Posted on February 16, 2022 (updated: February 16, 2022)

Supreme Court hears precedent-setting case on test for de facto expropriation

Photo of rocks, stump, water, and foliage inHerring Cove Provincial Park in Nova Scotia
Herring Cove Provincial Park_Textures of Nature_Photo by Dennis Jarvis

Ecojustice intervening to defend governments’ ability to regulate to protect the environment 

HALIFAX, N.S./ TRADTIONAL TERRITORY OF THE MI’KMAQ – In a hearing today, the Supreme Court of Canada will consider whether the Halifax Regional Municipality’s decision to deny a developer’s request to rezone a parcel of land — where the Municipality is considering developing a regional park — amounts to de facto expropriation. If this appeal is successful, it could open the door for landowners and rights holders to sue for compensation when governments move to prevent environmental degradation. 

Ecojustice is appearing before the court as an intervenor in the case of Annapolis Group Inc. v Halifax Regional Municipality and will argue that expanding the interpretation of de facto expropriation would severely inhibit the ability of governments across the country to take action to protect the environment.  

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). 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. 

The Supreme Court of Canada has granted leave in this case in response to an explicit request for the Court to change the law. Annapolis, a real estate and development company, owns lands within the Municipality of Halifax, adjacent to a provincially designated wilderness area.  

Annapolis has twice applied for the land to be rezoned to develop the land, but these applications have been denied by Halifax as they consider the best long-term use for the area, which may include development of a regional park. 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, or to undertake development of the Municipality in stages so that areas are properly serviced and to prevent sprawl.  

If and when the Municipality of Halifax formally approves a regional park, the land would be formally expropriated and Annapolis would then be entitled to compensation. 

In November 2019, a judge denied the Municipality’s bid to summarily dismiss the de facto expropriation claim on the basis it had no chance of success. However, that decision was overturned by an Appeal Court in 2021; the claim was dismissed, and the Court ruled that although Annapolis cannot use the area as it wishes, that does not amount to the Municipality taking the land. Despite the Court of Appeal’s dismissal of the de facto expropriation claim, the developer is still pursuing other claims against the Municipality. 

Randy Christensen, lawyer, Ecojustice said: 

“Ecojustice is headed to court to protect the ability of governments to make decisions in the public interest, including to protect the environment.  

“Expanding the interpretation of de facto expropriation would mean governments across Canada could face threats of litigation and be ordered to pay land or rights holders when considering actions to protect the environment and otherwise regulate in the public interest. This places an undue financial burden on governments that could threaten conservation goals.” 

“Under Canadian law, ownership of land does not entitle a landowner to do whatever they want with their property. Though Annapolis Group is currently limited in their uses for the land, their rights must be balanced with the right of Municipality to take the appropriate time to consider how development of this land adjacent to a provincially designated wilderness area could best serve their community and the environment.” 

Background 

The last time de facto expropriation went to the Supreme Court was in the 2006 case of Canadian Pacific Railway v Vancouver, 2006 SCC 5. CPR owned a land corridor in Vancouver that was no longer being used in its rail service (known as the Arbutus rail corridor). The Municipality passed an Official Development Plan by-law that designated the corridor for use as a public thoroughfare for transportation, which included use of the land for heritage walks, nature trails, and cycling paths. Development contrary to the plan was prohibited; use as a rail line was not prohibited. 

In that case, the Supreme Court of Canada held that de facto expropriation claims require the claimant to prove two elements:  

  • The landowner show that there is no reasonable use left for the property (all uses being prevented by regulation); and  
  • The government has obtained a “beneficial interest” in the property. The beneficial use criteria requires that government obtain something for itself in order to be compensable.    

The power to take land and/or ownership of rights without the consent of the owner is sometimes necessary to serve the public interest (such as land necessary for a school, hospital or roadway) and compensation would have to be paid. 

As is, the law allows governments to take necessary action to prevent something undesirable (pollution, noise, harm to species) or generally promote the community well-being (zoning restrictions such as use limitations or building height restrictions). These are non-compensable regulatory actions.  

For media inquiries

Zoryana Cherwick, communications specialist | Ecojustice 
1-800-926-7744 ext. 277, zcherwick@ecojustice.ca 

Join our newsletter

Get updates on the most pressing environmental issues delivered straight to your inbox.