When Does Land Use Regulation By Government Become So Onerous That It Amounts To What Is, In Effect, A Taking Of Land?

• Published date: 25 October 2022
• Subject Matter: Government, Public Sector, Real Estate and Construction, Government Contracts, Procurement & PPP, Real Estate
• Law Firm: McLennan Ross LLP
• Author: Ms Marika Cherkawsky, Gavin Fitch, K.C. and Darryl Carmichael

The Supreme Court of Canada has grappled with what constitutes "de facto expropriation" or "constructive taking" in a number of cases.

Most recently, on October 21, 2022, a 5-4 majority of the Supreme Court of Canada in Annapolis Group Inc. v Halifax Regional Municipality, 2022 SCC 36 ("Annapolis"), affirmed the two part test to establish a constructive taking set out by the court in Canadian Pacific Railway Co. v Vancouver (City), 2006 SCC 5 ("CPR"). However, the minority judgment in Annapolis disputes that the CPR test has been affirmed by the majority, arguing rather that it has been inappropriately broadened.

This test for constructive taking, as established in CPR and affirmed/modified in Annapolis, provides that for there to be a constructive taking, the reviewing court must decide: (1) whether public authority has acquired a beneficial interest in the property or flowing from it (i.e. an advantage); and (2) whether the state action has removed all reasonable uses of the property (the "CPR Test"). In affirming the CPR Test, the Supreme Court clarified that acquiring a "beneficial interest" does not require an actual acquisition, but can instead be understood more broadly as an advantage flowing to the state.

What is "constructive taking"?

Before summarizing Annapolis it is important to explain the difference between a "constructive taking" and a de jure taking. A de jure taking is where the government, often a municipality, takes land from...