The land use powers vested in municipal and regional governments across Canada can put landowners at a disadvantage.
In particular, they have the power to expropriate property without the landowner’s consent, if deemed necessary to carry out their powers, duties and functions.
At the same time, Cunningham Swan, Carty, Little & Bonham LLP explain, “Landowners in Canada are to be treated fairly with the application of the following principles: There is a presumption of full compensation for all losses caused by an expropriation. Ambiguities or gaps in expropriation legislation are to be resolved in favour of the landowner.”
Ideally, the expropriation process is clear and clean cut. However, that doesn’t always happen, as has been seen recently.
A local government can “constructively expropriate” a property by making gradual zoning or permitted land use changes over a period of time.
As discussed previously in a Legal Notes column, Annapolis Group Inc. claimed that the Halifax Regional Municipality had constructively expropriated several hundred acres of land acquired in the 1950s by refusing Annapolis’ attempt to advance a secondary planning process. Approval would have led to further serviced development of the property.
Upon appeal, the Supreme Court of Canada ruled obstructing the landowner’s reasonable use of land amounted to expropriation, even though the municipality never actually took title.
This ruling was consistent with a decision from the Quebec Court of Appeal, in what was described by Beauregard Avocats as a matter of “disguised expropriation.”
A woodlot acquired in 1976 was zoned to allow residential development over 70 per cent of its area. Ten years later, the owner agreed to the development of a ski trail by the City of Mascouche through the property. Unbeknownst to the owner, however, the city shortly afterwards modified the zoning for conservation purposes only, thus prohibiting any construction.
The Quebec Court of Appeal upheld a Quebec Superior Court decision in favour of the landowner and allowed fair compensation. They commented that, “a constructive expropriation arises out of an act which results in dispossession of any personal or commercial property or that removes for all practical purposes any possibility of use of that property.”
How is fair compensation determined when your land is continuously down-zoned and then expropriated?
Gowling WLG outlines the dispute of Lynch vs. St. John’s (City) that landed in front of the Newfoundland Court of Appeal in 2022.
Land acquired in 1960 in the Broad Cover River watershed had been subject to a series of continuous and increased restrictions, aimed primarily at preventing any pollution of the watershed.
As Gowling explains, “This began with development restrictions imposed by the province, to be administered by the city. The expropriated lands were later brought into the city as part of a large reorganization of the North East Avalon Region in 1992.”
More restrictions followed.
“Ultimately, in 2013, the city advised the expropriated landowner that the lands could not be developed and must be maintained in their natural state.”
The question then arose as to how the expropriated property should be valued, given that permitted uses had been reduced so significantly over time. Did the expropriation take place when the first restrictions were placed on the property, or years later when development was completed banned?
“The court of appeal determined that the process leading to the constructive expropriation started in 1964 and ended with the city’s refusal of all development in 2013” writes Gowling.
“In this case, the court of appeal found that the restrictions imposed over the years were all intended to achieve the same objective and were part of one scheme with a view to achieving effective expropriation.”
As Gowling WLG partner Sahil Shoor explained to the Daily Commercial News, “The court of appeal held that the downsizing had to be ignored in determining compensation. As a result, the compensation ought to be calculated before any downsizing occurred. The matter was sent back to Public Utilities Board for compensation determination.”
No final determination has been made.
John Bleasby is a Coldwater, Ont.-based freelance writer. Send comments and Legal Notes column ideas to email@example.com.