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Nov 2022

Is Halifax Expropriating a Developers Land? Supreme Court of Canada Orders Trial to Find Out

The law of de facto expropriation and property rights in Canada: A review of Annapolis Group Inc v Halifax Regional Municipality

By Brooklyn Lester and Slonee Malhotra

Annapolis Group (“the Group”) is a Halifax developer. They have owned about 1000 acres of land in the Blue Mountain Birch Cove Lakes area since the 1950s. This land is situated beside a designated wilderness area. The Municipality of Halifax (“the Municipality”) has proposed creating a regional park on an area of land next to the wilderness area, which includes the Group’s lands.

The Group has been seeking to develop the land starting in 2031. However, the Group claims that the Municipality has been intentionally creating roadblocks to this development by not providing the requisite approvals needed and by quashing development proposals. The Group claims that on top of the administrative and bureaucratic hurdles the Municipality has been subjecting the Group to, they have been actively encouraging the public to use the land as a public park. However, simultaneously, the Municipality has refused to rezone the land as a park, arguably to avoid having to compensate the Group for the value of the land.

Between 2007 and 2016, the Group and the Municipality have fought over the right to develop the land. The Group launched a $120 million lawsuit against the Municipality in 2017, citing that by depriving them of the ability to use their lands for their intended purpose, the Municipality’s actions have amounted to de facto expropriation. This matter most recently made its way all the way to the Supreme Court of Canada (“the SCC”).

What is De Facto Expropriation?

Before diving into more details on this case, it is essential to understand what de facto expropriation is.

De facto expropriation occurs when someone is prevented from enjoying their property. In the 2018 SCC decision, Lorraine (Ville) v 2646-8926 Quebec Inc, 2018 SCC 35, Chief Justice Wagner affirmed the meaning of de facto expropriation:

“Where a municipal government limits the enjoyment of the attributes of the right of ownership of property to such a degree that the person entitled to enjoy those attributes is de facto expropriated from them, it therefore acts in a manner inconsistent with the purposes being pursued by the legislature in delegating to it the power.”[1]

To prove de facto expropriation, as they claim, the Group is going to have to prove that the deliberate actions of the Municipality are preventing them from enjoying the right of the ownership of their property (and the right to develop it).

Judicial History

Annapolis Group Inc v Halifax Regional Municipality (“Annapolis”), has been working its way through the Nova Scotia Courts, all the way up to the SCC.

After the Group brought their motion against the Municipality in 2017, the Municipality applied for a summary judgement at the Nova Scotia Supreme Court (“the NSSC”) to dismiss the suit. However, the Municipality was unsuccessful in proving that there was no case to be tried.

Next, the Municipality appealed the NSSC decision to the Nova Scotia Court of Appeal (“the NSCA”). The NSCA sided with the Municipality, based on their interpretation of the de facto expropriation test (“the Test”) from the 2006 decision, Canadian Pacific Railway Co v Vancouver.

The NSCA applied the Test, stating:

“For a de facto taking requiring compensation at common law, two requirements must be met: (1) an acquisition of a beneficial interest in the property or flowing from it, and (2) removal of all reasonable uses of the property.”[2]

The NSCA concluded that the Municipality had neither acquired a beneficial interest in the land, nor removed all reasonable uses of it (only some uses). 

The Decision of the NSCA Will be Heard on Appeal

The Supreme Court of Canada (“the SCC”) has granted the Group what is called “Leave to Appeal” the decision of the NSCA. As it stands, the Group has no inherent right to be able to appeal this case to the SCC. In fact, there are very few instances in Canadian law where someone has an automatic right to appeal a decision of a Superior / Appeal Court to the SCC.

Granting a Leave to Appeal means that the SCC has looked at the facts of this case and has decided that there are enough issues to determine that a trial is necessary. For context: of the approximately 600 cases per year that apply to the SCC for Leave to Appeal, only about 80 of them are granted. The SCC does not take lightly the potential of overturning the decision of a Court of Appeal.

There are significant implications of this Leave to Appeal. Whatever the SCC decides will become binding on Canadian Courts. A decision of a Superior Court/ Appeal Court is only binding in that particular province (although it is influential in other provinces). This means that whatever the SCC decides about this case in Nova Scotia, the decision will be binding nation-wide and will therefore have a major impact here in Ontario as well.

The SCC will now be forced to grapple with the Test - historically criticized for imparting an overly high burden of proof on land owners. There is a longstanding metaphor used in property law called the “bundle of rights”. This theory purports that when you own title to a property, you must have the right to possess, control, exclude, enjoy and dispose of this property—otherwise you are not enjoying the full rights of property ownership. The high burden that the Test imposes could be seen as inconsistent with these rights. This is a question that will be answered soon by our highest Court.

This case has revitalized the debate around de facto expropriation, and property rights in Canada. It seems that the Courts of Nova Scotia themselves cannot agree on the correct application of the Test or its application to the facts of this case. Such leaves many important questions to be answered by the SCC. How the SCC answers these questions will impact the future of de facto expropriation claims.

If you have any questions about de facto expropriation or your property rights, contact one of our qualified land development lawyers today!

[1] Annapolis, para 27

[2] Annapolis, para 68