Supreme Court Expands The Doctrine Of Constructive Expropriation

• Published date: 26 October 2022
• Subject Matter: Litigation, Mediation & Arbitration, Real Estate and Construction, Trials & Appeals & Compensation, Real Estate, Civil Law
• Law Firm: Gowling WLG
• Author: Mr John Doherty, Sahil Shoor and Kevin Dias

Canada's law on de facto / constructive expropriation has been clarified and broadened by the Supreme Court's recent 5-4 decision in Annapolis Group Inc. v. Halifax Regional Municipality, 2022 SCC 36.

In joint reasons for judgement, Justices C'te and Brown, with Chief Justice Wagner and Justices Moldaver and Rowe concurring, held that a constructive taking occurs where: (1) a beneficial interest ' understood as an advantage ' in respect of private property accrues to the state, which may occur where the use of such property is regulated in a manner that permits its enjoyment as a public resource; and (2) the impugned regulatory measure removes all reasonable uses of the private property at issue. Moreover, they held that courts assessing de facto expropriation or constructive taking claims "must undertake a realistic appraisal of matters in the context of the specific case, including but not limited to:

1. The nature of the government action (i.e., whether it targets a specific owner or more generally advances an important public policy objective,) notice to the owner of the restrictions at the time the property was acquired, and whether the government measures restrict the uses of the property in a manner consistent with the owner's reasonable expectations;
2. The nature of the land and its historical or current uses and
3. The substance of the alleged advantage."¹

Lower court and Court of Appeal decisions

Gowling WLG's national Expropriation Law Group previously highlighted both the lower court and Nova Scotia Court of Appeal decisions involving Annapolis Group Inc. ("Annapolis") and Halifax Regional Municipality ("Halifax") as top expropriation cases in its 2021 year in review.

To recap that summary, Annapolis claimed that Halifax had de facto expropriated its lands by refusing to proceed with a secondary planning process, a mechanism that is required to advance the lands toward serviced development. Annapolis argued Halifax was exercising dominion over its lands by encouraging members of the public to utilize the lands as a park, and had an ulterior motive to refuse the secondary planning process. Halifax's motion for summary judgment of Annapolis's claim was dismissed, allowing the claim to go to trial and Halifax appealed that decision. The Court of Appeal concluded that the motive of an expropriating authority is not a factor in the analysis of a de facto expropriation, and, in applying the two-step test described in Canadian Pacific Railway v...