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Lost developer's profit recovered in Guelph
February 10, 2001

Should lost developer's profit be compensated? This issue is the subject of a continuing dispute arising from a 1996 school site expropriation in Guelph, Ontario. The case is titled 747926 Ontario Ltd. v. Wellington (County) Board of Education. The trial decision is reported at (1999), 68 L.C.R. 109. The first appeal decision is reported at (2000), 192 D.L.R. (4th) 764.

The School Board expropriated a 7.86 acre parcel of land from a portion of land contained within a newly registered subdivision plan. The land was taken from what had been intended by the developer as the first phase of a multi-phase single family residential development.

The compensation claim was considered first by the Ontario Municipal Board in 1999. The Board awarded compensation for the market value of the land taken and rejected a claim for injurious affection. It then turned its attention to the claim for disturbance damages.

The developer and the School Board agreed that if there had been no expropriation, the developer would have earned a profit of $475,287 from the sale of the land. This is the sum that had been deducted as a development input cost for purposes of determining the market value of the land taken. The developer claimed this sum as disturbance damages. However, the Board adopted the conventional approach to this issue and rejected the claim.

The case was appealed to a three member panel of the Ontario Divisional Court. The appeal court concluded that lost developer's profit should be compensated as disturbance damages. In doing so, the court relied heavily upon the 1997 decision of the Supreme Court of Canada in Dell Holdings Ltd. v. Toronto Area Transit Operating Authority [1997] EXLAW 217, 60 L.C.R. 81.

The case may not yet be over. An application for leave to appeal has been filed with the Ontario Court of Appeal.

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