Interest On Costs In Expropriation Cases Run From Date Of Order: Ontario Divisional Court, City Of Ottawa v. MacEwen Petroleum Inc., 2025 ONSC 6955

The Ontario Divisional Court recently considered whether an expropriation claimant is entitled to interest on legal costs from a date prior to the Tribunal’s costs order in City of Ottawa v. MacEwen Petroleum Inc., 2025 ONSC 6955.

The appeal arose from the City of Ottawa’s expropriation of lands required for a segment of its rail transit line – lands of which MacEwen Petroleum Inc. (“MacEwen”) was a lessee. The City and MacEwen settled MacEwen’s compensation claims under the Expropriations Act, R.S.O. 1990, c. E.26 ( the “Act”), leaving only the issue of costs to be determined by the Ontario Land Tribunal (the “Tribunal”). 

The Tribunal awarded MacEwen costs and ordered that interest on those costs run from the date MacEwen delivered its bill of costs to the City, reasoning that such an award was consistent with the principle that claimants in expropriation proceedings should be fully indemnified and made economically whole. 

The City appealed, arguing that neither the Act nor the Courts of Justice Act, R.S.O. 1990, c. 43 (CJA) authorize the Tribunal to award interest on costs from a date prior to the Tribunal’s order. MacEwen cross-appealed, submitting that interest ought to have been awarded from the date of settlement rather than the date its bill of costs was delivered. 

In considering the appeal, the Court reviewed sections 32 and 33 of the Act. In doing so, it emphasized that the legislation is remedial in nature and should be interpreted broadly in favour of those whose property rights have been affected, citing Smith v. Alliance Pipeline Ltd., 2011 SCC 7 and Dell Holdings Ltd. v. Toronto Area Transit Operating Authority, [1997] 1 S.C.R. 32. The Court also reiterated that one of the central aims of the Act is to ensure that rights holders in expropriated land are fully compensated. 

While acknowledging that section 32 grants the Tribunal broad discretion to award “reasonable legal, appraisal and other costs,” which advance the full-indemnification objective of the Act, the Court noted that section 33 expressly addresses interest and contains no provision authorizing interest on costs. 

The Court referenced WMI Waste Management of Canada v. Metropolitan Toronto (Municipality), 1981 CanLII 1632 (ON HCJ) and Ministry of Transportation v. Tripp, 1999 CanLII 3762 (ON CA) (Tripp) for the proposition that the Act constitutes a complete code governing substantive rights arising from expropriation. In particular, the Court noted that the Act specifically identifies the circumstance in which interest is payable and does not provide for interest on costs. 

The Court ruled that interpretive principles could not overcome the absence of statutory authority with respect to interest on costs. 

The Court rejected MacEwen’s argument that sections 129 and 130 of the CJA authorize prejudgment interest on costs. The Court relied on United States of America v. Yemec, 2007 CanLII 65619 in which the Court held that section 130 of the CJA cannot be used to authorize prejudgment interest on costs because section 128(4)(c) of the CJA expressly prohibits it. 

The Court further referenced section 129 of the CJA and Rajic v. Spivak, 2025 ONCA 363 for confirmation that post-judgment interest on costs runs from the date of the order, not the date a settlement is reached. 

Accordingly, the Court concluded that neither the Act nor the CJA authorize the Tribunal to award interest on costs from a date prior to its costs order. 

The Court noted that parties remain free to negotiate the payment of interest as part of a settlement agreement, and that interest already paid on legal accounts may still be recoverable as part of a claimant’s reasonable costs under section 32 of the Act. 

The appeal was allowed and interest was ordered to run only from the date of the Tribunal’s costs order.