Comments On Annapolis Group Inc. V Halifax Regional Municipality, 2022 SCC 36 ' A Step In The Right Direction For Owners Who Want To Demonstrate Disguised Expropriations

• Published date: 28 November 2022
• Subject Matter: Real Estate and Construction, Construction & Planning, Real Estate
• Law Firm: Fasken
• Author: Mr Nikolas Blanchette, Guillaume Pelegrin, Frédéric Legendre, Steven Brassard and Samuel Labrecque

1. Introduction

On October 21, 2022 the Supreme Court of Canada ("SCC") rendered its decision in Annapolis Group Inc. v. Halifax Regional Municipality ¹ ("the Decision").

In this five-to-four decision the SCC revisits the test required for a property owner to be entitled to compensation following a constructive taking under the common law.

Although it deals primarily with the scheme applicable in common law, the Decision will have a major influence on Québec civil law.

On one hand, the Decision is part of a series of decisions that make it easier for taxpayers to demonstrate that they have been the victims of disguised expropriation. On the other hand, the majority of the SCC judges confirmed that demonstrating that a municipal by-law removes the reasonable uses that an owner can make of immovable property is sufficient to show disguised expropriation ². That means that a municipal by-law that does not amount to total confiscation of the immovable property could still lead to disguised expropriation even if it does not make it impossible to use the land, for example if it imposes uses that are not reasonable for the owner. Such uses could include forestry, maple syrup production or leisure activities (such as hiking and cross-country skiing trails).

Some authors have commented on this decision by stating that the existence of a disguised expropriation in Québec law remains dependent on proof of an absolute denial of the exercise of the right of ownership, which in our view is inaccurate and is more consistent with the SCC minority opinion.

2. Constructive Taking Versus Disguised Expropriation

Appropriation or "taking" is the forced acquisition of property by the State for public purposes ³. It is said to be de jure when it is an acquisition of title by a public authority, such as a municipality, in return for compensation.

In the common law provinces, taking is said to be constructive when a public authority, such as a municipality, acquires de facto ownership of a property, i.e. without compensation, without formal exchange of title and through its regulatory power ⁴. Property owners who face overly restrictive municipal regulations will claim that this is actually a constructive taking.

In Québec this concept is known as disguised expropriation. The Decision is a reminder that the applicable test for identifying this concept is distinct from that of constructive taking ⁵. Disguised expropriation is limited to a single test for no-fault liability...