Comment On SBFD Inc. v. Ville De Saint-Augustin-de-Desmaures: Heritage Conservation Is Not A Public Objective Justifying Disguised Expropriation

• Jurisdiction: Canada
• Law Firm: Fasken
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Trials & Appeals & Compensation, Construction & Planning, Real Estate
• Author: Mr Nikolas Blanchette, Guillaume Pelegrin and Frédéric Legendre
• Published date: 16 March 2023

Introduction

In the Annapolis Group Inc. v. Halifax Regional Municipality¹ decision, rendered on October 21, 2022, the Supreme Court of Canada sided with current case law² by ruling in favour of the taxpayer when it confirmed that merely demonstrating that a municipal by-law removes an owner's reasonable use of real property is sufficient to constitute a disguised expropriation.

In light of this decision, it can be concluded that municipal by-laws that would not constitute a total "confiscation" of an immovable could nevertheless be a form of disguised expropriation when, without rendering the use of the land impossible, the said by-laws prevent the owner from making reasonable use of his or her land for a public purpose without compensation. For more details on this decision or the concept of disguised expropriation, please see our article on the subject.

In a decision dated January 17, 2023, on SBFD inc. v. Ville de Saint-Augustin-de-Desmaures³ (hereinafter the "Decision"), the Superior Court of Quebec added that municipalities can be condemned in civil proceedings for disguised expropriation when they choose to adopt municipal by-laws under the Cultural Heritage Act⁴ (hereinafter the "CHA") that have the effect of including immovables in a heritage site, thereby depriving the owner of the right to make any use of such immovable, without having exercised the power of expropriation that would allow the owner to be compensated.

The Decision

The Facts

In summary, SBFD Inc. (hereinafter "SBFD"), owner of a lot (the "Lot") on the territory of Ville de Saint-Augustin-de-Desmaures (hereinafter the "City") located in the vicinity of a heritage site named Domaine des Pauvres (hereinafter the "Site"), and Simon Bouffard, the sole owner of SBFD, are suing the City for disguised expropriation, alleging that the effect of the municipal by-law adopted and amended by the City following the acquisition of the Lot by SBFD was to prohibit any new construction on the Site. In order to block SBFD's construction project, the City decided to use its by-laws to include the Lot where the construction was planned onto the Site. The City argued before the Court that the effect of the by-laws was not to prohibit all construction on the Lot, as there were still highly discretionary, if not arbitrary, criteria by which it could authorize construction.

The Lot had been created as a result of a subdivision of the Site that was authorized by the City in November 2018, prior to its...