Preserving governments’ ability to regulate land usage to protect the environment

Annapolis Group Inc. v Halifax Regional Municipality
Herring Cove Provincial Park_Textures of Nature_Photo by Dennis Jarvis
Program area – Healthy communities Status: In progress
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Annapolis, a real estate and development company, owns lands within the Halifax Regional Municipality, adjacent to a provincially designated wilderness area. These lands have been identified for potential inclusion in a regional park.

Annapolis has twice applied for the land to be rezoned for development, but these applications have been denied by Halifax. The company launched a lawsuit against Halifax in 2019, claiming the Municipality’s refusal to rezone its lands amounted to de facto expropriation. 

De facto expropriation refers to a landowner (or rightsholder’s) claim that government regulation has so limited the uses of a property that it has been effectively expropriated (taken for the government's own use).

Though the company is currently limited in its development options for the land, the Municipality has not formally designated the land for a park and maintains the right to freeze rezoning of the land during a planning phase. A planning phase often includes considerations about urban sprawl or how to properly service an area proposed for development.

Annapolis and the Municipality have been engaged in a legal battle over whether the land has been expropriated and if compensation is due. Most recently, the Nova Scotia Court of Appeal ruled that although Annapolis cannot use the area as it wishes, this does not amount to the Municipality expropriating the land.

The Supreme Court of Canada agreed to hear this case in response to an explicit request by Annapolis for the Court to change the law to facilitate de facto expropriation claims. Ecojustice is intervening on its own behalf, contending that the Court should uphold the existing interpretation of de facto expropriation to ensure that governments do not face undue financial risk when they seek to regulate land usage to protect the environment.  

The case is being heard before the Supreme Court on February 16, 2022. 

Ecojustice is intervening in this case to maintain the existing interpretation of de facto expropriation to preserve the ability of governments across Canada to make land use decisions in support of environmental protection without facing undue financial burden. If Annapolis is successful, it could open the door for landowners and rights holders to sue for compensation when governments move to prevent environmental degradation. 

Currently, a claim for de facto expropriation requires that the landowner show that there is no reasonable use left for the property (all uses being prevented by regulation), AND that the government has obtained a “beneficial interest” in the property. The beneficial use criterion means that the government must obtain something for itself by taking the land in order for the land holder to be entitled to compensation.

Currently, these claims are uncommon in Canada, and they are seldom successful. Courts have described such claims as “exceptional” and “rare,” which would almost certainly change if the Court changes the law. 

Property rights are not absolute. They must be balanced with the government’s ability to make land use decisions in the public interest. While property owners can and should be compensated if their land is expropriated to benefit the community, governments should not be required to compensate private landowners with taxpayer dollars in cases where reasonable restrictions have been placed on potential uses of the land.

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