other industrial or commercial enterprise through the granting of bonuses for that purpose. 

The appellant asserted that the trial judge erred in viewing the expropriation of the mall lands by the respondent as constituting one transaction and the sale to Toyota at the expropriation price as a separate transaction. In the appellants’ submission, the two transactions should have been viewed together as one single transaction. It would follow, according to the appellant, that a violation of s. 106 as part of that transaction would operate to invalidate the expropriation of the appellants’ lands.

At trial, the appellant had asked the court to determine whether Oxford could lawfully expropriate lands to transfer to the car manufacturer for the proposed development of the plant.  The court stated that a municipality can expropriate lands and in turn sell them to a private party so long as the expropriation is in pursuit of the public interest.  On appeal, it was conceded that the expropriation had proceeded on the basis that there was a proper municipal purpose for the expropriation. That purpose was to promote economic development in the area. It was also conceded that a municipality may have in mind a particular purpose, when deciding to expropriate. Even if the subsequent sale and transfer to Toyota had breached s. 106, this breach would not invalidate or vitiate the proper purpose for the expropriation and would not render the expropriation invalid. As explained by the trial judge and quoted by the Court of Appeal, “a compelling valid purpose (promotion of economic development), drove Oxford’s decision to expropriate the mall lands and sell this land to Toyota for the expropriation price. The fact that the mall lands were transferred to Toyota for the expropriation price does not change the validity of the expropriation power that was exercised.”

The Ontario Court of Appeal dismissed the appeal, concluding that even if it accepted the submission of the appellants to the effect that the expropriation and sale should be considered together as a single transaction, and that there was a breach of s. 106, this would not invalidate the expropriation and give rise to an entitlement to damages calculated by the excess of the fair market value taking into account the proposed development over the expropriation value provided under the Expropriations Act. The ONCA concluded that there is nothing in the legislative purpose underlying s. 106 of the Municipal Act, (to level the playing field between municipalities competing to attract development), or in the language of s. 106 itself to suggest any intention to confer a right to damages upon land owners like the appellants.

If you have questions or would like to discuss this topic further, please contact Jeremy P. Smith at Patterson Law at 1-888-897-2001.

Please note that this article is meant to provide information only and is not intended to confer legal advice or opinion. If you have any further questions please consult a lawyer. Please note as well that many of the statements are general principles which may vary on a case by case basis.