Preserving governments’ ability to regulate land use 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: Closed
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Land use planning is a valuable tool that governments use to ensure environmental sustainability, appropriate economic development, and social inclusion for the communities they serve. This can also include regulating development on private property, which in some cases can involve the government “taking” or “expropriating” privately owned property for public purposes.

In law, there are two forms of land taking: (1) de jure taking, when governments formally acquire possession of private property through legislation; and (2) de facto, or constructive, taking, where the government effectively appropriates private land through regulations that leave an owner with no viable economic use of the property; in these cases, the government must also gain a beneficial interest in the land. In Canada, the common law allows a landowner to seek compensation through the courts for a constructive taking.

Constructive takings claims are relatively rare in the Canadian legal system. A legal battle in Nova Scotia recently brought the issue all the way to the Supreme Court of Canada (SCC).

Annapolis, a real estate and development company, owns lands within the Halifax Regional Municipality (the “HRM”), adjacent to a provincially designated wilderness area. The government identified the land for potential inclusion in a regional park. Annapolis twice applied to begin a planning process that would enable development on the land, but the applications were denied by the HRM council. The company launched a lawsuit against the HRM in 2019, claiming (among other things) that the Municipality’s refusal to rezone its lands amounted to de facto expropriation.

In 2021, the Nova Scotia Court of Appeal ruled that although Annapolis could not use the area as it wishes, it did not amount to the Municipality expropriating the land. Annapolis appealed the decision to the Supreme Court. Ecojustice intervened in the SCC hearing to stress the need to preserve governments’ ability to regulate land use to protect the environment without facing undue financial risks.

On October 21, 2022, the Supreme Court released its decision clarifying the circumstances in which government regulation of land use amounts to constructive taking of private property. In a 5-4 decision, the SCC determined that property owners must demonstrate: (1) that the government obtained an “advantage” flowing from the property; and (2) the regulation eliminates all reasonable or economic uses of the property.

In Ecojustice’s view, the Supreme Court’s decision risks significantly broadening the circumstances in which governments may be liable for interfering with private property rights by regulating land use in the public interest.

Land use is a key policy area that can further economic, environmental, and social goals. There are also important consequences for public health since land use influences air quality and pollution. Ecojustice intervened in this case to ensure governments do not face undue financial burden when making land use decisions in support of environmental protection.

Currently, de facto expropriation claims, like the case brought by Annapolis, are uncommon in Canada and they are seldom successful. Courts have described such claims as “exceptional” and “rare.”

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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