Last year, the Supreme Court of Canada issued a ruling that significantly impacts the rights of property owners across the country. Canadians now have better compensation rights when government regulations negatively affect their property. Yet, the journey towards ensuring these rights are fully realized is far from over, as the case of the Annapolis Group vividly illustrates.
Annapolis, a Nova Scotia-based company, had a significant stake in the Supreme Court’s landmark 2022 decision, Annapolis Group Inc. v Halifax Regional Municipality (HRM). The company owned 380 hectares of land adjacent to a proposed regional parkland that the Nova Scotia government had designated as “protected wilderness” in 2009 to facilitate park development.
For the Annapolis Group, this posed a significant problem, although it never expressed any opposition to the municipality’s creation of a public park. It had acquired the land back in the 1950s with future development in mind. However, when the company indicated its intention to proceed with plans to develop residential housing at a time when there was a dire housing shortage, they were met with resistance from the Halifax Regional Municipality (HRM), which flatly denied their request and instead, actively encouraged public use of the land for recreational activities.
The company claimed that HRM’s actions amounted to a de facto expropriation – a “constructive taking”, in legal terms – as the municipality had essentially stripped the land of any viable economic use. They were left with land whose market value was significantly reduced due to restrictive zoning, making it feel as though the government had outright expropriated the property.
In the case involving the Annapolis Group, HRM practiced a method known as ‘down zoning.’ This approach involves keeping a property’s zoning status as is, despite the potential for a more lucrative zoning classification. In response to this, the Supreme Court ultimately decided that the HRM was carrying out a ‘constructive taking.’ This ruling meant that the Annapolis Group was entitled to just compensation.
Significantly, the court provided clarification regarding the concept of constructive taking. It stated that a government doesn’t necessarily have to seize a property title formally for its actions to be considered as taking. Instead, the government merely needs to gain an ‘advantage’ in the property. Furthermore, the court ruled that for a property owner to claim a constructive taking, they must demonstrate that the imposed regulation eradicates all reasonable or economic uses of their property.
The court’s ruling has far-reaching implications for property owners, large and small, across Canada. It sets a precedent that allows owners to seek compensation when governments impose regulations that limit their use of land without proper compensation.
Yet, it’s also important to remember that such issues aren’t exclusive to Canada. Regulatory takings occur worldwide, but the manner in which they are addressed varies. Disturbingly, Canada has typically lagged behind many other nations in providing compensation for property owners affected by regulatory takings.
Israeli scholar Rachelle Alterman’s 2010 study, Takings International: A Comparative Perspective on Land Use Regulations and Compensation Rights, found that countries such as Sweden, Finland, Germany, Holland, Israel, and even the United States offer much broader protections and compensation rights for their citizens. Surprisingly, nations often characterized as having leftist policies, such as the Nordic countries, demonstrate greater respect for individual property rights than we do in Canada.
In the wake of the Annapolis ruling, Canadians have reason to celebrate. However, this should be a starting point, not a conclusion. We must continue to advocate for broader compensation rights for landowners and to place constraints on governments’ ability to infringe upon our property rights without fair compensation. After all, balance in public policy can only be achieved when all stakeholders’ interests are duly considered and safeguarded.
Joseph Quesnel is a senior research associate with the Frontier Centre for Public Policy. He is the author of the newly revised Canadian Property Rights Index, to be released on July 17th.
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