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Professor touts compensation for emotional loss from expropriation

|Written By Ron Stang

WINDSOR, Ont. — The Windsor-Essex Parkway construction project, the most expensive highway effort currently underway in Ontario, is also one of the largest cases of property expropriation in Canada.

Expropriation law has ‘clearly excluded’ emotional loss from compensation, says Anneke Smit.

Authorities have acquired some 900 properties to build the $1.4-billion, 11-kilometre, six-lane expressway that will connect the end of Highway 401 to a new bridge linking Windsor and Detroit.

The Ministry of Transportation and business and residential landowners along the route have reached some 350 property agreements. Construction got underway late last year with a completion date of 2014.

The acquisition process has been going on for several years with the ministry and property owners in large part coming to amicable deals based on appraised fair-market values.

University of Windsor property law professor Anneke Smit agrees the process has gone smoothly with few residents or business owners upset about the money paid out.

But that doesn’t mean they’re very happy about having to give up their homes and suffer the loss of community.

Smit and her team are interviewing as many of these property owners as they can to find out how they felt about the process, particularly in terms of how the loss of their homes affected their lives socially and psychologically.

One homeowner, a woman in her 60s, told Smit the process had been “wrenching.” An 88-year-old man indicated he hated what was taking place and said “they are taking it all away from me after 50 years.”

In a chapter in a forthcoming book, Smit puts forward the case for compensation based not just on the loss of a physical asset but also the inherent emotional deprivation of giving up property that has a singular and symbolic value.

Smit’s background is in immigration and refugee law. She worked with the Organization for Security and Co-operation in Europe’s mission in Kosovo and the Caucasus Institute for Peace, Democracy, and Development in Tbilisi, Georgia.

During her work, she met victims of war who were seeking resettlement after displacement. The experiences created an enduring interest in the idea of forced loss of home, community, and identity, even in democratic countries and for relatively benign purposes.

In Canada, the concept of emotional loss has “received virtually no protection” in expropriation law, she says. It’s “quite easy” for the state, acting in the public interest, “to exert a right of expropriation over a title holder,” she notes.

Smit’s upcoming book, co-edited with University of Windsor land-use planning law professor Marcia Valiante, is called Private Property, Planning, and the Public Interest.

It explores various forms of compensation and compares the Canadian approach to jurisdictions such as Britain, Australia, and New Zealand that compensate above and beyond replacement of the home itself.

Smit looks at some of the theoretical concepts of the home as a refuge, as one of the most significant financial investments a person will make, and as an anchor to an overwhelming sense of place. She quotes scholars who describe forced loss of home as “domicide.”

In Canada, it’s the principle of pecuniary loss that largely governs statute-driven expropriation law. Payouts relate to the appraised market value.

“There’s nothing about loss of dignity or loss of a sense of home or that sort of emotional stability or loss of community,” says Smit. “It’s been very clearly excluded.”

Canada’s system can also make payouts for disturbance damages that range from five to 15 per cent of market value. But the payouts compensate for factors such as the inconvenience of moving and not for the emotional impact.

Moreover, Canadian law doesn’t even parse for factors such as the homeowner’s length of residence. It makes no difference whether someone has lived in the building for 50 years or six months.

Smit points to an alternative compensation system called “solatium.” It’s a kind of soothing for a loss much like a sweetener or an apology.

For example, in New Zealand there’s a flat solatium of $2,000. In New South Wales, Australia, the solatium can go as high as $15,000. The amount depends on criteria such as the nature of an owner’s interest in the property and the length of residence.

In Britain, there’s the concept of home-loss compensation calculated at 10 per cent of market value.

In Michigan, the state constitution provides additional compensation through a percentage premium plan of 125 per cent of market value in cases of eminent domain.

Smit notes Canadian expropriation law differs even from other domestic legal areas such as matrimonial and landlord and tenant issues.

In family law, the home has symbolic and practical importance compared to other property. At the same time, the law grants tenants protection from landlords entering their homes at any time. In tax law, there are capital-gains exemptions for primary residences.

But some Ontario property law practitioners say the current system provides adequate compensation and argue expanding it for emotional harm akin to personal injury would be difficult to implement.

For example, Robert Doumani of Aird & Berlis LLP says the concept is “ill-founded.”

He notes expropriations are usually for the public good and says extra payouts “would be an additional burden to the taxpayers.”

Doumani, who represents public authorities in expropriation cases, suggests that affixing an emotional value to an inert entity like property is a “tenuous concept at best.”

He adds that such losses would be difficult to prove and require psychiatrists or medical experts, thereby increasing the length of hearings.

Sean Foran, a partner at WeirFoulds LLP and past president of the Ontario Expropriation Association, calls solatium an “interesting concept” but says “we need to be very cautious about importing” such ideas.

Foran, who acts both for public expropriating bodies and individuals affected by them, says his experience is that authorities “do whatever they can” when planning infrastructure in order to avoid taking private property.

In his view, paying additional costs would require close examination.

“When you start bringing in concepts of these personal injury-type damages — home loss, pain and suffering, solatium, whatever you want to call it — coupled with the full indemnity-cost regime, I think it’s going to be very, very difficult to get these matters resolved before the board,” he says.

Foran also suggests “it’s difficult enough” to settle expropriation claims and notes defining pain and suffering would involve more subjectivity than the current system.

For her part, Smit acknowledges those issues. But while she says enhanced compensation “does not come without difficulties,” she believes the obstacles, as shown in other jurisdictions, are “not an insurmountable hurdle.”

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  • Julian Bodnar
    Having now practiced 30 years plus in the area of pursuing compensation for expropriation/surface rights claims, I would venture to say that I cannot recall a case where emotional attachment was not part of the equation in driving the compensation claim. In fact, the inability of existing legal processes to give credence to the dynamics of emotional attachments in these sorts of claim is one of the primary reasons why I chose to transform my practice to be that of a Settlement Counsel. Indeed it will be interesting to see where the law might take us here.

    Julian Bodnar Saskatoon www.julianbodnar.com
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