Windsor wins 21-year expropriation battle
Shergar Developments ordered to pay legal costs in precedent-setting decision
The City of Windsor is claiming a precedent-setting victory in the protracted 21-year legal war over its expropriation of the last piece of privately owned riverfront land between the bridge and Hiram Walker.
The unanimous decision from three judges on the Divisional Court of the Ontario Superior Court of Justice affirms an Ontario Municipal Board decision from 15 months ago that ordered London-based Shergar Developments to shoulder its own and the city’s legal costs and receive much less compensation than it was seeking. Shergar has spent portions of the last two decades unsuccessfully fighting the legitimacy of the 1998 expropriation, what it should be paid by the city and, finally, how much interest it deserves after all these years.
It’s typical in these expropriation disputes for the expropriating authority — in this case the city — to shoulder the legal costs for both itself and the landowner. But the judges concluded that full compensation shouldn’t be automatic, “regardless of how unreasonable the claimant’s position might be.” The OMB decision last year blamed Shergar for “excessive and unreasonable delay in a case that was not supported by credible evidence.” The key factor for the OMB and the divisional court was the City of Windsor offered $1.2 million to settle the matter in 2015 and Shergar turned it down, opting instead for an expensive two-week hearing where it presented an unconvincing case with “groundless arguments,” according to the OMB. The most recent decision means that the city’s legal bill for that hearing has to be paid by Shergar — an amount in the $400,000 range that still has to be confirmed by the court. Shergar is also on the hook for its own legal bills, which are usually paid by the expropriating municipality in cases like these. Also, it’s on the hook for $542,692 plus considerable interest for the city’s legal costs from an earlier “bad-faith” claim made by Shergar that resulted in a 20-day Superior Court trial in 2004. That court ruled the claim was without merit. Shergar also owes $50,000 in legal costs for the most recent divisional court case.
Going the other way, the city owes Shergar $266,000 for the land plus interest, which should bring the total to the $400,000 range, said City of Windsor lawyer Patrick Brode.
“So obviously we don’t pay them any money, they owe us money,” he said Monday, shortly after receiving the decision.
“I was very happy with it,” said Brode, who said the judges recognized that the city acted prudently when it made the “generous” $1.2-million offer to settle in 2015. He said the decision is a good precedent for municipalities in the province.
“In the future, going forward, when a municipality — Windsor and frankly every municipality in Ontario — acts carefully and makes a good offer on land that it has expropriated, it won’t necessarily be tagged with the cost of a hearing.” A lawyer for Shergar, John Doherty, said he was unable to comment on the decision Monday because he had not yet read it. Windsor’s Toronto-based lawyer Stephen Waque said he believes the reasons behind the decision will be “often quoted” in the future. Up until now, people whose land was being expropriated could assume that taking the city to the OMB and court was a risk-free opportunity, he said, and “maybe I’ll hit a home run and get the $5 million I’m claiming and maybe I won’t, but it’s a free chance to do that and why would I give that up?” The court decision affirms that it’s not a free ride, said Waque. “If you’ve been made a reasonable offer, you have to accept it or proceed under risk that not only will you not get your cost (paid by the city), but you’ll be paying the city’s cost.”
The city had been planning and consolidating a continuous five-kilometre stretch of riverfront park land 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 for years. After it lost the 21-day trial in 2004, it lost at the Ontario Court of Appeal in 2007.
Six years later, Shergar filed 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. But the OMB agreed with the city that the land was worth about $710,000. A big portion of that money belonged to CP, which was holding a mortgage on the property and has since been paid. Shergar was owed just $266,832, plus interest. Shergar still has the option of seeking leave to appeal this most recent decision to the Ontario Court of Appeal, but Waque said the fact it was a unanimous decision makes it less likely the appeal would be granted.