City claims riverfront victory
Developer vows to appeal unprecedented $1M ruling over 1998 land expropriation
The City of Windsor is claiming a major precedent-setting victory in the protracted legal war that began with its 1998 expropriation of the last piece of privately owned riverfront land between the Hiram Walker distillery and the Ambassador Bridge.
The then-owner of that sixacre property, London’s Shergar Developments Ltd., has spent portions of the last two decades unsuccessfully fighting with Windsor over the legitimacy of the expropriation, what Shergar should be paid, and most recently, how much interest it deserves after all these years.
In a Jan. 24 decision by the Ontario Municipal Board, which Shergar has already said it will appeal, the developer has been hit with huge legal costs and much less compensation than what it was seeking. The board concluded that Shergar shouldn’t be rewarded with 18 years of six per cent annual interest (the statutory amount in these cases) when “very little of that time was devoted to pursing its claim.” The board said the city made every attempt possible to pay Shergar earlier, but that Shergar “persistently resisted those efforts by pursuing groundless litigation.”
Shergar has also been ordered to pay both its own and the city’s legal costs, which will likely be “very, very substantial,” according to City of Windsor lawyer Patrick Brode. His ballpark estimate is the legal bills will total $400,000-plus for each party. He said that, normally, the party fighting expropriation has its costs covered by the municipality.
The recent ruling means an $800,000 legal bill that normally would be paid by the city is instead going to Shergar.
“I think (the OMB) is sending a message,” said Brode.
The ruling is “unprecedented,” Toronto expropriation lawyer Andrew Baker writes in an article Thursday proclaiming the decision.
He said the decision “finally provides expropriating authorities with a clear precedent for penalizing a claimant’s delay and unreasonable litigation position.” And, he added, it will mean substantial savings for Windsor.
Mayor Drew Dilkens called the decision a “huge win” that confirms the city has been reasonable every step of the way for the last 20 years, while Shergar was unreasonable.
“And there is no valid reason for cost considerations to take 20 years to resolve,” he said. “It’s unconscionable.”
Shergar’s lawyer in this case, Ronald Moldaver, didn’t return phone calls and emails Wednesday and Thursday. Shergar’s original owner, London builder and developer Don Crich, died a few years ago.
Attempts to reach a spokesperson for his family were also unsuccessful.
In the most recent ruling, the OMB blames Shergar for “excessive and unreasonable delay in a case that was not supported by credible evidence.” A key factor, according to the ruling, was the fact Windsor offered to settle the entire matter in 2015 for $1.2 million. Shergar didn’t take the cash and instead went forward with a two-week hearing in Toronto, where it presented an unconvincing case, according to the board, noting city lawyers then had to “expend significant costs” bringing in experts to dispute Shergar’s “groundless arguments.”
The OMB decided that the interest the city should pay Shergar on the $266,832 owed for the land should be three per cent annually for the first 15 years of the dispute, then six per cent from 2013 until now.
But Shergar also owes the city money. An earlier Superior Court of Justice decision required Shergar to pay the city’s $521,137 legal costs. That total has risen to $737,412 at four per cent interest over 3,787 days. And an order for Shergar to pay Windsor’s $40,000 court costs for the Ontario Court of Appeal hearing has since risen to more than $60,000 at six per cent interest for 3,077 days.
Brode said that if the most recent ruling stands “they owe us about $1 million at the end of the day.” Shergar informed the city a few days ago it intends to appeal to the Ontario Divisional Court, a process that will drag the matter out for at least another year.
The city had been planning and consolidating a continuous fivekilometre stretch of riverfront parkway for almost 50 years when, in 1995, council tried to buy the sixacre former railway property from CP Rail, which also owned the former railway cut on the south side of Riverside Drive beside the CBC building. The city was beat out by Shergar, which bought both properties for about $750,000.
Council voted to expropriate the riverfront portion, between Caron Avenue and Elm Street in 1997, and the process began the following year. Shergar fought it, culminating in a 21-day Ontario Superior Court trial in 2004 that ended with a ruling that said Windsor’s expropriation was valid. Shergar’s appeal was rejected by the Ontario Court of Appeal in 2007.
It took another six years for Shergar to file a notice of arbitration, the process used to determine how much it should be paid for the expropriated land. Shergar asserted it was owed more than $5 million. The city said the land was worth about $710,000. Following a twoweek OMB hearing in Toronto, the ruling came down in Windsor’s favour: $710,000. A big portion of that money belonged to CP, which was holding a mortgage on the property. Shergar was owed just $266,832.
The most recent hearing was then set to decide who should pay the legal costs of the previous hearing and the outstanding interest owed to Shergar. After rejecting the city’s $1.2-million offer, Shergar argued it should be paid the statutory six per cent interest on the entire $710,000. But the board agreed with the city that it should pay interest only on $266,832. It also concluded the statutory six per cent interest would amount to condoning the “excessive and unreasonable delay ” in a case that was not supported by credible evidence.
“It’s evident that the claim should have been settled many years ago,” the OMB said, arguing it would “not be unfair” to reduce the interest.
Brode, who has managed the file since city council began the expropriation process nearly 21 years ago, wanted to underline the fact it’s been a fight worth waging.
“The continuous riverfront we’ve got is thanks to this,” he said.
The mayor agreed, and he’s hopeful the courts will look at the case and refuse to hear Shergar’s appeal.
“We have one of the most beautiful waterfronts in the world right here in Windsor, and so there was a cost to doing that,” Dilkens said. “Good on the council of the day in 1998 to move forward and get that piece of land.”